What's an 'Average' Bidding War?

By Dave Fratello | October 27th, 2017

We got a question the other day, and it led us to dive into some stats.

The person was contemplating a possible value range for a possible sale. (No one get too excited here; it's speculative.)

Knowing that there is significant uncertainty around value, the discussion turned to listing "low" to make sure buyers come in fairly soon and bid up the price. The seller would let the buyers set the market, without trying to "overthink" things for everyone... and without overpricing.

So the question was, "How much do buyers typically bid up a property if it's priced 'low' and a there is a bidding war?"

In other words, what is an "average" outcome for a bidding war?

While that discussion is off the record, we're happy to share some stats that we have freshly compiled.

We looked back at the better part of 3 dozen multiple-offer situations Dave has been involved with over the past 5 years.

The average bid-up percentage: 4.18%.

Average bid-up dollar amount: $47,728.

Of course, the individual results varied tremendously. Here's some more detail.

First of all, 25% of the "multiple offer situations" (they're not always "bidding wars") resulted in a property selling for less than its asking price at the time.

What's that? Less?

Sure, less. Properties that sit around on the market for a while tend to have a bunch of buyers watching, waiting for a sign that it is time to make a move.

Whether by coincidence or collusion (no collusion!), the phenomenon of multiple offers coming late in an overpriced listing is pretty common.

In "multiple offer situations" resulting in lower prices, we found an average net drop of $88,286, and 2.43% from the last posted price.

We removed those "backwards bidding wars" from the data to look only at those homes that sold for more than asking. (We also removed one from the mix where 3 offers coming in at the list price resulted in... selection of one of the offers at the list price, no overbidding.)

In "bidding wars" where the sale price was higher than the start, we found an average net overbid price of $97,719, and an average 6.70% overbid. Most properties were in Manhattan Beach, but there were Hermosa and Redondo examples in there, also.

Looking at our internal data here, in about 2/3rds of the cases, Dave represented the buyer, while the rest were Dave's listings.

1233 21st Street Hermosa Beach CAOur buyers stretched as high as 13-17% over asking in a few cases, the latest big one being on a Hermosa Beach fixer (pictured) that began at $1.189M, drew more than a dozen offers and sold for $1.400M.

Meantime, buyers coming to Dave's listings with multiple offers have bid up the list price by an average of $113,357, and an average of 7%.

Both of those averages on Dave's listings are driven high by just 2 sold listings, one a lower-priced listing that sold for $125K more (+13.5%) and one beauty of a house that drew 14 offers and sold $325K higher than asking (+15.5%).

Several of Dave's listings drawing multiple offers sold for just $10K-$50K over asking.

That's an outcome that we've always seen as a mark of success by our sellers. They read the market just well enough to price attractively - a smidgen under where the home might sell - drawing enough interest to get more than one buyer, and enabling to pick the strongest and best from the group.

Now, with all those statistics, what does an "average" bidding war really look like?

(No, Dave, don't cop out!)

Well, you see, it depends...


Bonus reading: On South Bay Confidential this week, we wrote about a sorta-kinda auction they're holding on a little SFR in Redondo Beach. The "come-on" price: $495K, about $300K below active competition.

Read: "Can This 'Auction' Drive Redondo Beach Buyers Wild?"

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