Weekly wrap-up: beware the winner’s curse
If you’re buying a single-family home in Seattle you’ll want to read about the winner’s curse, “a tendency for the winning bid in an auction to exceed the intrinsic value or true worth of an item”.
Exhibit A: ahead of its offer deadline this Beacon Hill home listed for $896k had multiple offers waiving inspection (even though no seller inspection was provided) and will be pending for close to $1.1m.
Exhibit B: a Madrona home that felt like a mid-$900s home received 23 offers with 4 over $1m. Winning offer had no contingencies and put up $300k of earnest money early released to the seller. (3-5% is typical for earnest money in competitive situations!)
I know it sounds crazy to put aside fair market value in order to buy a home, but if you want a home under $1.25m and it is a hot home, that is what winning buyers are doing. If you want a “deal”, condos, townhomes and homes that have been on the market more than 7 days are were to focus.
Of the over 400 new listings last week, two were ours. We listed a brownstone loft hybrid at the Brix and a one-of-a-kind floor plan at Nexus with private outdoor space. The most notable new listing is this lighthouse tender turned waterfront house on Mercer Island. It doesn’t get more unique that this home! Other good listings include a $4m Medina home with a pool or this custom contemporary on Beacon Hill.