If you’ve been following the real estate market in Oakland, you’ve probably noticed a sizable discrepancy between the list price and the actual sold price. Often, homes are listed for hundreds of thousands of dollars BELOW the price they actually sell for.
If you a new Bay Area home buyer, it might initially look like there are smokin’ hot deals everywhere you look…until you realize that there’s a fair bit of competition for each property, which often leads to the price getting bid up sometimes hundreds of thousands of dollars above the list price.
If you’re a homeowner looking to sell your home, you might be wondering whether this “list low, sell high” strategy is right for your home, or whether you should use a more transparent pricing strategy.
In this article, we’ll walk through why this phenomenon exists, what it means for your home purchase / sale, and how best to navigate the hot East Bay landscape to best meet your needs.
Why Are Homes Listed So Far Below What They’re Actually Worth?
This “list low, sell high” trend started appearing in Oakland back in the spring of 2012. In the chart below, you can see the divergence between list price and sold price over the past 9 years, culminating in where we are now – on average in Oakland, homes currently sell for 10-20% over their list price.
Home sales in Oakland from 2012-2021. Data from BridgeMLS.
The year 2012 coincided with the kick-off of our last several years of strong appreciation. On a macro level, home sale price appreciation simply outpaced the list prices.
In other words, because demand for houses in the Bay Area has grown so rapidly, it’s driven up home values at a breakneck speed – faster than list prices could keep up. But why?
At first, list prices could not keep pace. If the house next door to yours was listed for $599k and was under contract for $650k, you’d be highly likely to list your house at $599k, since buyers shop by comparison.
Buyers in the market may have watched what happened with your neighbor’s house, so they may have ended up bidding your home up to $660k, knowing that that’s what it’ll take to purchase the house.
When a second neighbor goes to sell their home, they will likely continue to list close to $599k, because that list price now has a proven track record.
So as you can see, it can take quite some time for list prices to catch up, which has led to the current discrepancy we now see between list prices and sale prices.
What The Oakland & East Bay Home Pricing Strategy Means For You
Now let’s fast forward to present day. We are now several years into this trend, and we’ve gotten ourselves into a bit of a pickle. If you’re unaware of the trends or how to navigate Bay Area listings, you might lose out on your dream home as a homebuyer, or you might end up selling your home for less than it’s worth or garnering lackluster interest in your listing.
Homeowners Looking To Sell Your Home
When it comes to pricing your home for sale, we highly recommend working with a knowledgeable real estate agent or team who knows the intricacies of the market, even down to a block-by-block basis.
Since you only have one chance to make a first impression (i.e., just one chance to release your home on the market as a fresh listing), you want to be sure that everything – including the list price – is thoughtful, strategic, and as dialed-in as possible.
In most cases these days, Oakland sellers and real estate agents have a real challenge when it comes to pricing transparently, because that’s often not what the market expects.
Pricing at or closer to market value will make it look overpriced in comparison with the other homes available for sale.
While it can be scary to list your home for a lower price than you know it’s worth, it can often be to your great advantage to list at a lower price.
This is because those lower prices can attract a greater pool of buyers, which builds momentum and interest in your home, ultimately leading to more offers, often at a higher price point.
An attractive list price is more likely to drive interest to the property, making it more likely the seller will receive multiple offers, and create an auction-like mentality among buyers.
As much as we hate pricing a home below market value, in most cases it’s the strategy that will bring about the best results, highest price, and fastest sale for sellers in Oakland.
Homebuyers Looking To Buy A Home
If you’re looking to buy a home here in Oakland or the East Bay, the first thing you should know is that the list prices you see are often well below what the home will actually sell for.
So how much will a home listed at, say, $599,000, actually sell for? As you can likely guess, it depends on a variety of factors, including…
- Property type (single family vs. multifamily)
- Submarket / neighborhood
- Pricing trends in that neighborhood
- The seller’s strategy when they listed the property
Ultimately, in order to dominate the “game” of putting in a winning offer when the list price is so far below the actual sales price, you must either be intimately familiar with the block-by-block trends or work with a professional who knows the market extremely well.
Otherwise, you’ll either be spinning your wheels putting in offers that just miss the mark, or else you’ll put in offers that are too high and thus wonder if you overpaid.
Related: How To Ensure Maximum Resale Value When Purchasing A Home
Need Help Navigating Your Home Sale Or Purchase?
If you’re looking to buy or sell your home here in Oakland or the East Bay, our team is here to help. We have helped hundreds of clients successfully navigate the “list low, sell high” environment here in the Bay Area, and we can help you formulate the best strategy based on your goals.
We are intimately familiar with local neighborhoods and block-by-block nuances and can help guide you on competitive yet reasonable purchase / sale prices.
To get started, call or text us at 510.995.0035, or click here.
