There are so many stories of homes that have sold for 70, 80, 90, even 100,000 dollars over the asking price. It makes the current market confusing for both buyers and sellers. And a lot of it is smoke and mirrors. Don't get me wrong, it is a strong seller's market in Oxford County, with many sellers hitting home runs when it comes to offer day! But many times, the stories being told, although true, are missing critical information.
This is where "Sold Over Asking" needs to be addressed. We should be talking about "Sold Over True Value". In the current market, the list price can be almost irrelevant. Realtors are listing homes with a soft list price. If we think the home is worth, $500,000, we might list the home at $480,000. This exposes the home to as many buyers as possible. When offer day comes, buyers will offer as much as they think the home is worth. If we received 5 offers in this scenario, and a couple of offers are over the $500,000, and they probably will be, everyone is happy! If we receive an offer of $510,000, we just sold the home for $30,000 over asking price, but the home sold for $10,000 over VALUE! And that is the critical missing piece of information.
If the same property were to be listed at $430,000, it would sell for $80,000 over the asking price, but still only $10,000 over VALUE! Nothing has changed except the list price. Oh, and one more thing, the story has changed. The Realtor has a great story to tell, and the seller could not be happier!
Soft pricing is good for the seller, but listings a home with an overly soft price can poison the minds of buyers and sellers. I have heard of sellers turning down fantastic offers for their homes because they didn't get $60,000 over their asking price. And it is because of these stories. The truth is, their home was listed with a proper list price. The offers they received were great offers. But these offers were turned down, the school of buyers moved on, and their home sat for a week. And the next offers were lower than the original offers received. All because of the "Over Asking" stories they had heard.
For buyers, it is even harder! What do you offer on a home when you don't know what it is really worth? Do you go over asking by $20,000 or $100,000. Most buyers need to be looking at homes that are listed $40-50,000 less than what they actually are approved for so they have room to offer over asking. If the soft prices were all closer to reality this would be an easier market for them to deal with. Not all Realtors are listing severely under market value, but it is difficult for buyers to know when they are and what is happening from one listing to the next. It is frustrating and confusing!
A great local Realtor can help with this. We are in the market every day with buyers and sellers and we can help weed through the myths and legends! It is hard for us to even show good comparables right now due to the vast swings, property to property, between list and sale price. But we can help you understand VALUE! Again, some homeowners are truly hitting home runs on offer day. And usually it is an offer from an out-of-town buyer that is being represented by someone that does not truly understand the market. If you are a buyer, you need someone to lead you away from these situations and help you understand what homes are truly worth.
The market does seem a bit like the Wild West right now. But there are strategies and information that can make it easier to understand and deal with. The truth is out there...