About a year ago, I had a client who lost a bidding war by less than five thousand dollars on a condo in the $450,000 range. If that's all you hear, it doesn't sound so bad. It happens right?
Here's the problem:
This was their last shot at affording a home. Prices were (and still are) going up and they quickly got priced out of the market completely. Similar units in the same condo are selling for about $30,000 to $40,000 more today than they were a year ago.
A few quick takeaways:
They still don't own.
The same exact condo is almost 10% more expensive today.
The extra $5,000 they would have spent would have turned into an extra $25,000 in value.
Why this happened:
There were two buyers. One who saw all the condos in the area, and one who only saw two condos, but made all the decisions. The "Decision Maker" only saw two condos, and we wrote offers on both. They lost both offers because they wouldn't come up higher on price. They wouldn't come up higher on price because they didn't see the "value" in the homes. That's because they only saw two. They only saw the good ones, never the bad ones that the other buyer and I sifted through for weeks. We knew the value, but the decision maker did not.
Most buyers act this way. I have proof... My last listing had 17 offers and we closed well over asking price. At least 80% of the offers were right at Asking Price or under. Only 20% of the offers were any good. We sent counter offers back to everyone, and none of the 80% responded.
They got hung up on the listing price. Actually, it was how much they have to pay over the list price, and didn't pay attention to the actual value. In fact, the buyer who beat the other 16 offers still got the home under value even though he paid well over asking price.
But try explaining that to the other 16 buyers still on the market writing offers.