2014 Mar 10th

How Much Over Asking?

The question of the day is “how much over asking do I have to bid” when there are multiple offers.  My answer is always the same.  You should pay one dollar less than the amount where you don’t care if the other guy gets the property instead of you.

We agents have no way of knowing which properties receive multiple offers or how many they receive.  When there are multiple offers, we don’t know what the other offers are even when our buyers are involved.  We don’t know why the seller picks one buyer over another (though it is often a combination of price and terms like deposit amount and closing date).  But I can tell you this – multiple offers have become the norm today.

I looked at all 2 bedroom or bigger properties on the MLS that closed since June of 2013.  Of 181 closings here are the stats:

Now, keep in mind that not all of those 76 necessarily involved multiple bidders.  I often advise buyers that if they really want a property, and come in first with a strong (i.e., full price) offer, they may put off other buyers.  But I found it interesting, nonetheless, at how many deals were over asking.  I suspect if I were to repeat this exercise in 6 months, which I will, the results would be even more startling.

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  1. Gilby

    Probably depends on the level of inventory that comes onto the market. If the inventory stays low, there will continue to be multiple and over asking offers. Amazing how little movement there is in the market and such low inventory….what are sellers waiting for? Or is Hoboken becoming more like other areas where people buy to stay and not to flip….which was the norm for many years?

  2. Peter Kim

    Depends on people’s situation but if people were to sell, where would they go? It’s not like they’ll get more value in Manhattan. If you move further out to the burbs, you’ll get more house for your money, but it’s a complete change in lifestyle. School enrollment figures seem to be starting to show that families are choosing to stay instead of moving out to the burbs as the did in the past.

  3. lori

    The other issue is that Brooklyn and even Queens, once the haven for those who couldn’t afford Manhattan but didn’t want to leave New York, have now become even more expensive than before. I’d say almost half of my buyers looked there before turning to Hoboken as a better value.

  4. Gilby

    I’ve been reading a lot about Brooklyn and Queens …particularly Brooklyn with hyper gentrification and that whole Spike Lee thing. Apparently some of the traditionally African-American communities are being gentrified and there is a lot of anger surrounding the community improvements that are going on. To some extent we’re lucky over here that Hoboken has already gentrified, maybe the profit margins aren’t as big, but there is more stability.

  5. Lori

    @Gilby, if you are really interested, read this article about what’s going on in my favorite (besides Hoboken) city, New Orleans. Campanella is a professor at Tulane.

    http://www.newgeography.com/content/003526-gentrification-and-its-discontents-notes-new-orleans

    There is a huge debate about the merits of gentrification and the affect it has on the community. It’s a hot topic in NOLA and commenters often bring up “Williamsburg” (calling the Bywater the Williamsburg of New Orleans) as if it is a plague. I disagree. Regardless of your position, it’s good reading, especially the comments.

  6. Gilby

    Thanks Lori – I’m very interested in the topic and hadn’t done any reading on NOLA gentrification happenings,

  7. Amy

    The gentrification issue is happening all over the country, and has also become a big source of contention in west coast cities, particularly San Francisco. If the markets stay the same, this won’t be going away.

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