Actual sale price is what matters; not asking, listing, or wishing price
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2011 Feb 10, 1:26am 16,303 views 44 comments
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here's one for the books. As unbelievable as it seems, the tax assessor in our small rural county has decided to use real estate listings as a basis for assessment. He claims that there were too few sales for the past four years (we are on a 4 year reassessment cycle) and therefore he has no basis other than to use the asking prices for homes currently for sale. Indeed there have been very few sales and for those poor souls who had to sell, they sold for 20,30, and even 40% of assessed value. SUrely this cannot be legal---what do you think we should do?
I was watching HGTV's my first sale. A couple with a condo in DC is moving to Denver and wants to sell. They refused to go lower than $410K because the owner "refuses to lose money on the condo" and "refuses to let the other sellers in his complex set his price" where bigger units with more bathrooms were selling at $20k less than his lowered asking price. They decided to rent it out.
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Indirectly I have a vested interest in watching the San Carlos, California housing market closely. 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. The actual sales prices are what matter, not asking prices. Asking prices are completely subjective and are often not founded in reality. For instance, there's a house on Sunset that's been chasing the market down for over a year. Their initial "asking price" was really a "wishing price" - so now that their current asking price is 25.02% lower than their original asking price doesn't tell anyone anything other than the seller & likely their realtor were way off base to begin with. Once the home sells - and the transaction is fully complete and closed - there will be an actual sales price that can give us relevant statistical information.
Another example: let's say someone manages a $357 million quantitative hedge fund and he wants to sell part of his long position in Cotton futures. If Cotton is currently selling at 1356.00 but the manager has a "wishing" price of 1450.00.....no one cares. No one takes note; they wouldn't waste their time. The HF manager is far, far away from the market, and a professional trader looking at the book would think, "What the hell is that person thinking" and continue on with her day.
Only in real estate, i.e. Realtorese, have I seen such unprofessional and uneducated habits so prolifically on display...
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