A few examples. As many of you know, I am a buyer who has been looking patiently in RSF since June and had been looking up here in the Bay Area since January.
In terms of areas, IMHO, the worst offenders of overpriced homes are in Santaluz. Prices per sf are generally higher than RSF, except it is not RSF, it is SD, usable lot size is much smaller, you have Mello Roos, and a the school you kids will attend is a big ??.
Skipping Santaluz for that reason, I have a few favorites in the low high end to middle high end of the market in both RSF and here in the Bay Area. In all these cases (except as noted), comps are selling for lower than asking for these examples by at least 10-20% as some modicum of protection against catching that falling knife.
SD.
House 1. My favorite in SD. Seller bought the house near the peak of the market for almost $800k below their current asking price. Seller did put around $200k into landscaping so the difference is $600k. House has been on the market 150+ days this time. It had been on the market last year at $1.3 million above what they paid for it at the peak of the market. Seller’s agent says, since they “already drastically” dropped the price by $500k when they relisted it this year, they will not budge on price again, and indeed, they have not. So this seller is trying to make a $600k profit in this market on a house they bought near the “peak” of the market!
House 2. Home listing for $3.2-$3.7 million and has been on the market almost 2 years. Seller will not budge on price. Comps in the neighborhood are selling for about $2.8-$3.0 million. House has been vacant all year.
House 3. Seller stuck to his $3.9 million asking for over 100 days and turned down offers as high as $3.7 million (second hand knowledge). House ultimately sold for $3.45 million.
House 4. Seller listed for $2.9 million and turned down all offers. Seller’s agent indicated they had turned down a $2.65 million offer. House still for sale listing at $2.3 million.
Bay Area (just last night the news reported that prices are going up in the bay area (Penninsula and San Jose). Yes, they reported “medians”).
House 1. Seller listed for near $3 million and said would not budge on price when asked if they would take $2.75 million. That is now their listing price after 170 days on market.
House 2. My favorite up here. a 4,600 sf 4 BR home in Los Altos Hills that listed for $4.4 million close to 200 days ago. Not a single drop in price. Despite this market not dropping as much as SD, that is still about $1 million over priced. The problem, a few other comps of comprable size are similarly priced (e.g. 5k sf at $4.3 million) and also not selling.
House 3. Or maybe this is my favorite. Try 4k sf 4br with no view and no pool on 1 acre for $4.2 million since January despite a slightly older 400 uphill yards away 5 br, 4k sf house with a great view and a pool on 1.5 acres selling for $2.5 million in June!
House 4. On market for 140 days+ at $2.95 million for a 4br 3700 sf house. Went off market for one month and back on the market for $3.2 million for about 90 days. Went off market again for a while and is now back at its original price! Seller relisted indicating “relisted at a significant discount.” Very generous.
p.s. I have observed in a number of cases that when homes I have seen sold for asking or slighly above asking, from what I have been able to learn, the home sold in the low end of the buyer’s range. Indeed, I must admit that when I look at houses in the low end of my range, I don’t think about low balling an offer as much as I do at the high end, for obvious reasons.
I have also seen a few houses below the low end of my range that I liked so much I was willing to consider a smaller house than I am looking for. In those cases I would consider paying above asking if there was competition for the home, since my goal would be location and subsequent upgrades.
When you see that you can put down 50% and can qualify for twice as much house, you are not as price sensitive as when your down is exactly 20% and the difference is at the extreme top of what you can finance. My sweet spot is somewhere in the middle (about 30% down) and I want to pay 10-20% below asking.
