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Actual sale price is what matters; not asking, listing, or wishing price
2011 Feb 10, 1:26am 16,954 views 44 comments
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Per square feet. Even though every residential realtor runs their shop as if ma and pa were still in charge we the market can easily side step them with per sq. ft. calculations. If commercial RE is based on it so should residential. (We are supposed to be the most advanced economy on the planet are we not?) It eliminates the dreaded Emotion that creeps in when we are overwhelmed with information consumption. And yes, it should be the PSF of sales. This also gives you the chance to smooth out current market insanity and gets you closer to the normal valuation.
P.S. one other sign of a manipulative person’s (commonly referred to as Re*@!#@&s) is sales volume marketing. What the frikking H$!! do I care about her sales volume????
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.
Jeff O
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2011 Feb 10, 10:32pm
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.
FortWayne
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2011 Feb 10, 11:12pm
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.
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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...
#housing