Home seller leads increased during the pandemic housing boom as several states see properties sell above asking price. While the lockdown decreased profits for most business owners, the real estate market has surged.
Colorado housing market leads the way to higher offers
Denver is experiencing an increase in sale home offers that leaves many wondering – what are home buyers thinking? Justin and Amanda Choi, for example, listed their home for $645,000 in April. In only four days, the house was under contract for $775,000, which is twenty percent over the asking price.
“Even on day one we got offers at like $740,000 or something like that,” Justin says. “I think my exact words were, ‘Have people lost their minds?’”
But perhaps it’s not so much that people are out of touch with what a house is really worth. According to Elizabeth Sacerdoti with Kentwood Real Estate, the pandemic has created new market conditions. Whereas before, buyers would carefully consider the financial aspects of buying a home, now it’s emotional.
Buyers are no longer only factoring in the financial aspects, but they are adding their fears to the equation. Sacerdoti noticed that from January to July of 2021, homes were selling between $50,000 and $300,000 over asking price. Particularly, buyers were more flexible and willing to negotiate inspections and appraisals.
“What I came to find out is that the consequences of the pandemic on people’s emotional needs for housing was something that we really needed to quantify,” she says. “I feel that, as a realtor, it’s my responsibility to make a purchase a sound, financial investment.”
But the focus of a purchase turned away from the financial aspect to people’s emotional needs in the pandemic. This also contributes to the increase in motivated seller leads in many parts of the country.
A housing trend at its peak
One example of an upward trend for the real estate market is Denver’s condominium market which had a bad year in 2020. But, as lockdown measures ease and businesses reopen, condos are also selling above the listing price. Selling prices on single family homes, however, are reaching a peak and staying stagnant.
“We’re finally reaching this point where we’re getting more inventory, we’re starting to slow down a little bit,” says BSW Real Estate CEO Bret Weinstein. “We didn’t have seasonality in 2020 at all.” Seasonality refers to the peaks and dips in the housing market during specific seasons. For instance, in Colorado the amount of homes for sale typically peaks between August and October. This means that sellers must be competitive and buyers gain a bit of edge.
These unexpected twists and turns in the housing market are compared to an auction where ‘closing’ is the ultimate prize. Andrew Abrams, chair of the Denver Metro Association of Realtors’ Market Trends Committee, this could lead to problems. Because people are overpaying for homes, they are also setting a new precedent for a future sale price.
“I think in theory, that’s bad practice,” Abrams says. “So the people that overpaid really are probably sitting in equity now because a month or two later everyone’s using those comps from which they bought.”
Mid-Atlantic homes are selling above asking price
In Richmond, Virginia, a colonial brick mansion sold for $750 thousand over asking price. Originally set at $1.99 million, the two story home sold within a few days for $2.75 million. Rebecca Winters with Shaheen, Ruth, Martin & Fonvilla Real Estate held the listing. The property was officially listed on July 7 and started showings on July 15. The sale closed on July 23, totaling 16 days on the market.
The mansion located at 4702 Rolfe Road includes a total of 16 rooms with four bedrooms, two half bathrooms and six full bathrooms. The interiors also feature marble countertops, a skylight in the kitchen with white French doors and windows. The original appraised value for the 5,500 square foot property was $1.65 million.
Additionally, nearby homes are selling above asking price. A 5,000 square foot house at 207 Nottingham Road in Windsor Farms also sold for $750,000 higher than the listing price. With the pandemic boom slowing and prices staying stagnant, albeit much higher, many are looking for their chance to buy.
Story by Fernando Villa
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