Bidding Wars on Homes
Related blog post: Bidding Wars Are Back!
Whether you are trying to buy or sell a home right now the art of the offer compared to the asking price is huge; the key to the buyer making the right offer and the key to the seller setting the right price our real estate experts are back with some important information for both sides when it comes to this give and take and a little more about bidding wars being back too. John McGeough and Anthony Lamacchia from Lamacchia Realty are back with us this morning and these are essentially questions you guys get all the time because when someone’s selling a house or buying a house well what’s the approach? Let’s start with the buyers first, no one ever offers the asking price correct?
That’s the exact question we get from buyers
So when you’re doing that, so I know this is part of the game, if you will, what is a reasonable offer?
That’s the most famous question we get from buyers and it all depends on the property. All depends on what it’s listed at. Obviously you’re not going to offer asking price if the home is overpriced but if the home is priced just right or even a little bit lower compared to all the houses in the neighborhood you had better offer the asking price.
Well let me ask you John, should you be willing to meet the asking price at the outset, you go in, you see the price, you say I want this home, then I’m ok with that.
In some cases absolutely, in some cases we’re even seeing over asking because what’s changed with buyers now is they have the resources very similar to what we have so they’re no longer fooled if they think that a home is reasonably priced as Anthony said they’ll offer asking price if the reasonable price is the asking price they have no problem paying the same thing.
Is there any offer that’s a bad offer?
Not usually, sometimes you get people who are unrealistic. Sometimes we have cases where we’ll be working with a buyer and we’ll say “look, this house is priced at $400,000, everything in this neighborhood has sold from $390,000 to $410,000,” and they say, “great I want to offer $300,000 this is a bad market.” Come on it’s not going to happen.
Let’s talk about the sellers now, do you set the asking price, John, knowing that they’re not going to meet it, so I’m going to go a little higher, knowing that they’re not going to meet that price, but still I’ll be ok?
We don’t, some do. We always tell sellers, the market sets the price, so the goal is to pull as many like properties there are in comparison to your property, and set a reasonable price. Do not build a lot of fat into the price, we don’t agree with that because once again, you can’t fool the buyers, price it reasonably, they’ll be more attracted, there’ll be more activity early on, and that’s the best leverage a seller can have.
Next question and kind of a follow up, from the buyer’s point of view, if you’re a seller and you get an offer you think is unreasonable, or it’s way too low like that $300,000 number you mentioned, do you bother responding to that, or do you say we’re too far apart to even respond.
If it’s way too low we tell our sellers just to deny the offer because if you’re only offering $300,000 and the house is clearly worth $400,000, then why are you going to counter if they’re coming in at $300,000 they’re not real.
Let me ask you about the bidding wars, we remember this from the good old days of real estate a few years ago, you put a house on the market you get 4 or 5 people bidding and overbidding and then going over asking price and that’s coming back in some areas.
It is, if it’s a popular price point, within a given town and you’ve got a decent size buyer pool you’re going to see multiple offers. We’re seeing it every week every weekend, we were just laughing about “multiple offer Mondays” we’re calling it because we’re seeing that type of activity, not with every price point but if it’s priced correctly, and marketed correctly, and there’s enough buyers there you might get multiple offers.
Anthony what price point are we talking about, what sort of towns around here are seeing this type of activity.
A popular price point for first time home buyers tends to be anywhere from $250,000 to $450,000. A lot of the homes priced between there, we’re seeing multiple offers on those. And sometimes it takes a buyer getting denied and not getting a house– getting beat out– to realize ok, the next house I had better be ready to come up if I think it’s priced well. If the house is a good deal, you don’t have to offer $50,000 less to make it a better deal because you’re going to get beat.
So we’ve got competitive bids going on out there, anybody exceeding the price?
So that’s happening too?
Definitely—a lot. It’s happening not just with our listings but we represent a lot of buyers, we’ve had buyers where we give them the best advice we can we think they should go up to $500,000 and then somebody else comes in an pays $510,000 it happens
Well if you’re sitting on the fence now and you hear that type of stuff you’re like I’d better jump in there coz it’s a good time to sell.
The best spring market I’ve ever seen.
And a great time to buy.
John McGeough and Anthony Lamacchia thanks gentlemen, it’s always a pleasure we appreciate your expertise.
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