More North Shore craziness (Boston, Lexington: comparable sales, for sale, real estate market)
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I'm still looking! What a feeding frenzy it is out there though... Here is my latest example of the real ugliness that the local real estate market has become for buyers.
Town of Middleton, went to open house with probably 60 people there. Bad craziness with lots of young families and luxury SUV's. Uh oh. 3 bed 2.5 baths in nice area, nicely updated, but 2000 square feet. Nothing huge or fancy. Listed at $489. Went home and bid $499 after discussing the craziness with our realtor. I'd never ever wanted to bid over list on anything, but I did here because it was a nice place in a great school district and the open house was a nuthouse.
After our bid was about to expire, realtor called back and said the sellers had a lot of offers and needed some time. Went in with a new bid of $500 and a nice personalized letter, pictures of the dog, the whole bit. I figured I was solid, brand new pre approval, etc.
Realtor called the next day. 10 offers, highest $520. 4 had "significantly" more than 20% down. No dice.
So this is a place with a 'zestimate' on pillow (I know, not the most accurate) of $458, and a tax assessment of $451 going for $520?!?!?!? Best I can figure is since the comps haven't caught up with the market (and won't for at least 3-6 months as people close) there is NO WAY the bank is going to appraise these places for that much. BUT the kicker is there are apparently a bunch of folks out there with plenty of cold hard cash to pony up. Maybe they can make up the difference? If/when this bubble bursts though they will be so far underwater they're going to need scuba gear and a decompression table to get up!
It seems the people who call this a "bubble" are the ones who lost out on the over-ask bids. You were in the thick of it, and if you had won the bid, you probably wouldn't feel as bitter as you do now. If you chase after what lots of others chase after, then you better have some firepower under your sleeve. Good luck hunting for that house in that great school district!
Silver lining in everything! Sometimes only way to win, is not to play. Realtors know who to play, and whole "show" was not put with you in mind. I wonder if "lucky winner" will feel so lucky when the rush of adrenaline wears off. Middleton is not worth that much war and bidding, so sucker gambled his down-payment away. Hope they like the house!
Last edited by kingeorge; 03-17-2013 at 05:00 PM..
nshorema, you're absolutely right. Appraisals have not caught up with the prices that buyers all of a sudden are willing to pay and in recent weeks I've been hearing more instances of the appraisals coming in lower than the offer price. If someone else won and overpaid, I say better them than you.
Just an fyi re: sites like Zillow, they are rough estimates. They're based on public data and often are based on inaccuracies. For example, they often don't take into account recent home remodels or have the ability to really account for variances in neighborhoods. They're an algorithm and are a useful place to start but wouldn't be what I'd rely on to hone in on the value. Your agent should be able to share very recent home sale data of comparable sales to help get you closer to a number - and help you make a decision about a cutoff point in a bidding war.
Best of luck in this crazy market. All I can say is we're anxious for more inventory!!
I'm still looking! What a feeding frenzy it is out there though...
It is INSANE out there. Early on in the spring when I had to wait in line in order to get into an open house, I should have known it would be this crazy. Any property that's reasonably priced is gone in two days. Most agents with new listings are hosting an open house both Saturday and Sunday otherwise the homeowner would have to be out the entire weekend to accomodate all the individual showings. It's almost impossible to even see the house at the OH through all the perspective buyers walking through. Offers are usually reviewed on Monday and there are almost always more than one.
Quote:
Originally Posted by nshorema
After our bid was about to expire, realtor called back and said the sellers had a lot of offers and needed some time. Went in with a new bid of $500 and a nice personalized letter, pictures of the dog, the whole bit. I figured I was solid, brand new pre approval, etc.
Realtor called the next day. 10 offers, highest $520. 4 had "significantly" more than 20% down. No dice.
A lot of these homes haven't closed yet, but comping out a house in Lexington recently I noticed a lot of closed sales that were $20K, $30K, or even $50K over asking and these were homes in the 7's and 8's.
Quote:
Originally Posted by nshorema
So this is a place with a 'zestimate' on pillow (I know, not the most accurate) of $458, and a tax assessment of $451 going for $520?!?!?!? Best I can figure is since the comps haven't caught up with the market (and won't for at least 3-6 months as people close) there is NO WAY the bank is going to appraise these places for that much. BUT the kicker is there are apparently a bunch of folks out there with plenty of cold hard cash to pony up. Maybe they can make up the difference? If/when this bubble bursts though they will be so far underwater they're going to need scuba gear and a decompression table to get up!
The Zestimate and the tax assessment are the two worst things you can use to judge the value of a property. I sold a condo not too long ago and the Zestimate was 30% less than what I sold it for. The tax assessment was a little closer, but if you know the way assessed values are generated then you'll realize there's a reason why they never match up with market value. The only thing worse than these numbers is trying to value a home in the Boston area using price per square foot.
If you put down enough money as a downpayment, the appraisal becomes a lot less important. It sounds like the people who outbid you will not have a problem with financing. These houses will become comps and they will help to support future sales.
Quote:
Originally Posted by kmann-sherborn
Just an fyi re: sites like Zillow, they are rough estimates. They're based on public data and often are based on inaccuracies. For example, they often don't take into account recent home remodels or have the ability to really account for variances in neighborhoods. They're an algorithm and are a useful place to start but wouldn't be what I'd rely on to hone in on the value. Your agent should be able to share very recent home sale data of comparable sales to help get you closer to a number - and help you make a decision about a cutoff point in a bidding war.
You're being FAR too nice to Zillow. I wouldn't even call the Zestimate a good place to start. What I would call it is a disservice to real estate consumers. Zillow cares nothing for data accuracy. They just want to sell leads to agents and line their pockets.
It is INSANE out there. Early on in the spring when I had to wait in line in order to get into an open house, I should have known it would be this crazy. Any property that's reasonably priced is gone in two days. Most agents with new listings are hosting an open house both Saturday and Sunday otherwise the homeowner would have to be out the entire weekend to accomodate all the individual showings. It's almost impossible to even see the house at the OH through all the perspective buyers walking through. Offers are usually reviewed on Monday and there are almost always more than one.
Mike, is somewhat typical for this time of year? The peak of the real estate season is spring and summer right? So doesn't it make sense that now would be a great time for sellers? Buyers are just waiting for the homes to go on the market and the sellers that list just before the spring time rush are having great luck.
Of course the low interest rate and maybe somewhat increased consumer confidence help.
Mike, is somewhat typical for this time of year? The peak of the real estate season is spring and summer right? So doesn't it make sense that now would be a great time for sellers? Buyers are just waiting for the homes to go on the market and the sellers that list just before the spring time rush are having great luck.
Of course the low interest rate and maybe somewhat increased consumer confidence help.
It's usually busier this time of year, but nothing like this. There are far fewer homes available for sale compared to recent years and my hunch is that with the press writing that interest rates are on the rise many buyers have come into the market earlier than they normally would have.
The home inventory in our area is at an eight year low. That's part of what's driving this craziness.
Mike, I also have concerns about these third-party sites and worry that some of the information is quite misleading. There is some useful data you can find on some sites, but ultimately many of them seem to create more confusion. Not a good thing in an industry that needs to build more trust among consumers.
What's the point you are trying to make here? You're bitter because you were outbid by $20K or 4%? If I liked the house that much I sure would have coughed up $525K to have the winning bid. That's only 5% more than your "best" offer - about $120 per month - for a house that you will live in for a long time and raise your family. Getting beat for just a few percentage points is short sighted.
You don't have knowledge of what a bank will or will not appraise a house for, don't let your preconceived notions or some bogus value from Zillow impact your shopping. Home prices really are not in a bubble, in most cases we are still 10% below the highs of 2005 and 2006 and interest rates are considerably lower now than they were in those years so people have more buying power today.
Good luck with your house search but it sounds like you're going to have to man up if you want to be in the game this Spring.
What's the point you are trying to make here? You're bitter because you were outbid by $20K or 4%? If I liked the house that much I sure would have coughed up $525K to have the winning bid. That's only 5% more than your "best" offer - about $120 per month - for a house that you will live in for a long time and raise your family. Getting beat for just a few percentage points is short sighted.
You don't have knowledge of what a bank will or will not appraise a house for, don't let your preconceived notions or some bogus value from Zillow impact your shopping. Home prices really are not in a bubble, in most cases we are still 10% below the highs of 2005 and 2006 and interest rates are considerably lower now than they were in those years so people have more buying power today.
Good luck with your house search but it sounds like you're going to have to man up if you want to be in the game this Spring.
Do you really want to argue that Re prices of "bubble years" in RE, prices that have plunged the whole world economy into deep abyss (that we are still trying to climb out of) are good and reliable benchmark for RE value? You have just proven that bubble mindset is well and alive. Price inflation and higher costs of living are not our long term friends here in MA, especially in the light of our inept, tax hungry government, huge municipal unfunded liabilities, inferior infrastructure. Should we be investing in infrastructure? Yes, but forget it. We are busy chasing our tails in same old circles. MA is vulnerable, and we have no solid game plan for 2st century, except re-inflating bubbles and rehashing old myths of us being so much more exceptional than the rest of the country. When all else fails we will have our high taxes, potholes, and casinos.
For young buyers out there: educate yourself, learn to negotiate, do not get intimidated easily. Also take this to heart: you are making money in RE when buying. High selling price is a testament that you bought well and smart. We have few homes on the market right now, because whole generation of buyers lost money when they bought! Good luck.
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