Tuesday, March 10, 2015

Bidding Wars, How High Should You Go?

by Osman Parvez

Last weekend we engaged in two bidding wars on behalf of clients. The #1 question: "How much should we offer?"

As you know from reading this blog, inventory in Boulder is ~70% below the long term average. But not all is what it seems. Once again, it's a tale of two markets.  

Some listings are receiving multiple offers and selling the first weekend they hit the market. Others are stagnating for weeks (or months) without a single offer.   

The only way to know what's worth a premium and what's not is to deeply analyze market conditions specific to the property, something few of our competitors are willing (or able) to do

Take a look at the following: 




The chart above is an analysis of homes that sold for more than asking so far this year in Boulder. 59 houses under $1MM sold since January 1st. Guess how many received a premium? Only 8, or just 13.5% of sales.   

The premium for bidding wars (under $1MM) ranges from 0.7% to nearly 15%. This is a huge range of variability, although most premiums were in the 1% to 3% range. 

Which houses are worth a premium and which ones aren't? What factors drove the two bidding wars past 10%? How do you maximize the value of your dollar in this market? 

Sorry, that analysis is for our buyers and sellers only. We love rolling up our sleeves and analyzing market conditions because it helps us better advise our clients. If you're buying or selling a home in Boulder, call us at 303.746.6896. Make a smarter real estate decision. 

p.s. We've recently started receiving a lot of calls from buyers and sellers who are represented by our competitors. If you are under an exclusive agreement with another Realtor, don't call us. Call your agent.  



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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.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate.  
image:  DC Central Kitchen

2 comments:

  1. Interesting. Have you looked at properties under contract? I suspect the percentage of premiums would be significantly higher. As buyers, we have looked at a number of properties, and 100% of them have gone under contract for a significant premium. One example that we were considering is 1110 Poplar Ave, listing price $539k, now under contract for $637k. That's $98k over asking price, an 18% premium.

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  2. Until the deal closes, information on properties under contract is murky at best. Some agents disclose the high water mark while running a bidding war. Others do not. Anecdotally, it appears that bidding wars have been driving prices higher in March negotiations but we can't confirm that until the deals close.

    p.s. we took buyers to see 1110 Poplar and although it was obviously mispriced, it wasn't the right property for my clients due to the layout.

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