Prices for Houses in the Nation’s Capital Go Up and Up: Are Washingtonians Living in Never-Never Land?

From a Washington Post story by Kathy Orton headlined “$1 million over the asking price: D.C. bidding wars escalate”:

A house in suburban Chevy Chase, Maryland, sold for $1 million above its asking price last month.

The five-bedroom, five-bathroom house in sought-after Chevy Chase Village was listed at $3,495,000 on April 16. After receiving seven offers, the sellers accepted a contract for $4,540,000 on April 19….

A house on Reno Road in Northwest DC that listed for just under $1 million received 32 offers and sold for $1,336,000 on May 7….

“We are now seeing the comparable sales in certain neighborhoods are becoming irrelevant,” Thomas Anderson, president of Washington Fine Properties, said….

While low mortgage rates and a desire — compounded by the pandemic — to upgrade one’s living arrangements are contributing to the housing hysteria, the main reason for the escalating prices is a severe shortage of homes for sale….

Setting a price for the Chevy Chase house was a bit tricky for Kathleen Nealon O’Donovan of Washington Fine Properties who co-listed the house with Nancy Taylor Bubes. Typically, a real estate agent looks at comparable houses in the neighborhood that have recently sold and sets the price based on those sales. However, Chevy Chase Village doesn’t have many sales and those that sold recently were not as extensively renovated as this one had been….

“Having grown up in Chevy Chase Village myself, I know these special homes do not come around often,” O’Donovan said. “So when they do, they go quickly.”

O’Donovan decided to price the house slightly below what she thought it would sell for in a hot market. Her sellers agreed with her pricing strategy. It helped that she had sold a house for them in the past.

“Maybe we’ll get multiples,” she told them. “I’m hoping we can but no promises. You don’t want to get too greedy.”

Once the house went on the market, O’Donovan was pleased by the response.

“There was a ton of interest and my phone was ringing off the hook all weekend from interested agents and their buyers so we decided to set a Monday deadline in order to give everyone the chance to do a pre-inspection if they wanted,” she said.

Judy’s clients were one of the six who lost out on the house. They initially wanted to offer $3.85 million for the house but he convinced them to offer $4.1 million. That still wasn’t enough….

Nevertheless, his clients learned a lesson. The next house they found they beat six other offers for it….

“The market has been on fire the last few months,” O’Donovan said. “There are multiple offers on homes in all different price ranges….It is tough for buyers out there. You have to be prepared to come in clean with no contingencies and willing to escalate very high.”

Some buyers are willing to go to extreme lengths to entice sellers to accept their offer. Redfin CEO Glen Kelman tweeted out last week that “a Bethesda, Maryland home buyer working with @Redfin included in her written offer a pledge to name her firstborn child after the seller. She lost.”…

Kathy Orton is a reporter and Web editor for the Real Estate section. She covers the Washington metropolitan area housing market. Previously, she wrote for the Sports section. She came to The Washington Post in 1996 from the Los Angeles Daily News. She also worked at the Cincinnati Post.

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