What could possibly justify a $200,000 spread in pricing on nearly identical homes, within the same community, with remarkably similar options? The answer is nothing.
It’s a frequently asked question that buyers pose when they narrow down the search to either a particular neighborhood or specific floor plan. They look at the list of properties and start wondering why homes priced in the $300,000 price range have identical homes sitting next door priced brushing up against the $500,000 threshold.
There are homes that are priced at or near the current market price and there are homes that get priced at the wish list price. The wish list price could be the premium price the owner paid for the property or the price they’re willing to move for.
Whatever the reason, the price is clearly too high for market conditions. Too high for a buyer without a head injury to pay when they sit down and look at the recent comparable closed sales and too high to appraise for a mortgage, too. Lenders are actually using them these days.
Typically, a homeowner calls a couple of real estate agents when they’ve decided to sell their home. The interview process usually entails some degree of marketing presentation explaining the techniques that will be used to advertise the property and a listing price estimate of the house or condo.
There is an interesting pricing phenomenon that occurs when some homes get listed for sale. For homeowners that get stuck on a particularly high dollar listing price, they will simply interview until they find the right agent. The right agent is the one that tells them the highest list price or the “yes man” agent that simply agrees to list a home at any price.
In the real estate trade it’s known as “buying a listing.”
The agent is willing to expend marketing dollars with little hope of a return on the investment just to get a listing … or they’re willing to tell a seller what they want to hear and a few weeks into the listing start hammering for price reductions to get it to the price where it actually stands a chance of selling.
The homeowners themselves are unwittingly “buying” by holding a property and incurring monthly costs which include the mortgage, taxes, insurance, utilities and maintenance.
What’s more, if the owners really were hoping to sell they are immediately in a negative position where they’ll be chasing the market price down. The end result is more days on market, more holding costs and the risk of stigmatizing the property.
A couple of years on market make for a stale listing. Stale listings tend to make buyers ask questions like, “What’s wrong with that one to keep it on the market so long?”
Behind the gates to most communities there’s a listing or two that is just too high and there probably always will be one. The same as there was always some doctor willing to “help” Michael Jackson, there will be a real estate agent willing to help a homeowner list at the wrong price.
Just remember that having all those yes men around MJ didn’t do him any favors, either.
- - -
Chris Griffith is a real estate agent at Downing-Frye Realty Inc. in Bonita Springs. If you have a question about local real estate or Bonita Springs, e-mail her at chris@LifeInBonitaSprings.com.