I just want to rant. It seems to me that there is some strategy to pricing low. It puts the seller in control and gets the buys to waive appraisals and inspections. It’s raising home prices everywhere and there are no consequences to this strategy because they don’t have to sell the house to you even if you offer asking price and they have no other offers! Forcing the sale if they have no other offers and they refuse to sell would make sellers price higher and the power would come back to the buyer. People don’t waive appraisals and inspections when they offer under asking price.
We have offered on 6 homes in Colorado. We have offered above asking price on every house. On Wednesday we offered on a house $11k over asking price. It had just been listed, but the buyers wanted to wait until Monday to collect offers all weekend so they didn’t accept our offer. Our offer expired, but I bet they told the other buyers “we have another offer above asking price”. This is a white lie because our offer expired!
Also every house that we have offered on we offer on twice, once the original offer and again after our realtor hears about how many offers they have over asking price and “I don’t feel comfortable saying, but significantly higher” offers. Then the realtor says “do you want to offer again?”, but what if these other offers are made up? They don’t show you the other offers and the winning offer is not required to buy the home or pay anything if they decline after winning. There could be some major fraud with this system! You go to jail for years for stealing $10k from a store, but I bet there are plenty of realtors who manipulate bidding wars to the tune of thousands and have no consequences.
Another strategy with pricing low is that if they don’t get the bidding war that they want, sellers can relist at a higher price. Relisting higher makes the home seem desirable, like you had so much attention you had to relist higher! Instead of lowering the price which says “we are having trouble selling, you can offer less than asking”. So listing low and getting the bidding war is a power move for sellers, but also leads to the potential for lying realtors and fraud.
Little late to the party but some thoughts as a Realtor - it's crazy in the Twin Cities too.
- Realtors are fiduciary's and can easily lose their license or be fined if found to be lying or committing fraud. Does it happen, yes - but this isn't commonplace.
- Yes, sellers have all the power right now. No seller should accept the first offer that comes in at list price. It's always in their best interest to wait multiple days and a Realtor who doesn't advise their client to do that is doing them a severe disservice. A listing agent owes allegiance to the seller, not the buyer.
- Your assertion that a full price offer should be automatically accepted is wrong. First off, the price is only 1 component of an offer. Financing, inspections, closing date, personal property and more go into an offer.
- It sounds like you are setting an offer deadline date. That's a bad idea in this market where sellers hold all the power. Your agent should advise against that.
- Your agent should be telling you how to use an Escalation Clause to make sure you are bidding confidently up to a price you are comfortable with. Example - I'll pay list price but will also beat all other offers by $2k up to a maximum of $X and seller must provide a copy of the next highest offer to validate the final price.
- Even if a listing agent does their best to price a property correctly the market is changing so quickly and there are so many buyers for nice houses that it's quite common to see many offers $50-100k+ over list price.
I'd encourage you to look at listings that have been on the market for 7+ days as those are either overpriced or need work and will have less competition. Or just keep at it - you'll eventually get one.
Good Luck!