Paying the premium?
When there's nothing to buy and you want to get a place to live, should you be paying a premium to get a great place? Sam Schneiderman, Broker-owner of Greater Boston Home Team gives you his agent-eye view.
Buyers are out in force in most of the markets that I serve and there is a definite lack of good property that is realistically priced. As a result, properties that present well and are priced right are going fast, often with multiple offers. Some end up selling over asking.
Recently, I got into a multiple offer situation for a buyer on a “best in class” luxury property with some of the best amenities and views in the area. The seller and listing broker were aware of what they had and held out for top dollar. My buyer and I tried to get the price down without success, so he walked away, feeling no pressure since the property had been on the market a while. Several days later he increased his offer, which was still nowhere near the seller’s previous final counter-offer. The listing broker responded that the seller was very close to finalizing a deal with another buyer. My client asked me what he could do to buy this premium property and I explained that he needed to remove contingencies and pay the seller’s price, if he could live with it. He did and couldn’t be happier with the gem them that he now has under agreement.
I also put a modest home in a desirable neighborhood on the market recently. The property was well maintained with a functional, clean, older kitchen and similar baths. It needed interior cosmetics. The seller took great pains to de-clutter and do what he needed to do to make the house look as good as possible. We priced it competitively, but not low. It immediately drew multiple offers ending slightly above asking price.
That got me thinking about premium properties and what’s involved in paying or receiving a premium price.
In the first case, my client is aware that he may be happily paying slightly above what the property will appraise for. In the second case, the appraisal will probably be fine. Again, the buyers will be happy with their score.
Contrast those buyers with others that insist on negotiating a substantial discount off of the asking price, whether it is at market, high or low. To them, it’s all about the discount, rather than the final sale price.
That got me thinking about premium properties and premium prices. I am also wondering about potentially “premium circumstances,” like lack of good inventory.
Should anyone ever pay a premium? Have you (or someone you know) ever paid a premium? Why or why not? Are there times or circumstances when a seller should hold out for a premium price?
Since I know that I can depend on my Boston.com friends to help me sort this out, let me know what you think.
