patrick.net

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...

#housing