When Janet Schindler snagged a listing in tony Presidio Heights last month, she was surprised to hear that her competition for the listing had valued the property at markedly less. Schindler, a real estate agent with Sotheby’s International Realty in San Francisco, believed that with staging and some minor remodeling the single-family detached house could command between $5.4 million to $5.9 million in auction. The two agents she beat out for the listing had suggested price tags 10-15% lower than hers. It was an estate sale. The property sat on a double lot but it had no view. But the neighborhood was good and so was the home’s layout. After a brief flicker of doubt, she plowed forward with her initial valuation.
Turns out even Schindler was modest in her assessment. “When we went on the market, 20 people wanted disclosure packages immediately and when we set the bid date, we received seven offers,” says Schindler. When homes are scheduled for luxury real estate auction, prospective buyers can usually make bids prior to the actual auction. The highest offer? $7 million, at which the sale closed. “I couldn’t believe it.”
While it’s still unusual for non-distressed homes to fetch more than their asking prices, the transaction sheds light on the buying frenzy (at least compared to the past four years) taking hold in many of America’s most sought after neighborhoods. Realtors in various markets across the country report robust increases in the number of transactions transpiring. In some areas, prices are beginning to tick up in response.
The National Association of Realtors just released its pending home sales data, reporting that the number of contracts signed in May for existing homes was 13% higher than a year ago. Every region of the country reported increases. “Actual closings for existing-home sales have been notably higher since the beginning of the year and we’re on track to see a 9 to 10% improvement in total sales for 2012,” added NAR chief economist Lawrence Yun in a statement. The number of new home sales (new single-family construction) is up too, with 19.8% more transactions in May than a year ago, according to the Commerce Department. The flurry of activity has NAR projecting a 3% increase in existing-home prices nationally this year and a 5.7% increase in 2013.
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