Can you provide a little more information about why you think the buyer overpaid (at the time) by a few percent? If the seller doesn’t mind, can you tell us how much (in dollars) you think was overpaid? [/quote]
Sure.
The purchase was right around $400k.
The price that was quoted by a prospective listing agent was about $425k.
I took the 90 days before and after that closing date for similar room counts in a geographically contiguous area of which the subject was a part and did a tally of all closings. I felt that an appropriate price was $375k to $390k based on ppsf. Ppsf only counts when properties are similar and near each other. I was willing to go on the high side of my estimate since it was damn near the smallest unit of that room count in the sample set (smaller units tend to allow for a higher ppsf). Adam actually mad a good point about that a year or 2 ago with his “buy-the-easiest-to-afford-property-in-the-neighborhood-you-want” strategy. I am paraphrasing to the point of parody but it is really a sound strategy. The most beat up tiny house in La Jolla will go for more than its size and condition would suggest. Conversely, I have to keep repeating to my brother-in-law that just adding more rooms to his house in college area won’t translate into more equity based on PPSF (seriously who would spend $700k for a house with a staircase IN the master bedroom?!?!?!). But I digress. The point is that I would never suggest the higher number suggested by the agent.
[quote=njtosd]Considering the number of factors that can vary from property to property, I would think it would be difficult to cut it that close. [/quote]
I hear a lot that there are “many factors” or that an area “varies wildly”. I find that in the actual final numbers, the market selects for a combination of price, condition, and location. After a while you get a feel. I do this a lot and it never takes me very long to get offers for a listing but yeah, I could always be wrong. I am only human. The DIY in this example felt I did not know the area well. Maybe.
[quote=njtosd] Are there any realtors who (publicly) attempt to predict the ultimate sale price of homes on the market? (Don’t know if that would be ethical – ).[/quote]
I am not sure what would be unethical. No sale price is “ultimate” (this property resold for far more years later). It is our job to consult and give our opinion of market value for a given property in a given area at a given time. Perhaps I don’t understand what you are asking.
The issue I was addressing with the prospective listing agent was that they had suggested that the list price be $425k and I felt that it was above market but that sometimes that issue becomes irrelevant in an accelerating market (which it was).
