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market stats

How much are buyers paying above the list price?

December 1, 2020 By Ryan Lundquist 14 Comments

It’s exhausting being a buyer because it’s so easy to get outbid. It seems like finding a house is a bit like trying to buy the new PlayStation 5. Let’s talk about that today. How much are buyers actually paying above the list price? And if you’re not local, what are you seeing in your area?

A spring market in the fall: First, here is a big market update I did for SAFE Credit Union (40 minutes). Enjoy below (or here).

QUICK SUMMARY:

  • There isn’t just one amount buyers pay above the list price
  • The market isn’t the same in every price range.
  • We’ve seen huge growth this year between $10-20K
  • About 80% of sales are somewhere between below list and $20K
  • Not everything is getting bid up
  • About 40% of sales sold at list price or below last month
  • 2/3 of the million dollar market sells at list or below
  • Higher prices tend to pay more above list (when above list happens)
  • Only 3.5% of sales went $50K+ above the list price last month
  • Look to the comps. Don’t just blindly offer above the list price.

SKIM OR READ IN DEPTH:

How much are buyers paying above the list price? Here are some brand new visuals to show how much buyers are paying above the list price. These might take a minute to digest. This image basically shows the total percentage of sales in the market. For instance, in the visual below 31.4% of homes last month sold below the list price, 9.9% of sales sold at the list price, etc…

Under $400K:

Between $500-750K:

Million dollar market:

This visual compares last year with this year.

Here’s the same information but with numbers. Do you like this better?

HOW MUCH ARE BUYERS PAYING ABOVE LIST PRICE?

1) Mixed results: There isn’t just one answer that applies to every price range and escrow. 

2) The biggest change: In many cases buyers are tending to pay ten to twenty thousand over the original list price to secure a contract. About one in five buyers paid $10-20K over the list price last month. In some cases prices get bid up even more, but close to eight out of ten sales are somewhere between below the list price and twenty thousand above the list price. Keep in mind many buyers are getting a loan for the full contract price, so paying above the list price doesn’t always mean buyers are bringing that much cash to the table.

3) Not everything gets bid up: It might be surprising, but this month we saw about one in three sales sell below the list price. It just goes to show sellers have to price it right – even in this wonky market. We also have to be careful about saying “EVERYTHING IS GETTING BID UP” when that’s not true.

4) Million dollar market: The highest prices basically show if buyers are paying above the list price it tends to be more significant. But two thirds of all million dollar sales last month sold at either the list price or below the list price, so the bulk of homes in this range aren’t getting bid up like the rest of the market. Like I’ve said before, this is the most overpriced segment of the market.

5) Not sensational: Only 3.5% of all sales went fifty thousand over the list price last month, so let’s be careful about shining a spotlight on this tiny sliver and saying, “Everything is getting bid up $50-100K.” Nope.

6) Don’t offer above without looking at comps: Buyers, be prepared to offer above the list price, but don’t blindly offer $10-20K above without really considering the comps and advice from your agent. Remember, the market isn’t the same at every price range either.

7) Appraisers: These days appraisers are getting huge flack for “coming in low.” Look, sometimes appraisers are legitimately missing the mark, but other times properties are getting into contract way beyond what is reasonable, so the appraisal should come in “low”. Sellers, sometimes the highest offer isn’t always the best one if there is going to be an appraisal involved. And to my appraiser colleagues, our role is never to “hit the number”, but let’s be sure to account for the true temperature of the market in our reports.

Anyway, I hope that was helpful.

Questions: What stands out to you most above? What is it like right now in the trenches for buyers? Anything stories to share? Did I miss something?

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Filed Under: Market Trends Tagged With: advice for buyers, advice for sellers, Appraisal, high demand, market stats, Market Trends, multiple offers, offering above the list price, sacramento real estate blog, sacramento regional appraisal blog, sensational stats, trend graphs

Overpricing, multiple offers, & hot ranges

November 10, 2020 By Ryan Lundquist 10 Comments

The market is hot. But it’s not so hot that you can command any price you want. Today I have a quick post to show a few trends. These are brand new visuals with some great takeaways (I think). Enjoy if you wish.

1) MULTIPLE OFFERS

Huge change this year: There were 39.3% more multiple offers this October compared to last year at the same time. This speaks to how much more competitive the market has been lately. While we are experiencing a slight seasonal slowing right now, the market is far more competitive than it should be for the time of year.

Not everything: Last month 32% of listings had price reductions. In short, even though the market is super aggressive it doesn’t mean everything is selling above the list price.

10-20 Offers: This year we’ve seen substantially more properties with 10-20 offers compared to last year. The highest number of offers last month was 37 too (just in case you want to sound super smart).

Here’s a look at 5-10 offers too. What a difference!!

NOTE: Our MLS has two fields called “multiple offers” and “number of offers.” This is how I’m extracting the data.

2) THE MOST AGGRESSIVE PRICE RANGES:

This is geeky stuff, but it’s so important for understanding the market isn’t the same in every price range or neighborhood.

The most aggressive: The most aggressive price range in the Sacramento region is between $300,000 to $400,000 (not a shocker). The sales price to original list price ratio is 101.65%, which basically means properties in this range sold on average 1.65% above the original price. In short, the lower the price, the more aggressive the market is. Keep in mind there are few sales below $300,000, so don’t write home over that lower stat. 

The most overpriced range: This year we’ve had explosive growth with the number of million dollar sales as there have literally been twice as many over the past four months compared to last year. But this price range is also the most overpriced. On average sales above one million dollars last month closed about six percent lower than their original list price. At times million dollar listings are literally priced hundreds of thousands of dollars too high (or even millions). 

And one more visual to show last year vs this year…

Market update: In this market update video I talk quickly through eleven trends. I hope you walk away with some insight. Enjoy if you wish.

Free webinar next week: I’m doing a big market update next week for SAFE Credit Union on November 19th from 9-10am PST. It’s free to anyone and it’ll hopefully be some good background noise while working. Register here.

QUICK CLOSING ADVICE:

1) Price reasonably and you should be able to get at least a few offers.

2) Price too high and you’ll likely get zero offers (seriously).

3) Sellers, you don’t need to aim to get twenty offers. I suggest aiming for a few solid offers. My stats even show you don’t need 20 offers to get the highest price.

4) Sellers, aim for the market instead of that mythical unicorn Bay Area buyer who will mysteriously overpay for some reason.

5) Buyers, study your competition in your price range and offer accordingly. There is a good chance you may need to offer above list and have cash to pay any difference between the contract price and a lower appraisal. This is not easy on buyers, but it’s the dynamic out there right now.

6) Buyers, start looking at properties that have been on the market for 30 days or more. These ones are likely overpriced and it may be easier to get into contract on something like that.

7) Other. What else?

I hope this was interesting or helpful.

Questions: What are you seeing in various price ranges? I’d love to hear your take from your vantage point in the trenches.

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Filed Under: Market Trends Tagged With: advice for buyers and sellers, Appraisal, Appraiser, buyers, competitive housing market, housing market in Sacramento, market stats, Market Trends, Sacramento Appraisal Blog, sacramento regional housing blog, sales price to original list price ratio, sellers, stats

Crazy contracts & condos are less popular

September 22, 2020 By Ryan Lundquist 17 Comments

I have two things on my mind today. Let’s talk about condos and then some of the crazy contracts we’re seeing happen right now. Then I have lots of visuals for those who are interested.

CONDOS ARE NOT ALL THE RAGE:

It looks like condos aren’t so popular these days. During the pandemic buyers have been saying no thanks and instead focusing on homes with more space. No matter how you look at it there are fewer condo sales happening, and that’s telling. If you’re not local, what’s happening in your area?

MARKET NOT COLD: One thing I want to clarify is just because condos haven’t been as popular doesn’t mean the condo market is dull or cold. Inventory is still sparse among condos, so don’t expect to get the deal of a century. In fact, there is not an oversupply of listings among condos at this time. Inventory is really tight. 

CRAZY CONTRACTS:

It’s common these days to see the appraisal contingency removed and many buyers are even offering to pay above the appraised value (if it comes in lower than the contract price). Anyway, I’ve been getting lots of questions about this, so here are some thoughts:

1) Value is not found in the contract: The reality is value is found in the comps – not the contract. Technically the terms in the contract shouldn’t matter because the only thing that counts is comparable data. Of course I realize some appraisers are swayed by the contract, and that’s unfortunate. Ultimately if you find yourself worried about the terms, I’d recommend focusing instead on communicating well with the appraiser because the comps are the bigger factor.
 
2) Offering above the appraisal: When I see a contract that states the buyer will pay above the appraised value by a certain amount if the appraisal comes in lower, the practical part of me wonders if the buyer actually thinks it’s not worth what was offered. But since my job is to be objective, my curiosity about the buyer doesn’t mean anything for the appraisal. The bottom line is I cannot let that influence my perception of market value. Besides, offering to pay more might not be about the buyer’s perception of value at all. Instead it could be a strategy to get an offer accepted. And most of all, the comps are what matters – not what an individual buyer thinks about value.
 
3) Hiding information: I was asked recently if it would be OK to only give the appraiser the purchase contract without an addendum that had further terms. Look, I’m not a lawyer or broker, but from my perspective I’d ask that you please give the appraiser the entire contract instead of holding something back for whatever reason. In my mind when this happens it seems like the goal is to try to influence the outcome of the appraisal, and that doesn’t smell right. Let’s keep it transparent.
 
Anyway, this is a loaded topic. Lots of emotions. What are your thoughts? Any stories to share? Please do so in the comments.
 
MARKET UPDATE VIDEO: Here’s my latest market update where I unpack glowing rebound stats. Watch below (or here).
 

WAY TOO MANY VISUALS:

Here are some new visuals. You are welcome to use these in newsletters and social media with proper attribution. Scroll quickly or digest slowly.

I hope that was interesting or helpful. Thanks for being here.

Questions: What are you seeing with condos right now? What’s happening with contracts too? Anything you’d like to see change?

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Filed Under: Market Trends, Random Stuff Tagged With: aggressive market, buying during a pandemic, condos, Greater Sacramento appraisal blog, housing market in Sacramento, imbalanced market, inventory, market stats, pandemic market trends, sacramento housing stats, Sacramento Region Appraisal Blog, supply and demand, trend graphs

How much value does a pool really add?

February 18, 2020 By Ryan Lundquist 18 Comments

What is a built-in pool worth? I get asked this question all the time. Well, let’s look at some fresh stats to help show why there isn’t a one-size-fits-all answer.

New Pool Stats: I pulled some stats and I’m excited to share these. If you aren’t local, does your market look similar regarding pools? Also, what other property features besides pools could we look at this way?

BIG POINTS:

– There are more pools at higher prices
– There are less pools at lower prices
– The percentage of pools differs greatly by location
– Some areas have tiny lots, so there are less pools
– The market expects a pool in some price ranges

THE HUGE VALUE POINT:

It’s easy to get stuck giving the same value adjustment every time we see a pool, but the market doesn’t pay the same amount for a pool everywhere because buyers have different expectations based on location and price range. So a pool probably isn’t worth anything in Antarctica while it’s worth way more in Arizona. As local stats show, in some areas like Granite Bay, buyers hands-down expect a pool to be present while in other places pools are extremely rare. Of course just because a pool is not common doesn’t mean it doesn’t add value. I’m just saying this gives us pause to consider the value of a pool might not be the same everywhere. 

SORRY: I know I didn’t answer the question in my blog title, but that’s on my purpose. My goal is to give us something to think about rather than a bogus adjustment that isn’t going to apply everywhere. But if you do want to find out what a pool is worth, start comparing homes with and without pools to see if you can discern a price difference.

MARKET UPDATE VIDEO: Here’s a market update I did a few weeks ago. It’s about 40 minutes. Enjoy below (or here) if you wish.

SPEAKING GIGS THIS WEEK: On Friday I’m talking at the Gold County Women’s Council of Realtors. Then on Monday night I’m talking at the Real Estate Round Table (at a tavern). 

I hope this was interesting or helpful.

Questions: What stands out to you about the data above? What is the most or least value you’ve ever seen for a built-in pool? Anything to add?

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Filed Under: Appraisal Stuff Tagged With: Appraisal, Appraiser, built-in pool, El Dorado County, market data for sacramento, market stats, Placer County, pool data, Sacramento County, sacramento pools, value of a pool

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