Listed below market common in Bay Area

[Fernando]

Bidding wars and lucky numbers: the secret home pricing strategies of San Francisco

Understanding the psychology behind the price pumping strategies.

sfstandard.com

Pricing a home in San Francisco is a mind game. Here’s how to win it​

When Michelle Balog of Christie’s International thinks about pricing a home in San Francisco, she relies more on experience than on algorithms. “There is no 100% formula,” she said. “You have to be able to feel into the market.”

Most San Francisco buyers, especially those bidding on homes priced at less than $2 million, have been confronted with the uber-popular strategy of underpricing. That means the home comes on the market at an artificially low price to bring in a bevy of bidders. An offer date is traditionally set for one or two weeks later, thereby creating a mini auction where the home is going, going, gone.

Sometimes buyers scarred by earlier bidding wars will make a pre-emptive offer, hoping to entice the seller to accept the deal before seeing any others.

Underpricing is far more common for single-family homes than for condos. In the latter case, uniformity between units translates to easily comparable sales, and more inventory means less competition. Even before the current downturn, the percentage of condos sold over asking price trailed single-family homes by double digits.

In the last year, 70% of houses in San Francisco went for more than the asking price, compared with 25% of condos, according to Compass data. Houses sold for an average of 11% more than asking, while condos sold for just under asking.

The underpricing strategy typically tops out at a list price of $5 million, where the percentage of sales over asking drops precipitously.

In neighborhoods where underpricing is the norm, even pricing a home at market value can throw off the game. Buyers will just assume the sellers want hundreds of thousands over that higher asking price and the home will sit on the market.

 

[John Hassler]

Still hot in the Bay Area. Listed two homes in September at just under what I thought was MV. Both had great “view” numbers on Zillow; one had over 2,000 views and 90 saves within a week. Both properties had multiple offers within 7 days. One went $35k over asking and the other $130k over. Both scheduled to close in under 21 days. Properties were 70+ years old, priced well over $1,000/sf, were staged and had seller paid pest reports in hand. All offers received were super clean with easy contingency hurdles. One purchased by a young family getting out of SF and the other by a demo/rebuilder. Like I’ve been saying for 35 years, people keep coming to the Bay Area with buckets of money and I don’t see an end in sight.

 

[John Hassler]

In contrast to the above, we have a second home two hours outside of the Bay Area and there is an abundance of listing with most over 90 DOM and with one or more price reductions common. Price per sf is a fraction of the Bay Area. Location, location, location.

 

[Fernando]

I did an appraisal for value at about $1,000,000 which in Silicon Valley is in low end in lower price part of town.
I was surprise days on market was like over 3 weeks and sales price slightly below list price.
When you think about it, those making not that much money still can't afford to buy a million dollar home.
If in better part of town where homes sell over $1,500,000, usually sell within 2 weeks and above list price. Those with high income can be selective where they want to live and bid against each other.