patrick.net

I could see making a big deal about "percent of asking price" for an agent and owner who realistically price the home after doing a comprehensive market analysis and asking honest questions about how badly the owner needs to sell. Unfortunately there are WAY too many agents out there who are "buying" listings promising grand selling prices, and handling sellers in a dishonest fashion just to get the listing and hold on to what remains of their real estate career.

We recently sold a home in a suburb of Chicago. for $7000.00 under our initial asking price on an offer that came 45 days after we listed. We sold it for less than I wanted to, but we wanted to sell and make a move for a better school district. We priced realistically as evidenced by a selling price that was 97% of the asking price.

Till this day I am still wishing for the MLS system to charge the listing agents money for every 30 days a listing is posted.

Right now it's no different from craigslist (car listings). Ten cars for sale, and 9 of them weren't even serious to sell in the first place. But if an idiot is willing to give them 20k for a 10k car, they'd sell. You never saw overpricing like this back in the old days when selling a car required you to pay a newspaper company to print an ad. Anybody listed on the paper is dead serious about selling.

Even eBay has an insertion fee.

chemechie says

Very good point Patrick!

Along the same lines, I keep hearing people talk about how much a property is “worth” - a property is worth what someone will pay for it now, not what it was 5 years ago, not what it could be in another 5 years, not what the assessment is on it.

Been saying that for years. In business anything is only worth what someone is willing to pay for it.

It was so dumb, that for a while there was this mass stupidity sponsored by federal government which was bribed by Fannie, Freddie, Countrywide and other similar institutions. So many people just thought houses just magically go up, and thats in a nation where we have the most graduates in business administration compared to any other nation.

Of course the actual sale price is often not what's reported as the selling price either. The price reported is lower so then the real estate taxes are lower. The rest is cash under the table.

Jeff O,

You said, "We priced realistically as evidenced by a selling price that was 97% of the asking price."

That kind of misses the point. :-) More accurately and more importantly, your selling price was 100% of your selling price.

What value does the 97% give you above? The only relevant piece of information that will be, and should be, recorded, is the selling price.

Need to disagree with you. Realtor's logic is fine.
“Percent of asking price” is important to a seller(perhaps not to analyst, not who he targeting in the advert) .
I don't want a realtor telling me my house is worth 130% of the going rate to get the listing.
I want an honest estimate that leads to a realistic listing price. Otherwise I end up
not selling for months and have a tough time getting buyers to look a second time when the
price is lowered.
Many realtors will say anything to get your listing. They don't loose a cent of commission
just because you are paying both a mortgage and rent for months.

robertoaribas, excuse me but it =is= happening. Especially in places where the real estate taxes are high, like Chicago. That "gift" under the table is one that keeps on giving in the form of lower r.e. taxes every year onward. And, the ones who are doing it seem to be the cash buyers. This is becoming a market in which banks are being by-passed and real estate transactions are being handled as "rent-to-own" and in cash. It's a whole new brave world out there.

What are the best websites to find the actual sales prices of houses? This information does not seem to be readily available.

I know this is crass, but when I first moved to Los Angeles I was told that the women thought their pussies were made out of gold. I never really got that until witnessing it first hand. Now, its not just the women, its house owners. They think their pile of dirt, wood, nails, plaster, piping, wiring etc. is made out of gold. Come back to earth house owners, if someone doesn't love it, it gets worn out. If someone doesn't want it or can't afford it, it gets used on the cheap. You get the idea....

bzaz says

What are the best websites to find the actual sales prices of houses? This information does not seem to be readily available.

The MLS cannot be trusted, since it is only a sales tool designed to get you to overpay for a house.

The counties have the official sales data, but there are 3,143 counties, and most of them have their own websites. It's a pity no one has collected that data in one place yet.

One hazard to county data is that they can also be wrong. For example in San Mateo County CA where I live, they record only the transfer tax, which is supposed to be proportional to sale price. But there is no rule against overpaying that tax to make the sale price look higher.

A good thing about county data is that the mortgages have to be publicly recorded there as a lien against the house, so you can at least look up and see how much someone owes. Well, maybe you can. The counties are often less than motivated to share "public" information, because they're often infested with Realtors(R) who don't want the public to have an easy time figuring out what the truth actually is. Might cause people to pay less, or to not buy at all until prices fall more...

maire says

robertoaribas, excuse me but it =is= happening. Especially in places where the real estate taxes are high, like Chicago. That “gift” under the table is one that keeps on giving in the form of lower r.e. taxes every year onward. And, the ones who are doing it seem to be the cash buyers. This is becoming a market in which banks are being by-passed and real estate transactions are being handled as “rent-to-own” and in cash. It’s a whole new brave world out there.

If the transaction is thru a title company, the buyers/sellers have to conspire to bypass the title company. Sales data is gleaned from MLS and property records (in those states that accurate report sales price - many do the "$1 and other consideration.")

I have a hard time believing that banks are participating in this in their foreclosure sales, and that such conspiracies can exist without being uncovered. But, as I've learned in the misc forum, there are so many conspiracies out there that we don't know about.

Patrick, First of all thanks a lot for hosting this web-site and assimilating all this valuable information in one place. Coming to my question ... I have been referring to 'redfin' to understand the area comps (where they list the selling price) and after a house (that I am tracking) gets sold I again refer to the web-site to see what was the selling price. So you mean to say those prices cannot be relied upon and they may in fact be higher than what the house got sold for.

hsehntr says

So you mean to say those prices cannot be relied upon and they may in fact be higher than what the house got sold for.

Right, you should not rely on them because:

1. Redfin, Trulia, Movoto, etc probably get sale prices from the MLS
2. no one is checking the MLS to insure that they are actually correct
3. there is a huge motive to fudge the MLS numbers to get you to think you have to pay more than you really do

IMHO, the safe thing is to use rent for an equivalent place to figure out the correct value. I have a little calculator that does that:

http://patrick.net/housing/calculator.php

Patrick, is your calculator only for California?

Elliemae, actually it's not a conspiracy but considered good business practice. (Specifically the Chinese do it all the time.) I heard about it first in the early '80s. Now it's de rigeur if you've got cash. You can "pay" anything (report anything) you chose. So I understand. Love your pup! I think I'm going to put one of mine up as my avatar....

bzaz says

What are the best websites to find the actual sales prices of houses? This information does not seem to be readily available.

The MLS cannot be trusted, since it is only a sales tool designed to get you to overpay for a house.
The counties have the official sales data, but there are 3,143 counties, and most of them have their own websites. It’s a pity no one has collected that data in one place yet.
One hazard to county data is that they can also be wrong. For example in San Mateo County CA where I live, they record only the transfer tax, which is supposed to be proportional to sale price. But there is no rule against overpaying that tax to make the sale price look higher.
A good thing about county data is that the mortgages have to be publicly recorded there as a lien against the house, so you can at least look up and see how much someone owes. Well, maybe you can. The counties are often less than motivated to share “public” information, because they’re often infested with Realtors(R) who don’t want the public to have an easy time figuring out what the truth actually is. Might cause people to pay less, or to not buy at all until prices fall more…

Patrick my friend, you are mostly right but I see no Realtors "infesting" our particular County. I think we're just still behind the times in terms of what is possible in technology.

The County does have the 'sales price' in the assessor's database. You might like to know there is a newly elected assessor - perhaps a respectful message to him requesting/stating that open online information would be useful to the constituents and feather in his cap. I know they might be looking at a new system...

Finally, I think Realtytrac does a fair job of collecting the information across the country. I am not a subscriber but I know someone who is. Of course, once I found something I was interested in I would still go check out the particular County records to verify. As far as free online systems I still think Redfin is pretty close to accurate.

maire says

Patrick, is your calculator only for California?

No, should work anywhere. There's nothing California-specific about it.

pkowen says

The County does have the ’sales price’ in the assessor’s database.

Is that sales price derived from the transfer tax?

pkowen says

You might like to know there is a newly elected assessor - perhaps a respectful message to him requesting/stating that open online information would be useful to the constituents and feather in his cap.

Good idea. Do you mean Mark Church?

"hat are the best websites to find the actual sales prices of houses? This information does not seem to be readily available"

Check Zillow.com they have lots of information back 10 years, a few years of tax assessment and on the right lower part of the screen, data on previous sale of comparable houses.

I had an unusual discussion with my county property assessor this week.
I am looking at buying a foreclosed property at auction. The house will most likely have to be bulldozed. The previous resident was letting the place rot into the ground then stripped anything of value out of it before leaving it for the bank. The assessors office has it valued at $160,000, the average 2006 price for a house of that square footage.
I expect it to sell for less than the price of a comparable empty lot as it will probably take $10k to remove the house, a selling price of maybe $25-$30K.
My call was to confirm that the property would be valued for tax purposes at the actual selling price, not at some hypothetical bubble year price.

She explained to me that foreclosure auction prices do not accurately represent the value of the property. It would be valued at $160K with an opportunity to adjust for anything that is missing. This was the head of the assessors office! Where do you begin when people with so little knowledge are running the show?

Cleg

Don't trust the mls. here in sd ca. the mls lists properties waaay below market price; then us investors must weed out this c*ap. also the local mls tries tries to hold auctions advertised on the mls. listing agents lic. should be yanked. market must be orderly. banks are holding back inventory. bank stockholders unite and demand executive resignations of banks that play games. zero tol.

vain says

Even eBay has an insertion fee.

sorry .... my sophmoric mind got the better of me.

One thing these people involved in the sale from owners to agents etc. have to realise they NEED to sell I DON'T need to buy.

The problem I have always had with certain real estate sellers is when a first price is insane, even in a free-fall, and reductions are still insane so they take the house off the market ...wait then put it back into multiple listing. Now unless one has nothing better to do but track listings (I don't) upon relisting one cannot see the original price change or days on market. I do not trust the MLS and never have. It is pure common sense that will rule the day.

The bottom line is to know what you feel is fair and honest for that given neighbourhood in my view projecting out what may happen to the neighbourhood and surrounding factors, then price your offer accordingly. If they don't accept I walk.

When I held two state licenses for referral years ago, an old school guy told me something about residential real estate I have never forgotten. He said he learned many years in the business that you put any given house high-end or low on the market at any time set to tight realistic price set to the neighbourhood and economic reality, If that given house doesn't sell, you then adjust the price in 90 days …because he felt if it was priced right to begin with there should have been at least one offer by then, yet if it doesn't sell or no offer after that adjustment you adjust the price in three months one last time! And if property has not sold within three months from that first adjustment his theory was that the fucking property has NO value, to anyone. I felt then and still do that he nailed it. His theory has been the basis of my personal philosophy one that saved me and my family from getting involved in a fucking financial train wreck during this ridiculous pricing and valuation cycle. The evil cycle of the past ten years was nothing but smoke and mirrors, a bad carnival act that too many otherwise intelligent people fell for out of greed.

commonsense says

And if property has not sold within three months from that first adjustment his theory was that the fucking property has NO value, to anyone.

drop the price enough and it will sell.

so it clearly has a non-zero sale price just not what the seller expects.

I agree there. Good point to us, but likely not to most sellers!

"There’s a realtor in that area that makes a big deal about “percent of asking price” and other stats pertaining to listing wishing prices.
His logic is highly flawed"

His logic is actually spot on. His logic is to put the most amount of money in his pocket. If a buyer actually falls for it then his logic is flawed.

I simply think of them as car salesman. Anyone ever try to buy a new car and walk out of finance happy? Buying a new car should be a very happy experience, instead it's a very miserable one. The reality is that these bastards all have a silent agreement among themselves to not drop below a certain price (LIST PRICE). The same holds true for the real estate market. Keep it all inflated as long as you can. This is like the pyramid scam. The last one holding is the loser.

This silent bid, make an offer crap, is exactly that, CRAP. If the banks are not really in the real estate business then they wouldn't be in it. Also, you would think that if the banks weren't really in the business that they would simply take the first offer that was made against the owed balance on the property that's being lost, instead of trying to resell it at a higher overall amount on a new 30 year loan.

That just goes to show you that their really in the real estate business after all. It's all a sham.
ie=
If a person paid 200k for a home and had already paid 150k in principal and now they're losing it, then you would think that the 50k balance would be all that the bank is interested in getting to clear out what was owed.
Instead, they take possession of the product and take all that was initially paid out against the product plus improvements and are now reselling it back on the market as if nothing were ever paid against it. They get a fresh RELOAD on our buck, while they get bailed out on our tax dollars and while they manipulate interest to suit themselves.

IF YOU DON'T OWN IT FREE AND CLEAR, YOU DON'T OWN IT, YOU'RE ONLY RENTING/LEASING.

Hell, even then you don't really own it. Don't pay your taxes on it and watch who gets it.

Here's a link to a house that's a prime example of what this article is talking about. This link takes you to the dream price and not the actual value price.
http://www.immobel.com/personal/1/searchResults.do?per=mrmls&la=EN&shcu=&cust%28mtype%29=res&xml=1&minprice=&maxprice=&cu=USD&minsurface=2600&maxsurface=&minbedroom=&cust%28garage%29=&minbathroom=3&minlsurface=17500&maxlsurface=&c_mrci=10000014644&cust1%28d%29=&cust%28zipcode%29=&cust%28year-built%29=&cust%28type%29=&rpp=15&B1=Search

The actual value price according to CORELOGIC's RealQuest Pro value is:
WARDMAN BULLOCK RD ETIWANDA, CA 91739
Estimated Value : $606,000 and $740,000.00

That's a far cry from the $2,800.000 price tag listed for this place, even if it is in a nice neighborhood.

Now the real question is: How many idiots will go out there based on false information and attempt to pay top dollar for this place in a failing economy.

We all joke around quite a bit and if there's anything that everyone should be doing more than anything else, it's to start thinking in reverse. Highest bidders are the dumbest bidders. Every day and every week the prices are dropping like a rock. The real question is: who's exercising their due diligence and who's not?

Value is value and right now the river is flowing harder and faster than the fish can swim successfully up it. If you're in an upside down mortgage and it drops a hundred thousand, or more. Well, you better soul search to keep it, because that's one hell of a large debt.

To me, these bastards deserve everything they get. They, and those that are guilty by association did this to the American people. If they hadn't been so greedy and tanked our system, we would have probably just kept on going like the Energizer Bunny. Work, profits and sales would still be going strong. SAD!

Here's another one:
http://www.immobel.com/personal/1/searchResults.do?per=mrmls&la=EN&shcu=&cust(mtype)=res&xml=1&minprice=&maxprice=&cu=USD&minsurface=2600&maxsurface=&minbedroom=&cust(garage
LISTED FOR $1,489,000.00

Valued per CORE LOGIC:
BRIDLE PL RANCHO CUCAMONGA, CA 91737
Estimated Value : $663,000 and 1,000.000.00

Here's my comp settings:
20 properties, 3months back .5 mile to 1 mile, living area 15%, Same as subject, Style No preference

It's all a joke. It's the numbers racket at it's best. The magician mesmerizes his audience in one hand while the real trick occurs in the other. I really feel sorry for everyone who has bought at the top end of the bottom of this price drop. They too, will be very upside down in a very short time. It's disgusting how all the misinformation has led many to believe that their getting great deals in an economy that may very likely be worse than anything we had in the past couple of years.

maire says

Patrick, is your calculator only for California?

No, should work anywhere. There’s nothing California-specific about it.
pkowen says

The County does have the ’sales price’ in the assessor’s database.

Is that sales price derived from the transfer tax?
pkowen says

You might like to know there is a newly elected assessor - perhaps a respectful message to him requesting/stating that open online information would be useful to the constituents and feather in his cap.

Good idea. Do you mean Mark Church?

Not sure how it's derived, it seems to be a discreet data field that doesn't seem to be calculated by the system. But I am a recipient of the data in a different system than the source. You can call the assessor's office to find out how it is entered and if that is a derivation.

Yes, Mark Church is the new assessor/recorder/elections/clerk official. He was a board member prior to this.

ptiemann says

But there is no rule against overpaying that tax to make the sale price look higher.

Patrick are you sure about that? I know you have posted this a few times.

That's from an appraiser who was working in the San Mateo County property records office as a clerk. He also told me that there were a dozen other petty scams going on all the time with the records. I just went in one day and ended up chatting with him.

FalconMaster says

.

When I saw your pic, I thought there was a resemblance. Maybe if you trimmed the moustache it would look dead-on?

Just thought it was a little funny, that’s all.

I don't see it, except in as far as everyone with a moustache looks alike. I can speak German though.

@Patrick

>That’s from an appraiser who was working in the San Mateo County property records office as a clerk

I would like to hear more on this!

It was just some nice old guy who was explaining the systems to me, and we got to talking. I asked what he did, and told me about being an appraiser, but also about working in the office and the stuff people to do hide or manipulate price data. It was at least three years ago, but I bet most of the same stuff is going on right now.

I agree, that in the end, everything is only worth what someone is willing to pay. I guess that when wishing prices are paid they're not considered wishes any more. However, when they exist, as an artificial means, of propping up a market without a foundation, then they are big bold wishes.

Comps are destroying these otherwise decent neighborhoods. Pocket deals that are going to cash sales are contributing to the low comp prices too. I've seen some amazing properties sold as pocket deals for less then half of what was the going price at the time. Damn banks. They won't offer the same price discounts for FHA, but they'll discount them tremendously for cash deals.

Here's another kicker. The banks will only lend based on the comp value. The differences must be made up by the buyer if they really desire to purchase a specific peace of property. The dream prices are way off target in almost all areas with very few exceptions. This eliminates the greater majority of FHA buyers, since many of them can only afford the minimum down payment. What's going on here?

To me, these guys sure aren't trying to move their inventory. In fact, it almost feels, like their intentionally trying to keep these properties from selling to many of the onlookers, who are financially sound and have good credit, but don't have the needed cash reserves to balance out against the needed down payment for the purchase. There's a prejudice being expressed in all of this.

My real question is, what is the end game for them? How are they making money on all of this again? It's obvious that they're doing better than anyone would think. Hell, I saw Wells Fargo close up a lease in one location, only to move down the street to another that had a brand new, never occupied building, that they tore down to the ground and rebuilt, to better establish their 21 Century branding.

All of this crap really makes you think about what's being planned for us useless feeders.

solver says

I agree, that in the end, everything is only worth what someone is willing to pay

Should be "willing and able"... we already had too many "willing" that were/are unable.

solver says

Comps are destroying these otherwise decent neighborhoods. Pocket deals that are going to cash sales are contributing to the low comp prices too.

no! "comps" are going back to prce equilibruim where they should have been. The over glamorization of homes is what is killing communities. No matter what the banks do by holding back it will not solve the affordbility issues, they may not be able to tolerate a free fall in prices, but prices will nether the less fall anyway back to long term trends.

Enjoy lower prices in the future, coming to your neighborhood soon!

LOL! I agree. It just pisses me off that even in the darkest hours of our economy, that these bastards still will not let an light in. Imagine if we all had to bid on milk... with silent bids that were over inflated just because the demand outweighed the supply. What's worse is that they're controlling the supply like drug pushers. Give them a little and keep them hooked.

If there's anything that needs reform and change it's getting rid of these crooks by prosecuting them all like they did in the past.

You know what I do with these people? WALK AWAY. It's that simple. Why are so many so desperate to go into debt? No one NEEDS to buy ANYTHING let alone overpay for it. Only a fool does that.

I once had someone pull the "Well, I DO have someone offering XYZ" which of course was higher than I was considering. I was so fed up, knowing it was complete bullshit from her demeanour and expression, I told her point blank, “Then you better sell it to them" and walked out of the door, with the dope running close behind me.

Saw in a r.e. blog yesterday that here in the KC metro area the shadow inventory was about 8 years.

Yeah, I can't figure out what the banks are doing unless it's all a result of sheer inertia. They're so big that no one group/person can see the need to take action and since they've been bailed out once, why worry?

But, think! When they own these huge swaths of land due to multiple foreclosures then they can dictate how they should be used. Medieval barons, redux! Isn't that what WF (in the above comment by solver)
is doing?

Patrick, I love the mustache! And, you've got a Celtic soul.

maire says

Of course the actual sale price is often not what’s reported as the selling price either. The price reported is lower so then the real estate taxes are lower. The rest is cash under the table.

Sale price should be reported on the county assessor. It might not show it correctly on any MLS listing though since it is not a legal record.