patrick.net

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.

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

"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.

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?

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.