About 19% of the homes listed for sale in St. Paul this year were on the market for less than two days before the seller accepted an offer. About a third of those were on the market for zero days.
Many of the homes were listed as “coming soon”, which gives potential buyers a chance to drive by and to look at photos of the property. Over the Easter holiday weekend, a small affordable house in the North End neighborhood got 18 offers after two days on the market and it appears that at least one of those offers was for about 15% more than the asking price.
We are seeing instances where the house appraises for less than what the buyer offered. As part of the mortgage approval process, the buyer’s lender orders an appraisal. In some cases, the buyer proceeds with the purchase and kicks in some more cash, and in other cases, the sale price is re-negotiated.
My gut hunch is that a buyer can pay too much for a house. If the buyer can stay in the house for many years it probably doesn’t matter much. If for some reason the buyer needs to sell in a few years and interest rates go up slightly the buyer may have trouble even breaking even after selling.
This is a wonderful time for homeowners who wish to sell a house. Houses in the cities and in the suburbs in most price ranges are selling quickly and for top dollar. Homebuyers can expect to pay a premium and face a lot of competition. Buyers who pay cash or who have large down payments have an advantage.