IN TODAY’S SAN JUAN ISLANDS REAL ESTATE MARKET, LISTING PRICES ARE LIKE AN AUCTION’S RESERVE PRICE
For generations, the process of buying and selling a home never really changed. Many homeowners in the San Juan Islands would try to estimate the market value of their house, and tack on a little extra to give themselves some negotiating room. Many would then consult a local broker for a more accurate figure based on comparable properties and that figure would become the listing price. Buyers would then try to determine how much less than the full price they could offer and still get the home. As a result, the listing price was generally the ceiling of the negotiation, with the actual sales price almost always somewhat lower than what was listed. It was unthinkable to pay more than what the seller was asking.
Today Is Different.
The record-low supply of homes for sale coupled with very strong buyer demand has led to a rise in bidding wars on many homes. Because of this, homes today nationally and in San Juan County often sell for more than the list price. In some cases, they sell for a lot more.
According to Lawrence Yun, Chief Economist at the National Association of Realtors (NAR):
“I would say it is hot, that is the one word description even with the sales decline, for every listing there are 5.1 offers. Half of the homes are being sold above list price.”
You May Need To Change The Way You Look At The Asking Price Of A Home.
In this market, you likely can’t shop for a home with the former approach of negotiating to a lower price.
Due to the continued 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. In an actual auction, the seller of an item agrees to take the highest bid, and many sellers set a reserve price on the item they’re selling. A reserve price is the minimum amount a seller will accept as the winning bid.
When navigating a competitive housing market, think of the list price of the house as the reserve price at an auction. It’s the minimum the seller will accept in many cases. Today, the asking price is often becoming the floor of the negotiation rather than the ceiling. Therefore, if you really love a home, know that it may ultimately sell for more than the sellers are asking. So, as you’re navigating the homebuying process, make sure you know your budget, know what you can afford, and work with a trusted and local advisor who can help you make all the right moves as you buy a home.
The Bottom Line.
Someone who’s more familiar with the housing market of the past than that of today may think it’s foolish to offer more for a home than the listing price. However, frequent and competitive bidding wars are creating an auction-like atmosphere in many real estate transactions right now. Let’s connect today so you have a trusted real estate professional on your side to provide the best advice on how to make a competitive offer on a home.