PALO ALTO (KPIX 5) – Bay Area residents are used to hearing about how red hot the housing market is, but home sales on the Peninsula are taking that trend to a wild new level.
In areas closer to Silicon Valley, homes frequently sell for well over asking price.READ MORE: COVID Vaccines: Marin County Set To Expand Eligibility; Seniors Say Finding Appointments Still A Challenge
But if you thought they area housing market couldn’t get any more outrageous, consider a home on Colorado Avenue in Palo Alto.
It listed for $2.9 million, but sold for $3.9 million, $1 million over asking price.
Another home on Anacapa Drive in the Los Altos hills listed for $2.8 million, but sold for $4.5 million. That is $1.67 million over asking.
Finally, there is this home on University Avenue in Los Altos that listed at $7.9 million, but sold for $1.8 million over asking.
In 2017, 10 homes in the mid-Peninsula area sold for $1 million over asking. Six of those listings belonged to Deleon Realty.
The spike begs the question: what’s going on?
“The market has been crazy,” admitted Deleon Realty CEO Mike Repka.
He says it’s a common tactic known as auctioning.
“Spending three to four million dollars on a 1,800 square-foot house seems crazy. But when you know you’re one of 12 that are bidding on it, you don’t feel isolated,” explained Repka.READ MORE: Santa Clara University Receives $25M Donation for Tech Center
It happened at a home on Waverley Street in Palo Alto that was listed at $3.9 million, but sold for just over $5 million.
Repka says a home that is intentionally under priced will attract dozens of bidders. When an auction is done right, the final price will end up higher.
“Anyone who’s been to a charity auction knows they get caught up and they say they’re going to stop at a certain point, and they raise that paddle one or two last times,” said Repka. “When you have 12 people doing that it can make a real difference.”
Lan Bowling with Keller Williams has been a realtor in Palo Alto for nearly 30 years. She says her own personal philosophy is to simply price homes what they’re worth.
“I did that a couple times. But did I like? I don’t,” said Bowling.
She says auctioning attracts lower-end buyers who think they’re in the running, but just end up frustrated.
“Those people think they got a chance, which they don’t. Ok, you’re gonna disappoint so many people,” explained Bowling.
Repka says auctioning is completely legal and transparent.
“It’s an approach that is actually fair and open, because we want to make sure everyone has an opportunity to buy the house,” said Repka.MORE NEWS: Fight Between 2 Women In Marin City Ends In Stabbing
Figures indicate Bay Area home prices shot up again recently. The California Association of Realtors says prices last month jumped 12.5 percent from the year before.