At The Front Steps, we’re always a little bit fascinated by the phenomena of overbids–those homes that sell for more than they’re originally listed for, sometimes to a fantastic degree.
Our weekly Maximum Overbid column breaks down the ten biggest overbids of the week and singles out the number one specimen–this week, a million-dollar teardown in Crocker-Amazon.
But we rarely get to write about Richmond homes when talking overbids. Not because overbidding doesn’t happen here: Indeed, it’s been the norm for years.
In 2021, the median list price for a Richmond home that eventually went to sale was over $1.62 million, while the median sale price was $1.8 million; the year before, it was $1.59 million to $1.7 million, and the year before that, $1.55 million to more than $1.62 million.
And if you break down the numbers for the past decade, the average listing price in the neighborhood–just under $1.24 million–lags behind the sale price of $1.35 million-plus since 2011. These averages are of course a very abstract way of assessing the phenomena–but the point is, overbidding happens, as indeed we’d expect it to.
But what you probably notice is the differences between these figures are fairly mild; a perfectly median Richmond home sale over the past ten years would sell for about 8.8 percent higher than its initial price.
That’s certainly significant, but it’s not very flashy compared to homes that go for, say, more than 60 percent of the asking, or more than 70 percent, or in one case almost 98 percent, often on downright delinquent properties.
Not to say that you don’t get those kinds of flashy outliers in the Richmond now and then too. But really, you probably don’t want a lot of those kinds of deals around: Sure, they can indicate a hot market, but they can also point to potentially unhealthy trends like, say, realtors deliberately pricing homes lower than their real value to attract more buyers and juice bidding.
Organic overbidding can also sometimes be a symptom of a bubble brewing–or already in progress. Or they can just be part of the natural static of statistical variation in a market; sadly, it can be hard to tell the difference.
Those of us who own homes in the Richmond might like the idea of bidders bidding ever higher for properties–certainly it’s good for a seller’s payday. Ultimately though, a steady market is generally healthier for everyone; and after all, $1.8 million is still $1.8 million.
For the curious, the neighborhood margin for 2022 so far is over 16 percent–but that’s based off fewer than two dozen public sales thus far. It is only February, after all.
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