Why Are Some Homes Selling For More Than List Price?
June 25th, 2009 categories: Buyer Resource, Seller Resource
“Why are some homes selling for more than list price?”
Santa Rosa Home 3/1, 1300+sq. ft.-$179,000
Sonoma County home prices are really low right now, relative to years past. In terms of Sonoma County housing affordability, we have not seen the opportunity to buy homes and rent them for more than the mortgage payments in 20+ years. I cannot give an exact date as the MLS was not around then, and I have not been able to locate a historic record of sale prices versus rent prices.
When investors can cash flow on Real Estate, they usually act quickly on those opportunities…they see it as getting paid to wait. Wait for what you ask? Wait for property appreciation.
Currently, some homes are being priced so aggressively that they are receiving multiple offers. Also, it is fair to note that other properties can sit on the market with no offers. Most homes that receive multiple offers are in the lower price ranges, where first time home buyers and many investors look. There are however well priced homes in all price ranges that are getting a lot of attention. From entry level Sonoma County Homes Under $200,000 to luxury homes in places like Fountaingrove and Mayacama. It all comes down to pricing relative to the competition.
Some areas, like Rohnert Park, Sebastopol, and Petaluma that have little inventory are seeing prices bid above asking due to demand related reasons, and others areas such as Santa Rosa which have a lot of inventory, are seeing sales prices above asking because many of the original list prices are at a level that attract a lot of attention. When this happens, the list price becomes irrelevant and people pay what the property is worth to them.
Do buyers ever pay to much? Yes! Even in a down market? Yes. The “Winner’s Curse” is certainly at play in some cases, as some people just want to be the one who “wins” the bidding war. This can be somewhat ego driven, and somewhat lack of discipline, but in any event it does happen.
Bottom Line: I suppose the quick reason comes down to Economics 101…Supply and Demand. Sales prices come down to a buyer and a seller coming together, regardless of asking price. If your price is better than your competition’s then you will receive more attention.
BUYERS: Do not let this discourage you, we are giving you the facts the way they are. Just know that even in this market you must be ready for your dream home. Knowing the facts are the best way to be prepared for a Real Estate purchase, and lately, homes have been selling for more than list price.
