As we enter July our brokers tell us that it is very difficult to be a buyer right now inmost parts of the nation. If the house is in good shape, reasonably priced, in a desirable area (and right now they almost all are desirable), and has been remodeled, it usually generates multiple offers and goes over asking. The question that Orion’s brokers is being asked is, “I know that there will be multiple bids, but how much over asking should my offer be? And how can you, the broker, help?”
In the past the number of offers was a solid indicator for how much a home would go over its asking price, but that is less true now. A few years ago, real estate agents would estimate about 1.5% per offer, so if there were four offers, then you could assume you would be about 6% over list price (4 offers X 1.5% = 6%).Now, that rule of thumb is far less reliable but in general, the larger the number of offers, the more it goes over the original asking price.
Orion, in various markets around the country, has found that the best indicator of sales price is the average sales price per square foot in that area and the condition of the home. This is a number that varies greatly. Homes near town in areas with flat streets often sell for twice as much as hillside locations. The other big variable is condition of the home. Buyers clearly pay more for remodeled, finished properties that don’t need any work, they always have, but now that is even more pronounced. Homes that need work or updating just don’t have any where the demand that homes with up-to-date finishes and appliances do. Buyers are clearly paying a premium for updated homes, as they consistently generate the highest number of offers.
What about that home that is priced so low it is just too good to be true? Well, Orion’s brokers know that it probably is. Some sellers, at the prompting of agents, will price a house so low that everyone goes crazy. It is hard to schedule an appointment to see it, the number of offers is unusually high, and then it sells at a price far above asking. We find this to be a terrible marketing tactic.
Real estate agents will tell you that there aren’t any hard and fast rules here, but those are some good indicators that will hopefully help your client compete in this difficult market. It is tough, for sure, but most brokers also believe in being honest and providing your clients with as much insight as possible. Orion and our AEs can help put your client on the track for the pre-qualification process, which will give them a leg up on home buyer competition, and Orion will provide a great interest rate and program suited to their situation.