A few weeks ago, in the context of an update about bonkers Bernal Heights real estate trends, Neighbor Sarah posed a question about the behavior of home sellers, and the role they play in pushing prices upward.
There are two parties involved in any sale, and there’s no rule that says you have to sell to the highest, all-cash buyer, but it seems that even many idealists become hard-core capitalists in that moment. Idea for Bernalwood: get data from real-estate agents in the area about how often the seller chooses a buyer who is offering materially less than the highest bidder (which, mind you, would still likely be a high price by normal standards). Sales to relatives would not count.
Put another way (and in the way we often hear this question posed), if a seller accepts the highest offer, is that greed? Or, if a Bernal seller declines an offer from an existing Bernal neighbor whose bid for a home was not the highest, is that greed too? What if the existing Bernal neighbor is going through a hard time, or is an artist? Or a teacher? What is it when the seller nevertheless takes a higher offer?
Bernalwood turned to Neighbor Danielle Lazier and Neighbor Michael Minson, both of whom are realtors, to provide some perspective. Neighbor Danielle writes:
In my experience, it’s quite rare for the seller NOT to take the highest-priced offer. For most of our seller-clients, their home is their retirement, their nest egg, their ability to go and pursue the next chapter of their lives, and they want to make every dollar possible. Occasionally, if offers are very close in price and terms (contingencies, length of closing, etc), they may then choose the buyer whose “story” they feel more akin to, but it’s just as likely that they’ll ask us about issuing a multiple counter offer to drive the price higher. This is the nature of the sale. The seller typically wants the most money for their home.
Prices (sales and rentals) have gone up in Bernal Heights because more people want to live here than we have housing for. I don’t think the buyers want to drive up prices and pay more than they have to. They just want to live here and are trying to figure out what it’ll take to make that happen.
Neighbor Michael adds some particulars:
The largest amount I’ve seen a seller leave on the table because of goodwill was $15,000 and that was mostly because the accepted offer had better terms (the buyer was more likely to close than their competitors). A little bit had to do with the fact that both the buyer and seller were “cat people”.
IMAGE: Bernal home sales price trend, by Neighbors Danielle Lazier and Michael Minson