Mostly in Ann Arbor city not the other parts of Washtenaw County.

Of course we tell our Buyers that IF they want that house.

Louise Scoggins says-A buyer thinks “oh this must be a REALLY good deal if other people are already bidding on it”. This is where we, as Realtors, need to truly examine the area comps, see what kind of work this REO property needs, and determine just how good of a deal is it.

For me, this is where my Realtor is worth her weight in gold. I can get 5 comps from various sources and have a mean price from one go $75,000 up or down as you look at the mean of the other sources. Usually the MLS comps give a gut feeling of being more accurate.

As Bawldguy thinks, so do I. He says,
Hmmm let me go over that. Their agent fuels that urgency by striking the fear of losing the deal into their hearts. Clients are the ones to sign on the dotted line, but this decision is UAI (under agent influence). And if enough agents engage in this practice, you have an overflowing, competitive market like this. Which brings about my question: When an agent influences their client’s decision to go higher than asking, is she serving her client’s interest or her own?

These are questions that pop immediately to mind if I should be dealing with a listing agent I do not know. Yes, this influence is strong in the marketplace. Yet, as you say, it’s the buyer who makes the final decision.

And on that note… I’ve got some cool data brewing…

Dear Buyer, if you want it, buy it. You’re rich uncle wants to give you a wad of cash back and the mortgage rates will be much higher in the future.

Also, I think our Houston market is blessed. In terms of percentages, compared to other hard-hit areas, the low number of total foreclosures compared to inventory creates buyer competition.

But you also touch on another principle. As pros we should make clear and obvious judgments about value, communicating them to clients. But in your examples I don’t see homes selling for obviously ‘over priced’ figures. Influencing a buyer to pay $120K for an $85K home is something neither one of us would do, sans overwhelming evidence it was worth the higher figure.

Are all of the buyers either stupid or advised by unscrupulous agents? Not likely.

That said, there are just as many mistakes made by ‘knowledgeable’ agents in what I’ll call transitional markets as anyone. Example: Coming out of the S & L Crisis many pros advised clients in the way you recommend, but were soon called on the carpet when the market showed that advice was woefully incorrect. Of course, if there are tons of like-kind homes available, the buyer can take their chances, moving on to another opportunity. Sometimes though, that’s simply not the case.

In the long run, paying a little more for a home doesn’t really come out in the wash, so to speak. Your position seems to assume the agent will always know the future, which of course is not the case.

Make any sense?

One piece of information I left out of the original post was this: Last year we were seeing multiple price reductions ($10k a pop) after properties were going through auction without sufficient bids. Fast forward to this year, when properties are selling over an unreduced asking price. Many of these deals carry retail price stickers on them. Pent-up demand has to influence things, sure. But 40% and counting?

I’m not one to blame “overzealous agents” for this any more than you can blame mortgage guys for the last time around. I take the position that the market situation drives the participant’s behavior.

I don’t think anyone can argue against the fact that some of the mortgage guys were responsible for some of what happened last time around just like some agents are responsible for some of this issue.

@Bawldguy

I disagree with you so rarely that when it happened this morning it got me giddy I’m all for personal responsibility and “buyers either want the house or they don’t”. But you can’t tell me agents’ advice doesn’t influence that decision. When a first time homebuyer sees the asking price of a home, they don’t automatically think: Hmmm let me go over that. Their agent fuels that urgency by striking the fear of losing the deal into their hearts. Clients are the ones to sign on the dotted line, but this decision is UAI (under agent influence). And if enough agents engage in this practice, you have an overflowing, competitive market like this. Which brings about my question: When an agent influences their client’s decision to go higher than asking, is she serving her client’s interest or her own? When an agent suggest usage of tax credit to cover the difference, is she breaching fiduciary duty?

I’m by no means suggesting that this is an industry wide issue. The majority of agents selling HUD homes are honest, hard working Realtors. But the issue is, are there enough deal pushers to force the market into this “inflationary” trend? Because if there are, honest Realtors will have to adapt to new market conditions by suggesting that their clients go higher on their bids as well.

@Thomas

Many of these deals are not at severe discounts considering condition.

@Louise

Thanks for your input re: your market. I have no issue with bidding wars per se as they tend to be part of the game in the distressed property market. My issue is with the increase in the ferocity of these wars which makes me wonder about its authenticity.