Home prices: Why Albuquerque’s listings today are in an auction reserve price

by | Aug 25, 2021 | Albuquerque Real Estate Talk | 0 comments

Home prices: Why Albuquerque’s listings today are in an auction reserve price

(Transcript Snippet): “Tracy:

Beautiful. So Tego, I want to really get to this, this topic that Eddie introduced and its home prices and how forever real estate realtors go in. We look at the market, we look at what the home could sell for. It gets priced buyers, come in and look at it and they say, well, I wonder how much off we could get. I wonder if we could get a few dollars off and let’s make a lower offer and see what the seller will agree to. Now, listing prices are more like a minimum reserve price on an auction. So remember years back, we used to get things on eBay. I know eBay’s still a thing, but we haven’t used it lately, but they have a minimum reserve, a lot of those different things. Or if you go to a live auction, which are really prevalent, where we’re from in Minnesota and Michigan back east Midwest, a lot of auctions. Actually my dad’s a auctioneer and I, I almost could roll it off my tongue, but I can’t pretend to be an auctioneer. So, you know, house prices today are really like a reserve price because 50, some percent of them, according to Lawrence Hoon, the chief

Tego:

Chief economist, chief economist, I couldn’t think of the Economist.

Tracy:

Yeah. He just put out a story and he said, 51% of homes across the country are selling for above list price. And we know from the research you’ve done. Thank you. Go ahead. No, it’s the same. It’s the same. So over half of the homes that are selling right now are selling for above the listed price. So it’s sorta like the list price is a reserve price on an auction. When people are saying how much over do I have to go to get it?

Tego:

And the thing that’s happened over the years, Tracy, we used to always look at one of the stats that we look at is the list price to sell price ratio, what percentage, right? And for the longest time, I mean, we, if we go back to, you know, the slower times of our market, let’s say back in 20 11, 20 12, you know, it was 95, 90 6% of list price or less and understand that’s after there’s maybe been some price reductions right. In, in the last few months where above a hundred percent, which means again, more than 50% of the homes are selling for more than the currently listed price. Now that brings in some challenges, we talked about that with some of our lending partners at our team meeting the other day. But, but your point you’re making is the list. Price is just kind of maybe a starting point. It might be, and it may be not a starting point to go down. It may be a starting point, Right?

Tracy:

So that’s the shift from the old, you know, the past forever in real estate, right in home purchasing is instead of it being well, how much lower can we go to get the house? Now it’s how much above do we have to go? And that’s been a huge shift this summer and it makes everybody uncomfortable.

Tego:

Let’s just be clear on this. So we also said it’s only about 50% or a little bit more than 50%. So that means the other 50% or 49% or whatever it is, 48% aren’t selling for over list price. So it really takes knowing what’s going on in the market with that particular home in that particular neighborhood and what type of demand there might be for that particular product. Right.

Tracy:

Absolutely. And, and I’ve read that, but the other thing is it might, might make a difference on who you’re working with and how much experience they have and how much communication you have with the listing agent. Because the listing agent should know if you’re having a lot of showings, they should know if there’s a lot of calls coming in saying, Hey, I’m going to be writing an offer. But if your buyer’s agent, you know, takes the time to call the listing agent to find out what’s going on, then you can help strategize and put the right offer together. And maybe you’ll find out, wow, this house doesn’t have other offers. Then this house isn’t going to need a above list, price offer.

Tego:

What you’re saying is when it’s done, right, you’re not going into writing an offer totally blind. Could you have some information

Tracy:

To work? Right? And a lot of times, as a listing agent, you know, there isn’t a phone call from another agent to say, Hey, I’m writing an offer. So it’s not a hundred percent foolproof, but we, we typically have a handle on it.