Here is the latest installment of Bates By the Numbers, a weekly feature by broker David Bates that drills down into the Hub's housing market to uncover those trends you would not otherwise see. This week, he looks at buyers offering more than the asking. (Last week, he looked at the hottest-selling condo tower in downtown Boston.)
Steve Carell enters a pawn shop and sees a World War II diver's knife he likes. Told the price is $2,500, the comedian responds, "You know what, it seems a little low." He pauses and says, "I will give you $4,000." Laughter ensues.
A similar scene repeats itself several times a week in the Greater Boston condominium market, but it's not nearly as funny. Sellers and their agents communicate the price of a condo to buyers, and the market's response is, "You know what, it seems a little low." A short time later, multiple offers show up, and, before you know it, the condo sells for more than the asking price.
It wasn't always that way. My analysis of MLS reports show that, in the first few months of 2011, Boston condos sold on average at 96 percent of the asking price. In fact, some condos even started a little high and had to adjust their prices down. So, although the accepted offer was 96 percent of the listing price, it represented only 92 percent of the original listing price.
The beginning of 2012 was a stronger market than 2011, and Boston condo sellers took offers that on average were 97 percent of the asking price, and 94 percent of the original asking price.
In today's condo market, however, negotiating room seems about as necessary as the coal room. According to a recent breakdown I did on MLS, Boston condo buyers on average are paying 99 percent of the asking price and 98 percent of the original ask. As well, condo sellers are, at an unprecedented rate, accepting over-ask offers.
Over a two-month stretch in Brookline in 2013, the Greater Boston condo market where over-ask offers are most common, more than 50 percent of the sold condos had sales prices that were greater than their listing price. In fact, nearly 40 percent of the sales prices were at least $10K over the asking price and nearly 30 percent were at least $15K over the ask. A few went even higher. Three Upland Road, #3, was $30K over ask, and the buyers of 652 Washington Street, #5, paid $36K more than the listing price.
Brookline may be the most prolific market for over-ask offers, but it was by no means the only place where sales prices were on occasion significantly above asking prices. In Somerville, 400 Washington Street, PH1, took an offer nearly $40K over the list price. And, in Cambridge, 37 Linnaean Street, #2, took an offer that was more than $100,000 over the asking. Incredible! The South End closed the condo with the highest above-ask in Boston so far this year: 61 Chandler Street, #2. It went for $126,000 more than the asking price. Asked why the home sold so much over the asking price, Richard Egan, the buyer's agent on the deal, said that at $760 a square foot the property was "underpriced."
If you don't want to be in a bidding war this spring, you might have to raise the white flag for buying many of Boston's most sought-after condo. If, however, you don't mind the competition, just act like Steve Carell, and whatever the asking price is—even if it seems absolutely ridiculous—casually respond, "It seems a little low, I will give you ?" and suggest a higher price. LOL.
· Our Bates By the Numbers archive [Curbed Boston]