How much are buyers paying? The facts might surprise you. In our latest Fresh Listings newsletter, I analyzed the most recent sales in Boulder and Denver.
The analysis is compelling. Median paid over asking, in deals where there was a perceived bidding war, exceeded 7%. Meanwhile, a surprising number of homes actually sold for less than list price.
That's right, I'll say it again: A surprising number of homes sold for less than the list price last month.
On the ground, we're seeing buyers continue to play herd ball and target some listings to the exclusion of others. It's creating quite a roller coaster marketplace.
Meanwhile, some savvy buyers are scoring big wins, despite the frenzy. What looks like buyer insanity to the untrained eye can be a very rational move. Take 5084 Cottonwood Drive, for example. Did the buyer overpay when they submitted an offer ~$200,000 or 22% over asking?
On the surface, it's a large 60's era ranch with a full basement. Other than a remodeled (but already dated) kitchen and a cheap sunroom addition, there was really nothing special going on with this particular home. Most of the finishes were decades old. The home needed a thorough update. So, what drove the bidding war?
Dig deep into the data for this specific property type and location, and you'll find extremely limited supply. Meanwhile, increasing demand is driven by demographics. The Boomers, the largest and wealthiest generation in history, aren't getting any younger. Is the market picture beginning to become clearer? This home will be in demand well into the future.
The location is your second hint. During the past twelve months there were only 11 single story, ranch-style sales in this country club neighborhood. Even at a sale price of $1.08M, 5084 Cottonwood didn't even top the list of recent sales. Not even close. In my opinion, it was priced low intentionally.
So, who left money the table? It wasn't the buyer. Even if the new owner goes crazy with their future renovations, they're unlikely to touch the high-water mark. Two recent sales establish a benchmark that is at least $600,000 higher. That's plenty of cushion for customization and more than justifies the waiting period for quality contractors. Could the seller have squeezed more from the marketplace? Possibly, but not without risking a listing that pushes past the summer selling season. The cost of certainty was money potentially left on the table.
The bottom line? Strategies and tactics must evolve with a shifting marketplace. This applies to both buyers and sellers.
Pro tip: The key to intelligent real estate decisions is relevant, actionable data. If your agent is pressuring you to offer way over list price without analytics to back up their advice, choose a better agent.
Osman Parvez is the Founder and Employing Broker of House Einstein. Originally from the Finger Lakes region of New York, he lives in Boulder with his wife and their Labrador Retriever. He has been a Realtor since 2005.Osman is the primary author of the House Einstein blog with over 1,200 published articles about Boulder real estate. His work has also appeared in many other blogs about Boulder as well as mainstream newspapers, including the Wall Street Journal and Daily Camera. For more information, click HERE.
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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties. House Einstein strongly recommends conducting rigorous due diligence and obtaining professional advice before buying or selling real estate.
