The South Portland real estate market has been on the rise and the town has not reassessed since 2006. The town has been working on a reassessment since 2019 and the final news should be out soon. I
Why are houses going for so much over asking price?
Dated: June 23 2021
The Maine Real Estate Market has been on fire over the past few months. Why are houses going for so much over asking price? We get this question a lot and many people are probably wondering if listing agents even know how to price a house anymore. The answer is YES! YES we do, but the answer is a little more complicated than that. The market prices have moved up and they have moved up fast, you could say, too fast for the paper trail to catch up with the pace of the actual market.
As a listing agent, we need to make sure that the list price will meet an appraisal price(or the price borrowed from bank). If you list your house at $300,000 and the bank comes out to do the appraisal and the appraiser justifies through the use of comparable sales that the home is only worth 250K, well guess what? The bank isn't going to issue a loan for $300k. In order to keep the deal together, the 50k difference needs to be made up by either the buyer, seller or both. In this case the listng agent and the seller "over priced" the house and the difference kind of falls on the seller. They shot themselves in the foot. Now, any good listing agent would have already done all this homework and most likely would have priced it with the seller at or close to the 250k. So, now let us say that you listed it for 250k and Mr. buyer comes in and says we want to offer $300k. "ok, Mr. Buyer, that is great but what if it doesn't appraise for that price?" This is where we are at now in the market and how we knew this was for real! Many buyer's are willing to make up the difference if the home doesn't appraise. Your home is worth what a willing and ABLE buyer chooses to purchase it for. Able, being the keyword here. Many people are willing but if the market says the home is worth a lot less, then many folks are not ABLE to buy it at that price. A recent home sale on Sebago Lake was listed at 1.2 million.........It sold for 1.7 Million. $500,000 over asking price! How is that possible? CASH! Cash makes it possbile and there was a willing and ABLE buyer to purchase the home for this price.
We have been seeing this for a couple of months now. A home typically takes 45-60 days to close on so we are now finally starting to see the comps play out. Now that the comparables are trickling in, we are able to utilize them to price the next home. These relative comps give sellers and their listing agent higher figures to use to price more accurately.
We should start to see this level out soon as we progress through the summer. I don't mean the prices coming down, I mean the large discrepancies between the list price and the actual sold price. The 30, 50, 100, 500k over asking should start to minimize as we head into late Summer.
Is paying too much over asking price risky? It depends; If you are only going to live in a new purchase for two years and we enter into a short-term market correction, then yes, there is a good chance you would be upside down. If you plan on staying in the home for ten years, then I'd say not so much. Everyone knows real estate prices increase over time, its a proven fact. Just like any market though, there are corrections but real estate has historically been proven to be a valuable long-term investment vehicle.
A long-time resident of South Portland, Matt studied at the University of Southern Maine and later, earned his undergraduate degree in Business Administration at the University of Phoenix. He has over....
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