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.