In case you didn’t know, we’re living in a seller’s market. But even though home prices are at record highs, buyers are still in the market. Not only are they shopping, but they’re putting down offers well over the listing price. Are you in the market for a home? Be prepared to spend money.
Listing prices? Never heard of them!
A buyer in Austin, Texas paid $1 million over a home’s listing price. According to the founder of The Agency Texas, Thomas Brown, the buyer was bidding for a home against multiple offers. To make sure the offer stood out against the competition, the buyer offered to purchase the seller’s next home (yes, really).
The deal, which included the home the buyer wanted (priced in the $400,000’s) and the seller’s new home (priced in the $300,000’s) ended up being sold over their asking prices and costing the buyer $1 million over the original home’s listing price.
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You may be shaking your head in disbelief over someone paying so much. But the truth is, that’s happening more and more in today’s hot housing market. While not every buyer is paying $1 million in cash, a majority are paying over the listing price.
In Seattle, a buyer offered $400,000 over the home’s $725,000 listing price without even seeing the home. Not to mention, they waived contingencies on their home offer.
A Realtor in Colorado Springs made headlines this year when she listed a rundown home for $592,000. In the photos, the home was covered in graffiti and very damaged. Mimi Foster, a real estate agent, told MarketWatch the home was like “walking into a crime scene.”
But guess what? She received multiple cash offers that were well over the asking price.
Low-inventory is partly to blame
Due to low inventory, buyers don’t have a lot of options when it comes to purchasing a home. This need is what’s causing home prices to skyrocket, which in turn, forces buyers to make competitive offers. According to Redfin, between mid-April and mid-May, over half of U.S. homes were sold over their listing price.
“The fact that 50% of homes sold for more than their list price shows just how intense and unshakable this competition is,” said Daryl Fairweather, Redfin’s chief economist.
Bottom line
If you’re looking to buy a home, be prepared to make an offer higher than what’s listed. In today’s market, sellers are juggling multiple offers at once. Meaning, they’re less likely to entertain a low offer or even make counter-offers. As a serious home shopper, make sure to lead with your best foot forward. This doesn’t mean you should offer a price you can’t realistically afford – but be competitive.
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