Home sellers are expecting more than list price when they go to sell. And there’s good reason why they believe that: Over half of homes—51%—are selling for more than the asking price, a record high, according to new research data from the real estate brokerage Redfin. A year ago, 26% of homes were selling for above asking price.
“The fact that homes keep selling for more and more above asking prices goes to show that many more people want a home than there are homes for sale,” says Daryl Fairweather, Redfin’s chief economist. “I don’t see that changing until mortgage rates increase, which will likely happen later this year. But until then, the housing market will remain red-hot.”
Just how high above asking price must buyers go? With bidding wars common, some buyers are bidding up homes to extremes. In Marin County, Calif., a bidding war for a 1,305-square-foot home with a single bathroom, listed for $1.298 million, fetched 18 offers that pushed the asking price 58% higher to $2.057 million.
More home buyers are waiving appraisals so that the sale doesn’t fall through. In April, 19% of homes had their appraised value come in below the contract price, according to data from CoreLogic. Over the two previous years, 8% of homes were appraised for lower than the contract price.
“The frequency of buyers being willing to pay more than the market data supports is increasing,” Shawn Telford, chief appraiser at CoreLogic, told The Seattle Times.
The average number of offers REALTORS® reported receiving on a closed sale jumped to five in April, according to the National Association of REALTORS®’ latest REALTORS® Confidence Index Survey, a survey of more than 3,500 real estate pros about their latest transactions.
Meanwhile, 24% of homeowners surveyed by realtor.com® say they expect to get more than their asking price when they sell, and 29% of sellers plan to ask for more than what they think their home is worth, too.
Source: “Housing Market Update: Over Half of Homes Are Selling Above List Price, Up From 1 in 4 a Year Ago,” Redfin (May 28, 2021); “Sellers Expect Bidding Wars, Other Perks in Hot Market,” REALTOR® Magazine Daily News (May 19, 2021); “Homebuyers Increasingly Pay Above Asking Price: ‘This Might Be the Most Competitive Housing Market We’ve Ever Seen,’” The Seattle Times (May 27, 2021)