Below is an interesting post from David Bates at CurbedBoston. With all the “over asking” activity it’s a fascinating analysis.
Another month of Boston condominium closings and another couple of hundred above-ask offers accepted.
In nine key condo markets in July, 55.9 percent of sales prices were greater than list prices, which narrowly improves on June’s wicked impressive 55.4 percent share of over-ask offers.
As far as individual condos that sold for the most over-ask, 71-73 Stearns Road, #2, in Brookline sold for $121,00 over-ask; 85 Fayerweather Street in Cambridge sold for $131,000 over-ask; and 79 Chandler Street, #2, in the South End went for $226,000 over-ask.
As well, out of about 1,100 total closings in June and July in these nine key markets, about 90 offers went at least 10 percent over-ask, a segment I think of as “extreme over-asks.” On the other side of the real estate coin, only 62 June/July sales had even 5 percent negotiating room. Those sales with at least 5 percent negotiating room are a segment I think of as “under-asks.”
As I looked at the details of the extreme over-asks and under-asks, I wondered what separated them? Was there any characteristic that could determine whether an on-market condo would attract extreme or negotiated offers? I decided to look into it.
My first thought was to compare location, location, location. What I found out was that extreme over-asks were most prolific in Somerville, where almost one out of every five sales was extreme, and Cambridge, where nearly one out of every seven closings was extreme. In fact, I saw that just four markets (Cambridge, Somerville, Brookline and JP) made up more than 80 percent of all the extreme sales that had occurred in these two months.
Did that mean that under-ask offers permeated in the markets that weren’t dominated by extremes? In one case, this was very true. The No. 1 location for under-asks was Back Bay, a market that not only accounted for more than one-third of all under-asks, but also a market where extreme over-asks were rare.
In other neighborhoods, location didn’t seem to be much of an indicator of whether a condo was going to attract extreme or negotiated offers. For example, Brookline was among the most prolific for extreme over-asks (16), while at the same time it had the second most under-ask offers (10).
If it wasn’t location, then what was the best indicator of whether a condo was most likely to garner under-ask or extreme over-ask offers? The best indicator I found was market time. The shorter the time a condominium was on market, the more likely it was going to get extreme over-ask offers; and the longer the time was on market, the more likely that it was going to receive a negotiated offer.
While the vast majority of extremes sold in seven days or less (63 percent), nearly seven out of every eight (87 percent) under-asks were on market for at least 12 days. And, while only 5 percent of the extremes made it 30 days on market, 50 percent of the under-asks lasted at least 36 days on the market.
So, if negotiating room is the most important room in your condo purchase, don’t look at the neighborhood, look at days on market.