Archive link if you are paywall’ed out: https://archive.ph/226bI
The couple recently found a three-bedroom, two-bathroom chalet-style house in Berkeley listed for $799,000, which seemed relatively affordable for the area.
The house needed significant work, including plumbing upgrades, but the couple wasn’t deterred. “It was like a dream house,” said Ms. Rohrer, who works in human resources for a tech company. (Her husband works at the University of California, Berkeley.)
The couple offered well above the asking price: $850,000. They knew there would likely be multiple offers but they also needed to save some money for the necessary repairs. They didn’t get the house.
They didn’t even come close. The home sold for $1.4 million — nearly double its asking price. “It’s terrible,” she says of her house hunting experience so far. “Completely terrible.”
Ms. Anderson, who is also a real estate agent with Compass, paid $786,000 for the home a decade ago and spent about $500,000 on the remodel. She thought they might be able to get above $2 million for the 3,000-square-foot home — then she saw a neighboring home sell for $2.6 million.
But that didn’t mean she was going to price it anywhere close to that. “You can never price a home too low, or that’s sort of the theory,” she said. With some nudging from her agent partner, Katie Krembs, she listed her home for $1.795 million, which she admits made her nervous at the time, since it was far less than it was worth. “But at the end of the day, which area of the store gets more attention? It’s always the sale rack,” she said. “The goal of the Realtor is always to get as many eyes as possible on the house.”
Ultimately, Ms. Anderson’s house sold for $3.05 million — or more than 70 percent over the asking price. Ms. Anderson said several of the offers were close to the final sale price and they simply chose the highest offer, which exceeded her wildest expectations. “$3.05 million is crazy,” she said.
That’s the right theory.
Ms. Koch, who works for a technology company, and her husband, an assistant principal, decided to change their search parameters to include only homes that had been on the market for 20 days or more, longer than the typical two weeks. Their thinking was that those homes might be the ones they had the best shot at because they had received the fewest offers. They found a three-bedroom home in Rockridge priced at $1.185 million, which appeared to be in the ballpark of the home’s true market value based on similar homes that had sold recently in the area. Her broker told her the “transparent” pricing had confused buyers and left the sellers with no immediate offers.
The seller then lowered the price to $895,000, which Ms. Koch said she thought probably confused buyers even further.
They won the house with a $1.2 million offer and moved in a couple months ago with their 9-month old baby. “You really do have to learn to play the game,” she said.
Exactly. You priced it right at the money and people still tag on an extra 20% expecting a bidding war. End result: you priced it too high.
When in Rome, do what the Romans do. Always, always, price it way below the true value.
To hell with bidding wars in the ultra expensive Bay Area - it’s just click bait for a National audience. Why does the NYT not cover places like Greenville SC, where you can still get nice homes at asking price below $500k? After all, that’s the real America
Leave us to suffer in silence, living in our needlessly expensive corner of the country…
The kind of people who read NY Times can be understood from this user comment:
Given that we are still in the middle of a pandemic, this practice should be condemned as down-right unethical; They’re attracting crowds of people to a single location under false pretenses, effectively creating a public health hazard.
I was looking for a house for a few months before giving up. I’m fully vaccinated but also 6 months pregnant with a history of asthma so I am trying to take only very calculated Covid exposure risks. I went to an open house a while ago where I overheard the sellers agent bragging that he priced the house “aggressively low” and in doing so had attracted “over 300 people” to the open house the weekend prior, most of which he joked “had no chance of being a high bidder”. When asked he basically admitted that the seller was not willing to accept a bid that was less than about .5M above the asking price. I was disgusted to realize that I’d been duped into risking my health and the health of my unborn child by falling for the games played by these unscrupulous and greedy sellers and agents. I’ve since decided to suspend my house search chiefly to avoid such a scenario, and I’m not alone. Many would-be buyers are tired of being jerked around , especially when we are risking more than just our time.
That “price it low watch it go” strategy only works when there are 10 offers per house. Could backfire in a buyers market.
Huh? What is a buyers market?
Actually, she’s right… The agents better hope their vaccines work better than the average…
Strange pricing action for this house. They initially priced it at $2.988M (I.e., just under 3M). It did not sell and sat around on the market. Then they reduced the list price by 400k to $2.588M. At that stage, one would have expected it to sell for around $2.75M (in between original and new reduced list price). But surprisingly, it sold for $3.05M.
What’s going on, I wonder?