REWARD: Commission rebate credits for crowdsourcing bidding wars

Uncle Sam Wants You

When it comes to bidding wars, the real estate equivalent of arms control is a combination of reason, restraint, research, field reporting and fact checking.  The key questions are: (1) What’s really happening, and (2) what’s the impact on individual home buying opportunities and housing markets across Massachusetts?  As with our award-winning Real Estate Bubble Map in 2006, The Real Estate Cafe wants your help to crowdsource bidding wars.  We can provide MLS data but need field observations and war stories, particularly if you’ve been wronged (would you believe there have already been 5,000 complaints received in Toronto?).  And as before, we’re prepared to reward contributions with commission rebate credits.

First pass:  Bidding wars in Top 10 housing markets in MA

Rather than addressing the entire market right away, our first pass was to take a snap shot of MLS residential listings in the top 10 cities, neighborhoods, and towns in Massachusetts, as defined by the Warren Group and Boston Globe Magazine, between March 1 and April 5, 2012. Then to slice the data more narrowly, we focused on listings that have been on the market for 7 days or less, or gone under agreement within 7 days or less during the same period. That data query resulted in 299 properties across the Top 10 towns.  Here’s what we found:

  • 40% of the NEW listings are still active;
  • 42% (of this sample, not all new listings) are already under agreement; and
  • One in ten properties have already closed — presumably cash buyers.

Here’s the good news if you’re a homebuyer:  Only 13 of the properties that have been on the market for one week or less sold for OVER ASKING PRICE.  That’s just 4% of the 299 listings identified in the Top 10 housing markets across MA.  Hardly a compelling indicator that the housing market is roaring back, and nothing close to “people trying to get on the last lifeboat on the Titanic,” as one bombastic listing agent boasted two weeks ago in a front page story in the Boston Globe.

But let’s return to the data in our limited sample before rushing to conclusions.

Of the 31 sales that closed in a week or less, 42% sold for over asking price.  That sounds ominous until you realize, once again, that we’re talking about thirteen listings in the Top 10 towns.  Would you believe that three of those bids were $1,100 or less over asking price?  Not exactly a show of strength from cash buyers, and hardly the stuff of headlines.

So what made front page news?  Some listing agents are quick to sensationalize, so that fact that prices were driven more than 5% above the original asking price sounds like a market on fire.  That only occurred in six of the 299 listings in our preliminary data analysis, and the details are revealing:

  1. Two properties were priced about 15% below their assessed values and sold for about 10% below their assessed values;
  2. Two properties were located in Cambridge where the People’s Republic has been replaced by the Poupon Republic; and
  3. Two luxury condos priced over $1M in Back Bay generated bids approximately $100K over asking price. (That may say more about the difference between the 1% and the rest of us, than it does about the housing market).

Stay tuned for the rest of the story

When others reported that 15% percent of the homes put on the market in Greater Boston during 2012 have gone to contract within three days, buyers may have assumed many of those homes were selling over asking price. So far, looking at the narrow market slice described above, we’ve only identified 13 sales over asking price between March 1st and April 5th, but nearly 100 more properties are under agreement.  As their sale prices become public in coming weeks, we’ll know more about what’s really going on.

Until then, we encourage buyers to act prudently, and don’t fall for fear or pressure tactics that could cause you to bid unnecessarily over asking prices. Further, we invite you to click on the button below to make an appointment to:

We’re available tomorrow April 7 at BarCamp Boston or at your earliest convenience, online or off.  If it’s urgent, just call us at 617-661-4046.

Related Articles

Homes selling for below assessed value in Greater Boston

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During the past three months, March through May 2006, another trend has emerged signaling the end of the housing boom in Greater Boston:  nearly one in four single family homes is selling for below assessed value, according to an analysis of sales in 27 of the most expensive cities & towns in Greater Boston conducted by The Real Estate Cafe. 

During the three month period, 921 single family homes sold across the 27 towns, including 216 sales below assessed value (see related map) identified in listing data from MLSPin.com.  According to an interview conducted with Lawrence Yun, senior economist for the National Association of Realtors earlier this year, "There’s no solid data, but it’s pretty much well known that the government assessment is nearly always below the market value." 

Preliminary data for May 2006, suggests that the number of homes selling below assessed value is rising, even though the percentage may be falling slightly.  During March 2006, 71 of the 275 single family homes in the surveyed towns sold for below assessed value.  That number fell to 61 in April when 257 homes sold across the 27 towns.  However, preliminary sales information from May 2006, show that 84 of 389 homes sold for below assessed value — an increase of 23 sales or 38% over the previous month.

More important, the year-over-year change raises concerns.  During May 2005, only 23 of the 342 single family homes sales in the top 27 cities and towns surveyed sold for under their assessed value.  A year later, that percent tripled, rising from 7% to 22%; and the number of homes selling below assessed value nearly quadrupled, rising from 23 to 84 sales.

Opinions vary about whether the rise in homes selling for below assessed value signal a loss in housing value, distressed sellers, or town assessments which have overshot a changing housing market.  In coming days, weeks, and months, The Real Estate Cafe will take a closer look
at those questions, and discuss which cities and towns are most impacted by this
new trend, which towns are improving and which are getting worse.  We
invite readers elsewhere to let us know if homes are selling for below
their tax assessment in your communities, too, in Massachusetts and
beyond.

1st user documents falling housing prices on Bubble Map

Walkerst_071506_3 The first user has added two local properties to an experimental Real Estate Bubble Map created by The Real Estate Cafe to involve consumers in
the process of tracking falling housing prices.  Located at 21 and 30 Walker Street in Cambridge, Massachusetts, the contributions document an emerging trend:  both sales prices and asking prices are falling below assessed values in once overheated housing markets in Greater Boston.  Despite the prevailing myth is that housing prices never fall in Cambridge, the city is among 66 housing markets that have experienced significant price corrections over the past two decades.  21 Walker St. sold recently for approximately $150,000 below its assessed value; and the asking price at 30 Walker St. has fallen more than $110,000 below it’s assessed value.  That property went under agreement in 11 days in 2003 when it sold for $1,275,000.  After six months on the market, the asking price is now $50,000 less than the sales price three years ago.  (See comments on map for more detail on both properties and approximately 150 others in Greater Boston)

Both Walker Street properties are in walking distance to Harvard University, where an "Un-Conference" on Citizen Journalism will be held, Monday, August 7, 2006. It is hoped that other house hunters will create local bubble maps to protect fellow home buyers from overpaying in "extremely overvalued" housing markets nationwide. 

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