Some Realtors and Sellers very carefully and tactically price their houses competitively and put the property on the listings on the open market. Putting up the property lower than the actual price creates a sense of affordability and aspiration to buy that property. Real Estate Agents and sellers love this flood of profitable activity. They are receiving record-breaking prices for a house that too in very short time.
Potential homebuyers that hope to buy face emotional and stressful experiences with nothing getting at the end of the so-called bidding wars and auctions.
Every buyer faces the competition from other different types of potential buyers. There might be a buyer who is the first time buyer of the real estate property. These buyers submit the offer under asking. These are generally a few strong offers over asking, some without condition and with the condition, and these offers are mostly around the true market value of the property.
The offer can be significantly higher than that of the nearest competitor offer. It can be of $20,000, $35,000, and $60,000 and in some unusual conditions in excess of $110,000 extra than the highest offer, generally with no situations, or what we call a “strong deal”. And, the buyer made this offer is what the real estate agents call “The Right Buyer”.
The Right Buyer is one every seller and real estate agent wait for. This buyer is either a fed up with looking and losing many other properties or an international investor or buyer. The general public is fed with the information that the listed property is sold for thousands of dollars over the asked price, but the crucial question is for above how much market value it was sold. There is much difference between the asking price and the market value. The listing price is simply for the marketing purpose.
When the listing price is higher than the Market Value – Sellers prepare themselves to bring down the price while negotiating.
When the listing price is equal to the market value – Sellers are straightforward.
When the Listing price is lower than that of the Market value – They opt for a Bidding War!
So how come every second house has “Sold Over Asking” Sign board?
Assume that the property’s market value is $725,000 and the listing price is $599,000, but the seller ends up getting $725,000. Now, is it really sold over asking? Did the seller ask for $599,000 or the real estate agent negotiated and pulled $725,000? Absolutely Not!
The property was deliberately listed at the price lower than that of actual price to initiate the bidding war, but the results are not the same every time. The regular “Sold Over Asking” sign boards allude the every listed property on the list being purchased at prices greater than their value – which is shaking the whole real estate market.
As they are doing it to attract more Listing Business they should look at this as a Bad Business Practice and RECO should step in to change the Advertising Guidelines and what’s best for Public Interest and Real Estate Market future.