I’ve only ever bought two homes in my life. One was in Pittsburgh, which was (and probably still is) a buyer’s market. When I left Pittsburgh, it took us two agonizing years on the market to sell our home. (And it was a pretty awesome, huge, brick home, too — four beautifully finished levels, 4+ bedrooms, detached garage, terra cotta tile roof, great location, stained glass windows … even a damned full-sized sauna! Sold it for $155k, which wouldn’t buy a fixer upper in many other markets.)
We then bought a home in Portland, Oregon at the time. It was a different market back then (2010) from Pittsburgh, of course. But, as I recall back then, if a home went up for $200k, you could actually buy it for $200k.
That was something I always believed about the housing market because I’d never experienced a seller’s market — namely, that, if you put something on the market for a price (say $350k), someone could actually come to you with that $350k and buy the home.
Nope… that’s not how things work here in Portland, or I suspect any other huge, crazy market. What they do now is this: Let’s say they want $375,000 for a home, and that’s their bottom line. What they do is put it on the market for maybe $335,000.
In a seller’s market, the market is saturated with cash-happy investors who know the current and future value of every property available. And the sellers know that the buyers know the value. So, they offer it up undervalued, and let the market fight it out.
What it means for the buyer, though, is that if you see a good deal out there, you can’t simply put in an offer at or below the list price. I’ve learned this now twice! Both times, we actually offered above the list price — one house we offered $331k on a $325k listing, kind of as a show of faith. It’s like saying, “Hey, I like your house that you have listed for $325k so much, I’m giving you a $6k bump, just to kind of show my enthusiasm.”
Nope… lost that deal. They had it on the market one day, and got 9 offers.
Next deal… a little 3BR bungalow-ranch deal at $355k. We offered $366k. So, same deal, with an $11k bump this time! Nope… they didn’t accept, apparently because they figured a better offer would be coming in.
I’m still trying to wrap my head around this. Someone says “I’m putting my home out there for $355k.” We respond with “Awesome, here’s $11,000 free dollars.” And then they say “Nah, someone will give us more.”
I know it’s all a game, but it’s a strange game.
✍🏻 Jim Dee maintains his personal blog, “Hawthorne Crow,” and a web design blog, “Web Designer | Web Developer Magazine.” He also contributes to various Medium.com publications. Find him at JPDbooks.com, his Amazon Author page, Facebook, Twitter, Instagram, LinkedIn, Medium, or via email at Jim [at] ArrayWebDevelopment.com. His latest novel, CHROO, is available on Amazon.com. If you enjoy humorous literary tales, please grab a copy!