Seems like we have been seeing headlines like this in the current market. Why is that?
Is the market actually swinging up by $400K in one month? Are people really paying that amount over asking? Are houses even appraising?
Let me see if I can break it down just a bit.
15-20 years ago, when Sellers said they wanted $500,000 from the sale of their home, we would suggest listing for $550K. Then in the process of negotiating, we would end up at $500,000. We would issue counter offers or multiple counter offers, and it often took several days to get to a final price. Properties took several weeks (or even months) to get sold, and buyers didn't feel rushed like they do today. Many times the buyer would do their own inspections and renegotiate the price prior to removing final inspections. Buyers found out about the home when we showed them homes. We would tour, introduce properties to our clients and show them. We call those times, the "olden days"... HAHAHA!
8-10 or so years ago, after (during) the housing debacle, things were a bit different. When a seller said they wanted $500,000 we would suggest that they price at $500,000. The market was slow and properties sat and sat. Homes with inflated prices wouldn't move, and would eventually need a price reduction to achieve a sale. So we would convince Sellers to price where they would accept. This caused a shorter time on the market, and got properties sold. We saw more counter offers, and less multiple counter offers. We saw sellers providing pre-sale inspections and disclosures to all buyers before reviewing offers. The internet gave clients the ability to see homes, but they still found out about them through us, the agents.
5 or so years ago, things indeed changed again. But then again, the only thing constant in life is change, right? If a Seller wants $500,000, we suggest that the seller price their property at $450,000. Buyers are discovering homes faster and faster. They use search engines to find what they want, and discard them before even looking at them. So now we only have one chance to get the presentation right. We prep homes now, stage them, landscape, paint, do inspections, fill out reports, get professional photographs, have amazing flyers printed, send out circle mailers, door knock the neighborhood, wash windows... In an effort to make the house amazing. Then to draw as many people in as possible, we price low to ensure that EVERYONE comes and visit. This strategy gets the most buyers into the house at one time, to ensure that we get offers that first week after open houses. And it usually ends with a price higher than the seller is expecting.
When you have 10 offers on your home, there can be only one winner. So 9 buyers go back out and look in that area, and then start making more aggressive bids till they win. Sometimes a buyer loses out on a home 7 -10 times and they vow to never lose again. This buyer can be that one buyer that bids the price well over the pack. They do win, but it pulls the market up in spurts. It may not appraise, but when it closes, it become the new comparable sale in the area.
The market is complex. Let us navigate it with you, for you. Call us so we can help you on your next move!