It can be very common in a multiple offer scenario for a house to sell for $10,000 to $20,000 over the asking price. Recently there have been cases of houses in New West selling for more than $100,000 over asking price. Why did that happen?
Every house and every scenario is different. There is truly no one exact explanation. The simple, summarized explanation is that it’s a combination of timing (the right combination of buyers all at one time), an exceptionally well kept home, a strong floor plan, low supply and high demand.
Demand has to be at a point that there is a long list of (up to 20+) buyers who are serious about considering an offer on the property. In the end it results in 10+ actual offers on the property. Each buyer wants the house and is calculating in their mind how much they want the house, how high they need to go to stand out as the best, and if they think the home is worth that price.
In rare cases, multiple buyers come in very strong, ridiculously high, but still don’t stand out because their competitors have done the same. The listing agent (representing the seller) gives an opportunity for those offers to be improved. It’s at this stage that if any one buyer simply must have this house that they blow the doors off with an offer in excess of $100,000 over asking price. It’s rare. It’s hard to predict when and how it will happen. You can never know for sure how many buyers will fall in love with a house until you have already put a price on it and put it on the market.
A home priced close to current market value will always attract interest. If multiple buyers fall in love and drive up the price, then, well, they are the market. They have determined a new market value for that house. If there are enough other buyers similar to them in the marketplace, the prices will persist and adjust to that new benchmark.
This type of frenzy will often produce more supply in the marketplace (sellers looking to maximize value). The list of buyers will shorten as they each find their dream home and the market levels off, for a time…