When a three-bedroom brick house with a “snout” garage typical of the 1990s was put on the market, it received an unusual number of offers.
In just two days, more than 150 prospective buyers toured Arthur Street and 64 made offers.
Nicole Flores of Dream Town Realty, who marketed the home, said that she expected to receive five or six bids. Did I expect 64 offers? “Oh no.”
Five days after the initial showings, the house, for which owners had asked $525,000, was under contract on April 19. The sale was completed on May 18, at an amount of $820,000, which is 56% more than the asking price.
This is the most offers this real estate reporter, who has been in the business for many years, has ever heard.
Flores: “My nerves had been rattled.”
The buyers offered a price that was far higher than the original asking price. They also provided two safeguards, namely proof of funds to cover the transaction and an appraisal gap, or gap rider. A lender will not lend more than the appraised value. Buyers with a gap rider, therefore, offer to pay the difference in cash between the agreed upon price and the appraisal.
Flores’ isn’t the only agent who has received a flurry of nerve-wracking offers this spring.
There are many buyers looking to buy a home, whether it’s because they missed the boom, or due to life changes such as job relocations, marriages, having more children, or empty nests. The inventory of houses for sale is extremely tight. According to Redfin, there were 19,726 houses for sale in Chicago’s metro area as of late April. This is a 27% drop from the same period last year.
These figures help explain why so many people are interested in nice homes that come on the market. When a home is being advertised, it can be so busy that the neighbors mistakenly believe there’s a memorial. Mario Greco, an agent with Berkshire Hathaway HomeServices Chicago, says this happens when a new house comes on the market.
Greco presented a four bedroom house located on Bradley Road, Buffalo Grove. It’s a four-bedroom house with about 2,400 square foot, just like the Lincolnwood home.
The property was listed on April 10, priced at $599,000 He says that in just 72 hours, there were 77 showings.
Greco has said that the deal will be closed above the asking price, even though it is not yet finalized.
It is impossible to know how many homes are listed and receive a large number of offers. However, recent examples abound.
According to Scott Gettleman, listing agent at Berkshire Hathaway HomeServices Chicago, the four-bedroom house on Margaret Terrace in Cary received 31 offers. The sale closed at mid-April for $250,000, which was 25% more than the asking price.
A five-bedroom home on Richmond Street, Arlington Heights, received the same number of bids. The sale closed at $537,000 in late April, which was about 15% more than the asking price.
Holly Connors is the agent at @properties Christie’s International Real Estate who represented the Arlington Heights home.
Connors says that because the house was in good condition and well-maintained by her clients, she expected two or three offers and a sale price of $485,000. The market has reached a point where selling for more than the listed price is almost standard. However, it was surprising to receive so many offers.
Redfin reports that the average price of a home in the Chicago area was 99.5% above the asking price by the end of April. This is up by 2 percentage points compared to the end of February, but below the 100.7% average for the same period in 2022.
Matt Brugioni, who is also surprised at the amount of offers he received, says he understands why this happened.
“There’s such a lack of inventory that people are quick to jump on anything new,” says Brugioni. He is an agent at @properties Christie’s International Real Estate. On April 25, he listed a three-bedroom Round Lake townhouse for clients at just under $246,000 The property was listed with 21 offers seven days after the listing. He can’t reveal the price because the sale isn’t complete.
Keith McMahon, a Compass agent in Naperville represented a home on Lakewood Drive which needed extensive updates. He set the price low at $300,000. He expected investors to pay more than that, about $15,000, because they were interested in the upside potential.
The sale was completed in late February with a $45,000 profit over the asking price. There were 28 bids, including many from investors who planned to rehab and flip the property.
McMahon: “The response was insane.”
Ginny Jackson, a Baird & Warner real estate agent, says that sellers whose homes receive so much attention – and so many offers – are “overjoyed.” She figured that a four bedroom house in Naperville, which she represented, would receive “a handful, maybe three to five offers” and sell for “$620,000, or perhaps up to $625,000,” when it was put on the market in early March.
The house received 21 offers. The winning bidder included a gap-rider and bought the house on April 17th for $660,000 or 8.1% more than the asking price. Jackson reports that the sellers were “thrilled”. Jackson says, “I was thrilled too.”
Why would a purchaser offer to pay so much more than the price asked, and even in some cases risk covering the gap between the appraised value of the property and the price?
Jackson: “They need to buy a home.” There aren’t that many houses available.