June 6, 2013

Buyers offering more than the list price for an existing home?

danBy Dan Dolan
Dan Dolan Homes

The discussions were particularly animated at a recent real estate meeting that I attended. For those of us old enough to remember the vintage, “Can you top this?” radio program, someone would mention an event, and another would “top it” with an even more exciting situation. For instance, some agents were describing how quickly their recent resales had sold. One agent described a listing of his that had sold in three days. By way of topping it, another indicated “the ink on her recent listing wasn’t even dry” when she sold it. Along those same lines, yet another agent indicated that several of his resales had sold at full list price. Two other Realtors reported recent sales that had taken place above list price—“just like in the 1970s,” one of them added.

I couldn’t report any events quite that spectacular, but I could say that two recent buyers of our new homes at Stone Gate East had seen their respective existing homes sell within two weeks of being listed. By any standards, that’s really good. And the fact is that sales of existing homes in the Quad-Cities have been extremely strong in recent weeks, and that’s both good news and bad. It’s certainly good for the sellers, who complete a fast transaction at a very favorable sales price. But in a way it’s also “bad,” because it reflects a situation in the market of very low product inventory and limited availability of the size, type and price point of homes that
certain other buyers cannot find to allow them to trade up.

I mentioned in last month’s article in these pages that I encounter many potential buyers at our weekend open houses who are looking to “make the move in another year or two.” For some, there may be a need for that delay. For others, the delay is quite arbitrary, and I suspect it may be a way largely to postpone the decision date. But given the current strength in the resale market, I make every effort to encourage those who can take action now to give serious thought to doing it now. For one thing, their new home will surely cost more in a year or two. Secondly, the current market for the sale of their existing home is so strong that they are likely to secure a very favorable price for it. Recently, I saw one of my colleagues with a large yellow badge on his lapel that read “List it and it will sell.” And, I agree. It would be a shame for anyone planning on selling their existing home in the near future to miss out on this unique situation in the market. And since it took some 40 years since 1970 to see “bidding wars” on resale prices, who knows when we’ll see those conditions again. For those who can, I would suggest: “Do it now.”