Buyers May Benefit From an Auction Mindset
Buyers who head into the housing market believing they should get a home for less than the listing price may be very disappointed. Instead, they may consider that asking prices have become more like the start of an auction and be ready to start bidding.
For every listing, there is an average of 5.1 offers, according to the National Association of REALTORS®. What’s more, half of homes are being sold above list price.
Additionally, “Due to the low supply of houses for sale, many homes are now being offered in an auction-like atmosphere in which the highest bidder wins the home,” an article at Keeping Current Matters notes.
In actual auctions, many sellers often set a reserve price, which is the minimum amount a seller will accept. In today’s market frenzy, the list price for a house for sale may be more like that reserve price,, the article says. The asking price has become the starting point of the negotiation in many home sales today.
About 40% of potential buyers who were searching for a home this spring say they haven’t bought yet because they keep getting outbid, according to a survey from the National Association of Home Builders.
Knowing they have the upper hand, sellers have come to expect a bidding war for their home. Twenty-four percent of homeowners recently surveyed say they expect to get more than their asking price, and 29% of sellers plan to ask for more than what they think their home is worth, according to a survey of 657 homeowners conducted by realtor.com®.
Some buyers are going to extremes to win a home they want. Real estate pros report individual listings fetching as many as 20 offers—one even got 97 bids—as the homebuying frenzy continues. To win a bidding war, buyers may be willing to waive contingencies and stretch their budgets to the absolute max. Some buyers have even offered $100,000 above asking price, Debbie Barrera, a broker at Realty Austin in Austin, Texas, told The Wall Street Journal. She even had a buyer offer $500,000 above asking price for a home with a pool.