Choosing The Right Path

highways

Determining the correct path when it comes to making a decision about what price to offer on a house in this area seems to get more and more confusing with each passing month. In the last 3 months in San Mateo, Foster City, Belmont and San Carlos 187 single family homes have closed escrow in all price ranges. Of those 57 houses closed escrow at a price over their original asking price…and most of those were just slightly over asking. Only 1 house originally priced at $1mil or more sold for more. 42 of those 57 overbids were on homes priced at $825,000 or less, so in other words the lower the price, the greater the chance you’re going to have to pay more than asking to get the house. If the house is priced under $500,000…it’s a guarantee.

Here’s the thing, there were 100 houses priced between $829,000 and $2.4mil…and 15 over bids. 36 houses sold that were listed between $695,000 and $829,000…15 of those had overbids. The highest being 4203 Skymont in Belmont that went $60,000 over asking. 2 others hit $50,000 over but most were under $10,000. Even under $500,000 the overbids were at most $65,000 on an REO in San Mateo. It was originally listed at $389,000.

The question for buyers and agents alike becomes, what price should we offer? If a number of offers come in with FHA loans and I have 20% down will that overcome someone elses higher bid? Here’s my opinion…it’s flat out confusing! If less than 10% of the offers on every house sold in the last 3 months were aggressive overbids, how aggressive should we go?

Yesterday I presented an offer for some clients on a great house at 3519 Winway in San Mateo. The house was listed for $699,000 and needed some updating but was a great value. It was obvious at the open house Sunday that there was going to be multiple offers. My client commented that there were too many smiles on faces there, he was sure he was going to have competition! Sure enough, there were 13 offers…it sold for more than $800,000. How do you figure it? With no history at all of even 1 single $100,000 plus overbid in the area, somebody stepped up for this house. It actually is a fantastic house…so it”ll most likely pay off.

To me this is a very interesting thing. I had a listing a month or so ago that got 8 offers and only went over asking by $888.00. The question needs to be asked: Are we going back to large overbids to secure properties? If so, how will the appraisals come out if buyers are doing that? How many zany overbids does it take to constitute a trend? How many buyers will get sick of losing out before they start suggesting it themselves?

Comments

  1. Jim,

    Once again, great insight. The market is extremely puzzling right now – some houses are gone in three days with multiple offers, and others just a few blocks away languish. There seems to be no real common theme as to why this is happening either.

    Certainly makes for lots of head-scratching…

    Chuck

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