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Doesn't the market address this automatically? i.e. price discovery is a process that is inherent to every transaction and nobody is forcing the buyers to make an offer. If the agents don't feel that a seller is truly interesting in selling at the listed price, they don't have to take the listing.
BayArea
2017 May 2, 9:07am
It should address it unless sellers are purposely setting asking prices below market.
If 60% of homes are selling above asking price and the market isn't going up, then there's your answer. Are there any indicators that the market is surging in recent months?
Patrick
2017 May 2, 9:17am
Doesn't the market address this automatically?
No, the agents are party to the conspiracy against buyers. They hope to profit from the deception just like the sellers do.
http://www.bizjournals.com/sanjose/news/2017/03/17/bay-area-san-jose-house-bidding-price-wars.html
No question we are in a bullish seller's market.
However, when it comes to claims about % of sales above asking price, I think it needs to be taken with a grain of salt.
When SJ, SF, and Oakland all have 60% of their sales above asking, the most obvious conclusion is that homes are going up for sale with prices that are below the current market, a common practice in hot markets. Sellers love the frenzy it creates and realtors love to advertise that X% of their sales went above asking. And remember, its 2017 so the market hasn't been growing like gangbusters in the month of Feb to justify that 60%, so this smells funny.
And asking prices don't exactly have restrictions so sellers can ask whatever they want.
Id like to see the industry eliminate this practice as it's dishonest and creates an incredible amount of time wasting for people who are interested at the low asking price but totally uninterested at the real market price.
The idea proposed to eliminate this practice is to make the asking price partially binding. As a seller, if you ask $900k for $1M house in an attempt to create a frenzy, and if you get a $900k offer and refuse to sell, you are on the hook to pay the real estate agent commission based on your $900k asking price. That would overnight eliminate the phony 60% of sales going above asking price.
The problem is that this gives realtors even more power, so I'm conflicted.