On Feb. 25, a Brookline agent put a Beacon Street condo on the market and later lamented that she received only three offers, the highest of which went only $5,000 over ask. So much for the old real estate adage about pricing: Leave some room for negotiation. In the market the Hub is currently in, only three offers and only $5,000 over ask is a letdown.
A month later, a lesser condo in that same Beacon Street building came to market and is said to have gone under agreement for 10 percent more than the three-offer, $5,000 over-ask condo. I suppose if home values keep changing at this pace, the Greater Boston Real Estate Board might have to look into getting a ticker. For in today’s inventory-challenged Hub real estate market, 30 days to appreciate 10 percent is dial-up modem slow. Nowadays, a Hub home goes on the market and before you can add Mentos to the list price’s Coca-Cola, the home sells for a price so much higher than list that even the jaded brokerage community is surprised.
Last year, I wrote about the “over-ask” phenomena so often it provoked one real estate website to dub “over-ask” the 2013 Real Estate Word of the Year. But this year, when I review sale-to-list prices, I’m in fear of getting whiplash from all the double takes I do. In just April, in the nine condo markets I write most about (Back Bay, Beacon Hill, Brookline, Cambridge, Charlestown, Jamaica Plain, Somerville, South Boston and the South End), two-thirds of the sales received at least asking price, a quarter of them went at least $25,000 over asking and one out of nine sales went at least $50,000 over asking. Three percent of the April sales in these markets went at least $100,000 over ask. Incredible!
No Signs Of Slowing Down
Those unheard-of ratios are way ahead of last year, of course, but it’s scary to think they may be a bit weak compared to what’s about to come. Through the first half of May, already 73 percent of sales in these nine markets got at least asking, 30 percent went at least $25,000 over ask, and more than 15 percent went at least $50,000 over ask. Seven percent went at least $100,000 over ask. You read that right: In April, one out of every 14 offers in Greater Boston’s best condo markets went $100,000 over ask. And while $100,000 is an almost an unfathomable amount to pay in excess of the list price, some homes garnered offers that went even higher.
In November, Mona Wiener, one of the top agents in Brookline, listed a Coolidge Corner three-bedroom with 1,539 square feet for $799,900. In January it went for $1 million, $201,000 (25 percent) over ask. What was it about the property provoked the extreme over-ask offer? Was it the allure of being a former rental? Was it the IKEA cabinets? Folks, it’s got be the inventory, because that $650-per-square-foot price is usually reserved for luxury Brookline properties.
Paula Narenkivicius, an agent with 10 years of experience, listed another Coolidge Corner condo at $829,000, a price the sellers told her “may be a bit high,” as the 1,655 square foot condo didn’t have fancy finishes or central air conditioning, and in all likelihood a buyer would have to gut the kitchen. Nonetheless, the lack of inventory and a strong location provoked seven offers and a winning bid that was $266,000 over ask.
How fast is the market moving? How extreme are the over-asks? In May 2013, a developer asked Ed Feijo from Coldwell Banker to assess a Cambridge single-family he had just purchased. “In the past five years, the highest price in this neighborhood was maxed at $2 million,” Feijo told me. Considering the appreciating market, however, Feijo optimistically projected that the rehabilitated property might be able to sell for $2.1 million to $2.2 million. The finished home came to market on Feb. 12, 2014, for what had to be thought of as an aggressive $2.45 million. Yet, it closed six weeks later for $2.8 million, $350,000 more than the asking price. Double incredible!
In a market where the most oft-used remark during the first week of the listing is, “Offers, if any, will be reviewed Tuesday,” Brookline and Cambridge aren’t the only locations where Hub properties go way, way over-ask. This year in Somerville, 56 Line went $101,000 (19 percent) over ask; in the South End, 202 West Brookline went for $105,000 (11 percent) over ask; in Charlestown, 15 Concord Street sold for $173,000 (18 percent) over ask; and in Jamaica Plain, 16 Revere recently sold for $227,000 (19 percent) over ask. The over-ask offer is so entrenched in today’s marketing expectations that it is not unheard of for some buyers to back out of agreements upon learning that they were the only bidder. As a result, I’m advising my seller on a terrific Brookline listing coming to market to price it rationally and let the irrational market do the work.
Amidst 2014’s over-ask frenzy, I still wonder if any offer can possibly exceed the epic, outrageous, over-ask offer for the ages I wrote about last year, the $1.3 million over-ask offer received by 66 Sparks, Cambridge. The year is young, so stay tuned.
David Bates is a broker with William Raveis Real Estate and author of The Bates Real Estate Blog, www.BatesRealEstateReport.com, and a recently published e-book, “Context: Nine Key Condo Markets, 2.0.”
