A property in the Sacramento area had a whopping 147 offers as reported by the listing agent. This is a freakishly high number of offers, and I think there are some interesting layers here to talk about. Any thoughts?
UPCOMING SPEAKING GIGS:
3/8/24 Redfin (private)
3/11/24 Yolo Association of Realtors (YAR only)
3/19/24 WCR Gold Country (details here)
3/21/24 2024 Market Update for Brent Gove Team (big event free)
3/26/24 Orangevale MLS meeting 9am
4/11/24 Lindsay Carlisle Event (private)
4/25/24 HomeSmart iCare Realty (details TBA)
4/26/24 Prime Real Estate (private)
5/9/24 Empire Home Loans (details TBA)
5/15/24 Investor Meetup (details TBA)
6/6/24 Golden 1 Credit Union (details TBA)
6/11/24 Elk Grove Regional MLS Meeting 8:30am
6/13/24 Sacramento Realtist Association (details TBA)
UPDATE: MLS has since pulled this sale, so it is not longer available. I’m not sure why they pulled it, so I won’t speculate. I do have a screenshot from yesterday where it shows the number of offers. I had someone call me today saying, “Hey, I can’t even find the sale. What’s going on?” Well, this sale no longer exists in MLS as of later this morning. If I get more details as to why, I’ll speak to that.
PAINTING THE MARKET WITH EXTREMES
One of the temptations in real estate is to build housing narratives based on extreme examples. This happens on the doom side when people isolate properties with sensational price reductions and say, “The market is collapsing.” Or some find a non-performing Airbnb and say the entire short-term rental market is a bust. But this happens on the rosy side too with situations like this. The narrative can become, “Bro, everything is getting one hundred offers. This market is insane.” But, let’s step back and ask why this many offers happened. By the way, I’m not on Team Doom or Team Rosy. I’m on Team Market Stats.
THE MARKET vs THE MARKETING
Did this many offers happen because the market is so competitive? Or was it due to the marketing (pricing)? Well, in this case, a 1744 sq ft property in Rancho Cordova was priced at $199K before closing at $425K. Look, this is already a competitive area, but pricing over 50% below what the property sold for created an auction-like environment. Bottom line.
View this post on Instagram
THE ZESTIMATE IS PLAYING GAMES
The Zestimate on this property was above $450K before it listed for sale, but as soon as it listed at $199K, the Zestimate chased the list price (this is really common to see). Oh, and look what happened when the property closed at $425K? Yep, the Zestimate changed. I talked about this dynamic on a reel this week with a different property. I’m not a Zillow-hater, but I do hope people who get overly-fixated on the Zestimate will question credibility when seeing price-chasing games like this. Ultimately, Zillow touts itself as a ballpark estimate, but it’s really a benchmark for many consumers.
BRO, EVERYTHING IS NOT GETTING 100 OFFERS
Since June 2023, there have been only two sales with over sixteen offers in this neighborhood. When looking at the visual below, 68.5% of all sales had three or fewer offers, which is telling for what the bulk of the market looks like.
A NEW RECORD IS BORN
Getting 147 offers is a new record from 2016 onward in the Sacramento region. In 2016, our local MLS created a “number of offers” field, and since that time period there have only been two legitimate sales with one hundred or more offers reported. The previous record was 122 offers in 2021 for a property in Citrus Heights, and that house went viral on many news outlets. The narrative was, “The housing market is insane. A property just got 122 offers.” Part of me wonders if this new record of 147 offers will get similar treatment (even though it was an auction price causing this).
DOES AUCTION PRICING WORK?
The are many opinions on auction pricing, and I’d love to hear in the comments what people think. Did this property sell at the top of the range for the size of home? No. Should it have? Well, that’s not for me to say without doing an appraisal and knowing more about the condition of the property. I cannot say what this property was actually worth, and whether $425,000 was a legit market value or not. I can only say the price was toward the lower end of the competitive range for the size of home. Was that due to condition or some other issue? I would need more information.
And here’s the immediate neighborhood:
SELLERS & BUYERS
Sellers, don’t expect 147 offers. And buyers, it’s really competitive out there for the good stuff that’s priced well, but don’t let this one situation get you down. You’re not competing with that many offers unless it’s an auction price.
SOME GRAPHS TO HELP SHOW THE TREND
Here are some visuals to help unpack the neighborhood dynamic. I made these almost instantly using the free spreadsheet I pushed out in December. Feel free to download and experiment. Keep in mind, other MLS systems don’t always have a “number of offers” or “concessions” field, so those graphs aren’t possible outside of Sacramento.
TAKEAWAYS: It’s rare for properties to go 10% above their original price in this area. When bidding up happens, it’s usually a few percent of the original price. Also, many properties sell below the original price too. The property with 147 offers went $226,000 above the original price, and that’s a unicorn.
NOTE ABOUT INTENT: This post is not in any way meant to throw shade at the listing agent. This is about talking about a unicorn pricing situation for the sake of cultivating objectivity and being able to talk about a sensational example. On that note, I will not approve any comments that personally disparage the agent. I welcome any comments to talk about pricing strategy. Don’t make it personal in my space here though. Thanks.
Thanks for being here.
Questions: What do you think about situations like this? What did I miss? Any thoughts?
If you liked this post, subscribe by email (or RSS). Thanks for being here.
I think homes that get these high amounts of offers are absolutely unicorns! Ask yourself this question, how many sellers can you get to agree to allow you to list their home at such low values to attempt to find yourself in a bidding war? I have tried on a few sellers, and they want what they want, even when you assure them and show them the statistical proof of this marketing tactics success’s!
Now, I want to see what this home looked like, was it in a super crappy location, or was it a dumpster fire, needing loads of work to make it a great investment? 425k seems like a bit of a lower value for a home of that size in Rancho Cordova, then again, location, location, location!
Thank you Floriana. Agreed on unicorns. I think you bring up a great point regarding unicorns in that sellers won’t always agree to something like this. I suspect many sellers would be concerned about whether value would be maximized or not. This was not a dumpster fire based on MLS photos or the MLS description. There could be more to the story. Surrounded by other residential units. No commercial influence.
Great post Ryan. Actually kind of fun. I’m guessing the offers were made electronically, and there was no line of buyers agents paper in hand. ? Is auction pricing just cheap advertising?
Thank you so much. Yeah, I imagine there are very few paper trails. Probably not a huge line either. And yeah, sensational examples get lots of attention. Probably not bad advertising. I mean, here we are talking about this one property…
Another stat you have access to in Sac that we do not have access to in Portland unless we email the agents. I know of one local agent who is convinced this “auction” pricing strategy is the best, but the couple times I’ve come across his listings with only one day on the market, they also sell toward the bottom of the range. Then I get marketing emails from the agent bragging about how the market has an average of X days on market but his homes sell in only 1 or 2 days, therefore he is the best agent and you should use him. LOL
Interesting that the multiple offers field in Metrolist says NO.
I suspect this listing has been reported for violations. It currently isn’t even coming up for whatever reason. And this morning it said zero for the number of offers. I have a screenshot from yesterday though showing 147. Weird stuff happening.
It was originally a PROBATE SALE. Then cancelled. Then relisted under another MLS #. You are not disclosing all the information.
Correct. I am not intentionally withholding anything. This property was listed really low at $199K, garnered all these offers, and the re-listed very shortly afterward to sell. I can’t speak to why it was re-listed. Maybe it was strategic. Maybe it wasn’t. Not trying to withhold anything. Does this information somehow factually change what I’ve shared here?
One clarification. This was listed in MLS as a probate sale for $199K. I can’t speak to whether it was ever listed on a different platform. Probate properties are listed all the time though, so this is not uncommon. What is not customary here is to see a listing at 50%+ of the final price, and that’s why this is a conversation piece. Honestly, I’m not sure what difference it makes that this was a probate sale. You are welcome to clarify how that makes a difference. There is a strategy here though beyond just this one list. I’m happy to share examples if needed.
Good story Ryan as always when you dive details on “WHY” these situations occur. Makes for titillating reading but at the end of the day, the real price (give or take) is always going to manifest itself. Your work is always appreciated Bro!
Thanks Roy. Value has a way of rising to the top. I’d love to see some studies on auction-type pricing in MLS and whether a higher price is achieved. For clarity, there is room for multiple pricing strategies and models in real estate. This wasn’t an auction, of course. It felt like one with the pricing strategy.
I find these types of marketing ploys deceptive and to create headaches for buyers, agents and appraisers for multiple reasons.
1. It looks like the agent doesn’t know how to price a property properly, if they did it would have sold for closer to the listing price.
2. It could backfire. Is the seller really going to accept an offer at that price if that is all they received? Most likely not. So it’s misleading.
3. It creates unrealistic expectations for buyers – if the property is listed for that amount they may now think they can afford similar properties.
4. Buyers agents have difficulty explaining the reality to their clients and it complicates writing a successful offer.
We had a similar situation in my market and the overall feedback was negative from the agents in regard to using this as a marketing ploy. Why not just hold an auction?
Lots of questions. It’s a weird vibe to see properties on MLS that feel more like an auction. Granted, properties in the Bay Area see stuff like this all the time, so some of this is real estate culture. It’s just not the norm here in Sacramento. It does happen sometimes.
I do not think unicorn is what this is. I think it would have sold in this range anyway. It is a sad attempt to take advantage of a market that has had low inventory, and, frankly, it didn’t work. It’s time to stop the unprofessional marketing and do what the seller and buyers aren entitled to. Setting a price within range, to drive up buyers is a good approach. Setting an auction price and dissapointing people who cannot afford a home in this area yet think maybe they can, is why they all think we are predatory vermin. Up your professionalism if you think this is a strategy.
Thanks Debra. I get it. I would say unicorn in the pricing strategy still though. This is rare. This is pretty common in the Bay Area too.
I am from the Bay Area and it’s just not the same set of incomes and prices. We are not dealing with the same market(s), it’s unique challenges, and it’s have and have not incomes to the extreme. When first time or young buyers try to buy a home here, we have a serious responsibility to try to get people on their way to getting an equity position. If your only interest is in benefitting yourself through deception, you might want to rethink this. It would be interesting to see the offers. This will tell you what we know. There will be probably 10 or fewer close to what it sold for. The balance tells the story of families, with kids, and no chance. As we were two tech execs with really good incomes, we struggled to find places that we could afford. However, the sales price eventually put cash in our hands. This drives the prices here too, and creates the same inequity we see there. Let’s be thinking about the pain and numbness and withdrawal for those who can’t get a home.
Thanks. Yeah, I’m not saying this is a good thing, and I feel for buyers here. I’m just saying there are markets where this happens regularly. Thankfully, Sacramento is not one of them. I would love to see the spread of offers. On a related note, you don’t know 40 or more offers to sell for top dollar. The truth is so many offers start looking the same anyway. You don’t even need 10 offers. That’s my observation through the years. When something goes way over list price, chance are the list price is simply a low point.
I agree.
I agree with both Shelley and Debra; this is deceptive marketing that sets buyers up for unreasonable expectations of the market. It’s deceptive advertising- it seems like a bait and switch. As professional Realtors, it is our job to set reasonable expectations for our buyers and sellers based on similar comps/market trends. This kind of scam undoes that. I can’t tell you how much time I’ve wasted in the past telling potential buyers that this is an auction-type situation and that the comps on the home indicate a much higher value. This is a total time waster for Realtors and buyers. I would not take a listing if the seller chose to list this far below value.
Thanks for sharing your take, Lisa. It’s tough when there is one winner in the midst of so many people who lost.
Hi Ryan, I’m a real estate broker here in Austin, Texas. Been following you for a few years now and even took one of your broadcast course! Always love your sharing and insights and stories. This one here obviously made me think of the house in Austin that got 97 offers, but that was a totally different market. Buyers were just trying to get whatever they could at that time. I always think a house speaks for itself. If it’s a good one, it will sell when price is right. I haven’t personally seen any sellers willing to price so low below the market price just to be aggressive. And when we list a little bit low and get several offers, some sellers would even question whether we list it too low! LOL. Anyway, just want to say hi!
Jill, you are too kind. Thank you for stopping by, an hi to you also. I love this example too, and I think there is some real wisdom in what you said. You just likely don’t need a significantly lower price to maximize value. In this case, the property still sold at the lower end of the competitive range (ironically, I think).
I’m interested in the stat that 68.5% of all sales had three or fewer offers. Sometimes, sellers get a few offers in, then they (or their agents) may get impatient and unsatisfied with the number and wait weeks longer hoping for something higher. But as the DOM vs Final Price graph shows, the best offers are typically right when the property goes on the market.
Hi Hoots. Thanks for chiming in. I appreciate it. I’m not sure if there is a question there, but I think you’re right about sellers and agents sometimes holding out (which doesn’t always work out so well). Good eye regarding the days on market graph. Things are moving pretty quickly here. Over the years, I’ve noted that getting multiple offer doesn’t always mean going over the original list price. It often does, but not always. Of course, we could also see something overpriced and then get multiple offers once the price is lowered to a reasonable level. I will say sometimes the market is just weird though where a property isn’t getting any action, and then all of the sudden two offers come in. My sense is sometimes the market simply needs more exposure, but sometimes we just need to see the right buyer come along. Maybe the right buyers simply hasn’t seen the place yet. I’m not sure there is any real way to quantify that, but it’s a very real dynamic.