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 and people you would not otherwise notice. Follow him on Twitter and check out his ebook, Context: Nine Key Condo Markets, 2.0.
A Cambridge agent recently confided to me about a listing the agent had taken that had aluminum siding, no parking and was on a busy street.
The agent feared that an aggressive list price would cause buyers to "pass" on even seeing this home, which, I was told, was "gorgeous." So, the agent persuaded the sellers to list it at a "restrained price," a price below the agent's estimation of market value.
How did it work out? "We got a ton of people in to see it and we got 10 people to make offers. And of those 10 offers, four or five of them were amazing." In the end, the home sold for 30 percent over the asking price and for even more than the broker's initial opinion of market value.
Another Cambridge agent I spoke with told me about some homes that came on for what appeared to be a reasonable price. "Not like the steal of the century," he articulated, "but at prices that at least made some sense." Nobody even took the listings to the bathroom for 90 seconds. They just put them out there under-inflated, and what was the market's response? Those places sold "for two or three hundred [thousand] over-ask," he told me.
Sure, some folks think the more you ask, the more you get. But could we be entering the "reasonable list price era," a time when sellers get the most by listing for the least? Maybe. The popularity of restrained list prices would explain why one breakdown I did showed that the majority of Cambridge condo sales went over instead of under ask. Under-inflated list prices would also explain why I easily found more than 90 Cambridge sales that in 2014 went at least $100K over ask.
Every agent knows there can be a thin line between pricing a home to sell and pricing it to sit. So, why should Realtors and sellers take the chance of pricing a home too aggressively? More reasonably priced homes always get more showings and offers, and in a seller's market, noting something along the lines of, "We're expecting six other offers," has been a real effective way to get buyers to go all in with their best bid.
But I wonder, what would happen in Cambridge and in the Hub in general if all the brokers pumped up their list prices to a price that had to be negotiated down, the way they do in the rest of the NFL... er, markets.
Our Bates By the Numbers archive [Curbed Boston]