Are Underpriced Homes Fueling Bidding Wars?

The number of homes for sale is at the lowest point in more than 10 years, but with buyer demand still high, many markets are seeing bidding wars. A TIME magazine article recently asked: “Are buyers being manipulated into overbidding for the relatively few attractive homes on the market?”

Some real estate professionals say that homes are being underpriced in order to ignite a bidding war.

“Most people are not pricing at market value,” a real estate professional told the San Francisco Chronicle. “Even in this market, you don’t want to overprice.”

For example, the San Francisco-based agent said a two-bedroom townhouse in the area was priced at $659,000  recently, even after a similar townhome had sold a year ago for $675,000.

“We priced it intentionally to get multiple offers and sell quickly,” the agent says. The townhouse attracted nine offers and sold for 15 percent above the asking price — $755,000.

Bidding wars have become commonplace in markets like Denver, where half of the new homes on the market are selling in less than 30 days. In Northern and Southern California nine in 10 homes are attracting bidding wars, as well as two-thirds of the homes for sale in Boston, New York City, Seattle, and Washington, D.C., the TIME magazine article notes.

“The only question is not whether a new listing will get multiple bids but how many it will get,” says a Sacramento, Calif.-based real estate professional.

Source: “Forget Lowballing: Bidding Wars Return in Hot Housing Markets,” TIME (April 30, 2013)

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Get Ready for Big Bidding Wars This Spring

With tighter inventories of homes for sale, buyers are finding increased competition through bidding wars. But the bidding may not be between only one or two other buyers — more bidding wars are popping up where dozens or even hundreds of other buyers are all competing for the same property.

“The only question is not whether a new listing will get multiple bids but how many it will get,” Kris Vogt, who manages Coldwell Banker offices in the Sacramento area, told CNNMoney.

For example, a home in Elk Grove, Calif., reportedly received 62 separate bids, with the final sales price more than $150,000 above its $129,000 asking price. In Cambridge, Mass., real estate brokers stopped accepting bids after the tally reached 250 bids for two condos listed at $800,000 each. The two condos ended up selling together for $2 million.

Seventy-five percent of real estate agents with the brokerage Redfin surveyed in March say their clients have faced multiple bid situations for properties — up from 56 percent in late 2011.

Bidding wars appear to be most prevalent in California. Ninety percent of homes sold in San Francisco, Sacramento, and throughout Southern California saw multiple bids during the month, CNNMoney reports. What’s more, at least two-thirds of listings in Boston, Washington, D.C., Seattle, and New York had bidding wars for homes too.

Meanwhile, inventories of for-sale homes continues to be low. The National Association of REALTORS® reported a 19.2 percent drop in inventories year-over-year in February.

Source: “The home bidding wars are back!” CNNMoney (April 4, 2013)

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