Spectator speculates on the sales price
This property first came to my attention when I was looking for examples of properties that were selling for over asking price. I was not involved in this purchase. So, I am a spectator, like you.
This one has a couple of interesting moments in marketing:
7/XX/2008 Listed for $X49,900
9/XX/2008 Price Changed to: $X99,000 (-$50,900)
10/XX/2008 Status Changed to: Extended…withdrawn…
1/XX/2009 Status Changed to: Back on Market
1/XX/2009 Price Changed to: $X39,000 (-$60,000)
2/XX/2009 Price Changed to: $X99,000 (-$40,000)
2/XX/2009 Listing Alert Flag set to: Yes - Accepting Additional Offers
2/XX/2009 Status Changed to: Under Agreement
3/XX/2009 Status Changed to: Back on Market
3/XX/2009 Status Changed to: Under Agreement
3/XX/2009 Status Changed to: Sold
3/XX/2009 Sold for $X05,000 (+$6,000)
It came on the market last summer, way overpriced. In about two months, it came down over $50,000. Then it went off the market for a while in the winter. It came on the market more than $100,000 below the original price.
It still had to come down another $40,000 before it hit the “sweet spot.”
There, at the sweet spot, it found more than one buyer. It sold for over that final asking price...Ooops. Something happened and it came back on the market, about two weeks later. But, the sellers had another interested party, or two. The second Offer went through without any further hitches.
If I were working with the buyer who made the $X05,000 offer, I would be looking at this whole picture to get an idea of how to advise the negotiation.
First, I need a CMA to see what it should sell for in the late February, 2009 market.
Second, I would look into the sellers’ position. Have they moved yet? Have they bought something else? Can I find a compelling need for them to sell this, now, like relocation, job loss, illness…?
From there, my clients can weigh their desire for the property against their fear of losing this particular home. With knowledge of the fair market price, they know the parameters of a reasonable deal.
Commonly, in a situation like this, the seller’s agent will tell me that “the seller feels that he/she/they have already come down nearly $150,000.” My answer - and it should be yours, too - is “the buying public made it clear that they should not have expected the get that extra $150,000.” It is the seller’s agent’s job to help the seller accept where the market has gone, not mine, or yours as a buyer.
How would you interpret a marketing pattern like this house?
Because I know this agent, I believe that she did not create the original price out of thin air. Either the market has dropped dramatically from last fall to this spring, or her sellers were directing her to hold the price too high. I suspect it was the latter. Another case of “sellers in denial.”
What’s your guess?
Comment
Permalink
Email
The real estate agent is blocking other real estate agents from listing the property by telling the seller the house will sell for a higher price than the real estate agent knows it will sell. This activity currently makes up will over half the listings on the market currently...frankly, I think it's more like 90%.
I had heard that in California, some more creative agents have been offering properties for below what they are worth and creating competitive bidding that is getting decent prices relative to market. Alas, human nature is such that the vast majority of agents will waste their sellers' time with unfulfilled promises.
repeat after me, "a house is a liability, a house is a liability..."
Houses will no longer be viewed for their "investment merit", people have figured out that their house is not a cash machine, or a path to riches, but an obligation just like any other debt...
“I believe that she did not create the original price out of thin air.” What?!? This selling agent is entirely to blame for this fiasco. The cornerstone of an effective selling strategy is proper pricing. Good agents give their sellers a narrow range of price. The seller is not given the option to add $150k and “see what happens”. My reputation as a broker is at stake as well as my limited time (only seven days in a week). If they choose to be unrealistic, Aunt Edna is only a phone call away. I had a (then) potential client cry in my office when I gave her and her husband a price. After they reviewed the comps (many of which I had been on the buy or sell side) and listened to my marketing strategy they decided to list with me. We sold the home for 50K above asking in less than two weeks. I speculate that they will use me in the future.
I would blame the seller only for not vetting her agent properly. A flaw in our system is that potential buyers and sellers cannot readily access transaction volume for individual agents. Past success predicts future success. Ask Aunt Edna to access MLS for you to find which agent in your target zip code had the highest transaction volume for the last year or two. The list will be two or three long. Narrow the list further by selecting the agent who specializes in your price range. Then hire that agent and do what he/she says. Aunt Edna will get a 25% referral fee and you will buy/sell your home at the best price in any market.
A flaw in our system is that potential buyers and sellers cannot readily access transaction volume for individual agents. Past success predicts future success.
Wrong, wrong, wrong!
I hired a Broker who was in the Top 200 agents in the entire United States to sell a home for me in Seattle for $2M and one would think that with him selling over $200M in houses per year, year in and year out for many years, he would be competent. No!
All he was, was a "good people person and a good networker" and had a high powered Society wife whose family knew everyone who were worth big bucks in the City. He over priced the home and went on chasing other business and we never heard from him unless we chased him down.
There are exceptions to everything and to every argument, but the dollar volume of some of these older agents who know nothing more than glad handing is usually the case. They can fill out forms and they can drive you around to look at homes, but when all is said and done, they couldn't care less about getting that extra 10K or 50K. The Realtor commission plan with all the splits between agents and their offices makes it so they need to close the deal as fast as possible and get the seller to lower their asking price or strong arming their buyers to stretch their budgets. I know that I am not the only one who feels this way or has witnessed this up close and personal.
Mr Wang -
Real estate continues to be a good investment. The problem is that few are qualified to invest properly. A couple of years back every bozo was an investor , developer , or flipper. Home buyers expected massive increase in value every year. This happens with every up cycle and feeds the cycle. When the cycle turned down, these bozos discovered that they were not qualified and the value increases were not there. This is the " Get rich quick" America that we live in. We` have done very well over the years with real estate investments and will continue to invest.
..
NOTE TO ALL,
You are getting WAY too personal here. Please tone down the personal attacks and tune up the real arguments.
My editors thank you!
Rona: But please provide the approximate dollar value for this transaction. There is a big difference between overpricing a $1 mil house by $150k and overpricing a $300k house by the same amount… I was going to ask this question before but I assumed one of the usual Perry Masons would have scoured the MLS by now and found the specific property you used as an example.
Regardless, these kinds of pricing games are not at all unusual. The specific technique the agent was using (assuming they weren’t just clueless—which is a big assumption) is called “anchoring”. It’s a well-worn tactic in the retail world… Mark it up 300% then take 50% off. People see the original price—which which is arbitrary—and think they’re getting a great deal because they’re paying 50% less. It can be very effective. People fall for this stuff all the time.
The pricing game also applies to comps. Running comps is not a science. It is a tactic used for marketing and negotiation. Show me a typical old oddball property around Boston (i.e. something other than new tract housing where units are very similar) and I can pull comps that will justify +/- 30% of the selling price (often much more). Shrewd players spin the data in their favor depending on which side of the table they’re sitting. The range of values that can be justified is wide. Anybody who claims otherwise is pulling your leg.
REMaven, I agree wholeheartedly, real estate can be a great investment at the right
price ( I own 9 properties myself and just started some long positions in some REITS, WRI, DRE, and BRE). A person's primary residence should not be viwed as an investment. Apartments, retail, land with mineral rights, timberland, etc., these are are investment properties, but the single-family home in Peabody is not an investment. As you say every clown with a hammer was a "developer" a few years ago, and now we are siing the consequences. There will be several banks that fail in MA due to their shoddy construction lending. My point, which I cannot emphasize enough, is your basis, or the price you pay is EVERYTHING.
This broker has only seen the tip of the iceberg...
The Lake County News reports from California. “The loss of homes to foreclosure across the United States, California and Lake County is showing no signs of slowing, and local Realtors are warning of another wave of foreclosed homes that is about to come onto the market. Anita McKee, president of the Lake County Association of Realtors, said Realtors are continuing to see a lot of activity. ‘The foreclosure market is really bad at the moment,’ she said. ‘Some of the agents are getting four a day, every day.’”
“McKee said they’re hearing that the banks are holding back on another group of foreclosures set to come onto the market until the current foreclosure are sold and cleared. ‘We’re expecting a lot more to come,’ said McKee.”
Lance,
I am intentionally making it hard to find this on the MLS. I respect this agent and I don't want his/her client to feel picked on.
I walk a line since I am working here and I am still an active broker.
That said, this property started well below the $1M mark, which makes the $150K price drop worth mentioning. I agree with you that $150-350K drops on $1M+ places are pretty common.
Ward, You are so right about these so called experienced, recommended brokers turning out to be incompetent. And you are right about them not chasing down the last $5k or $20k because they just want to quickly turn the house over. I have met only 1 real estate agent that was worth his/her salt. The rest definitely earned their ranking down there with car salesmen.
Put aside for a moment the issue of whether or not this particular seller's agent misbehaved... Am I the only one here who is not surprised to see the asking price for a property cut by 15-30% since last year? I can provide many similar examples if people don't think price reductions of this magnitude are really happening. The credit bubble popped last summer and real estate prices are tanking. Is nobody else seeing this?
Gotta be W. Roxbury Parkway- am I right? Well, if so:
I don't believe that was a case of a bubble-buyer trying to get out, but long-time owners misreading their house's appeal vs. others in the area AND not adjusting for said bubble-poppage.
Assuming it's the house I'm thinking of, the original asking price was kind of bizarre from Day 1, and while i've always liked that house, it has a very specific style/theme inside and is not going to appeal broadly. It's cool, just not for everyone, and maybe that accounts for some of the drop.
JChristian,
Nope. you didn't find it. Good try.
This blogger might want to review your comment before posting it.
Recent Posts
browse this blog
by categoryINside Boston.com
on the ice at Fenway Park