"The house sold for how much over asking?? "
"Those people stole that house!!"
You've probably been caught saying something similar to the above or have heard someone else say it.
A house gets listed for $800,000 and sells for $950,000 or a house listed at $600,000 sells for $530,000.
The common train of thought is that any home sale below the list price is a 'deal' and anything over the list price is considered 'overpaying'. This is where most people I feel get it wrong. So much emphasis is put on the list price vs. sale price without actually digging a little deeper and understanding why a house sells for what it does.
Case in point: Last week I had a buyer client forward me a sold listing in a hot, high-end neighborhood in the city (for privacy reasons, I cannot disclose the address) with the following caption: "I can't believe this DEAL, unreal!! I should have bought this".
The home sold a whopping 850k below list price which came to around 72% of list price. The home wasn't listed for 2 years, tilting sideways or habited by hoarders. Quite the opposite… 35 days on the market, large lot and a potential fixer upper.
So all this would lead anyone to believe that this buyer absolutely pulled a rabbit out of the hat and stole this house. Not so. After looking into it further, I found out that there wasn't one home in the area that sold remotely close to the price they were asking and what that home sold for in the end, was very close to recent comparables all factors considered.
I am not saying the buyer did or didn't get a deal but I guarantee you that the list price was not a reflection of true market value and whether or not the sellers and their agent believed they could 'try' and get that amount from some buyer is a different story but they obviously knew the home wasn't worth anywhere near that much or they simply wouldn't have sold.
Buying a home over asking is the same thing. Houses are constantly listed below market value to generate traffic and bidding wars and we then read these sexy headlines:
"House sells 100k over asking"
"Bidding wars have buyers lining up"
The list price in these instances are just a figure to attract buyers fully knowing that it will sell for more. The sellers, the realtors and the buyers are all aware of this (at least i'd hope so).
So did they really overpay? Or did they get a 'steal' on that home you heard about? That is really up to you and your agent to determine. Believe me, deals can be had anywhere if you know what you are doing but if you are strictly basing yourself on list price vs. sale price - don't - it tends to be misleading.