House at twilight with the words Overbids in homes that sell fastWe are in the middle of the spring market, and overbids in homes that sell fast are often sky high.  Today I just want to mention it since it’s worse than usual, even for Spring. That said, it’s not as bad as in the first half of 2022.

We periodically publish a pricing snapshot, but keep in mind that those are by calendar month, and often the best info is whatever went into escrow yesterday (recently pending sales). That data isn’t published, so it’s a case of learning what can be learned the old fashioned way: networking.

What is going on with overbids in homes that sell fast?

What’s causing these extreme market conditions?

  • Inventory is extremely low.
  • Most of what is for sale is from “have to sell” situations. Many of those properties are not super updated.
  • The recently remodeled, nicely updated segment of the market is probably 20% of what’s available. Buyers are mostly fighting for them.
  • It’s like there are two different markets: the white hot market for recently remodeled homes (that are usually listed low) and the market for homes that are not as updated and not priced too aggressively.

The overbids in homes that sell fast in Silicon Valley have to do with both the home’s condition and the home’s pricing position – think low. The lower the listing price, often the larger the number of competing home buyers and the larger the number of eventual bids. In some cases the offered list price is so low as to be a price mirage. If it looks too good to be true, well, you know.

How bad is it? For single family homes in Santa Clara County that sold / closed in the last week, the average sale to list price ratio was 111%, and the median was 109%.  That figure ranged from a low of 83% to a high of 151%. Often the properties with a very large number of bidders will get the super high offers.

It is deepening. I ran the same data for closed sales 8 – 18 days back and the average sale to list price ratio was 108% and the median was 106%. Month over month it’s been rising.

People moving to Silicon Valley generally have sticker shock unless they are coming from places like Tokyo, Paris, New York, or other competitive markets with  elevated prices. What we have right now is frothy even by our local standards and tolerances.

What sellers need to know

Home sellers, if you want to maximize your return on investment, consider both getting your home on the market and also making key improvements, time willing. Your pre-sale preparation is key to a strong sale. Don’t mess around with pricing and “just try” a higher price than what the market will bear. The most successful sales are with homes priced low to attract multiple offers. The first week is crucial. Start too high and you cannot easily recover from that.

What buyers need to know

The risk for entering a feeding frenzy of competition is worse in the first 10 days after a property is listed. If you can find a home that’s been on the market a little longer, the odds are good that it won’t get so crazy. That’s not a guarantee, but it’s more likely to be easier for buyers, especially after 3 weeks or so.

If there’s an offer due date, the listing agent probably expects multiple offers and overbids. Although, some listing agents won’t put in a due date, but instead make a remark that strong pre-emptive offers will be considered. If that’s the case, it’s a foot race. You have to read between the lines!

Above all, with this wacky market with steep overbids in homes that sell fast, it’s imperative to have a strong real estate agent to help you, whether buying or selling, so that you’re positioned to get the best deal possible in whatever market you’re in. And if you’re still looking for your Silicon Valley (or nearby) Realtor, we’d love to chat with you!