Here's the latest installment of Bates By the Numbers, a weekly feature by Boston real estate agent David Bates that drills down into the Hub's housing market to uncover those trends you would not otherwise see. Follow him on Twitter and check out his ebook, Context: Nine Key Condo Markets, 2.0.
Today, nobody knows a home's market value.
Not brokers, not assessors, not even Bo Jackson.
In the markets of real estate past, buyers tried to negotiate. Today, they try to win. Big difference. Negotiation involves things such as understanding the other side's goals, win-wins and finding common ground. Winning, well, winning just involves doing whatever it takes.
While list prices are traditionally determined by how a home's features and benefits stack up against comparable homes, today's sales prices are more often than not determined by how many offers are on the table and how many bidding wars those interested buyers have lost in the past. In the end, the two prices—list and sales—can be as afar apart as wholesale and retail or retail and MSRP.
In reviewing July closings, it didn't take me long to find 76 Hub condos that sold for more than $50,000 over-asking. Additionally, around half of those 76 went for at least $75,000 over-ask and about a quarter topped the list price by no less than $100,000.
If that sounds incredible (and it should) consider this: Eight Hub condo sellers took $150,000 more than their asking price to the bank and four Hub condo sellers went to the registry of deeds to cash offers that were more than $200,000 over ask. Unbelievable! It wasn't so long ago that in that game that Realtors sometimes like to play, "Guess What It Will Sell At," the highest guess was the list price. Boy, how times have changed.
Additionally, in the past, things such as bad layouts, weak locations and poor condition often provoked lower offers and longer market times. Not today. Take, for example, 71 Weld Hill, #3, a condo in a secondary JP location, with walls which follow the pitched roof line. According to the listing remarks, this condo is "just waiting for your personal touches," a phrase that can be easily translated to, "Buyers beware, this condo needs some work." Are you sensing an opportunity to negotiate? Well, forget about it. After just 12 days on the market, Weld Hill went $18,000 over ask.
Then there's 11 Tufts Street, #2, a Cambridgeport condo whose listing remarks communicated that a sizable amount of the condo was in need of renovations as it hadn't been used in eight years. Do you think you could've thrown in a low-ball offer? Well, think again, because in just five days Tufts sold for $20,000 over ask.
You can wax nostalgic all you want about how it used to be that many buyers would stay clear of basement units; but now, even these condos with their head-high windows can provoke bidding wars. Take, for example, 471 Washington Street, #B, in Brookline, which listed at $599K but sold for $655K.
And as much as I am amazed at how this market makes outrageous prices look commonplace, and as much as I play the game and do everything I can to help my clients win, I can't help but think of 64 Marion Street, #1, a condo which sold for $1,150,000 in East Boston in 2005. Sure, Marion was an exceptionally large, completely renovated condo in a former firehouse, but it also turned out to be the first and last East Boston condo to garner $1M or more.
· Our Bates By the Numbers archive [Curbed Boston]