patrick.net

I think there are some states where you can't sell a house for more than the advertised price. That's the case for new cars — I think — in California.

Pat, this is not the hill to fight on.

First of all, the "underprice method" is how tax lien properties are sold. The price starts with what taxes are owed, and is bid up from there. I have been to several of these tax sales, and have not seen any houses bid up to more than they are worth. Secondly, anybody doing the bidding in your example above still must have the cash or a qualified loan. Since people attracted to auctions tend to be bargain hunters anyway, plus the fact they must have available funds, the auction method is unlikely to bring higher prices that the old listing method. Auctioning may speed up a sale, however.

If you were to add a law like "must sell for advertised price," then houses would start to be sold like large aircraft. That is, very high list prices with the opportunity for discounts. This high list/discount would be needed both for bargaining and to allow seller concessions in an environment where seller is limited to the asking price.

If we really want to fight high home prices, the best method is delete any government backed loans. If people had to put 20% down on a 20 year max term loan, house prices would be much more reasonable, and the "McMansion" excesses would be curtailed. People would pay less interest in their lives and everyone wins except Realtors and banks.

HeadSet says

First of all, the "underprice method" is how tax lien properties are sold.

Well that's for tax properties, the RE market should be more up front and honest all around.

HeadSet says

everyone wins except Realtors and banks.

You mean everyone wins except the two entities that matter most in real estate today? Blasphemy!

And to me drugs and prostitution are a more honest and transparent business than real estate.

"Transparency?" Seriously? Before you buy a house you can find out the real estate and related taxes, school district, condition of the property, age, improvement history, and even what the previous owners paid and when. You can also see how comparable homes are priced.

I have never had issues getting details on the homes I was interested in. The problem I have seen over the years is so much easy credit that allows spendthrift types to bid up prices. All that reckless money sloshing around means debtors do not mind paying high "origination fees," points, or in-bedded Realtor commissions, especially if down payment is low and most costs are rolled into the loan.

Too bad people do not have the attitude they would like to be debt free by age 45 or so, and thus stick with max 20 year loans. Such a policy would make the costs of bank fees and Realtor commission more apparent, and would force those fees down.