Sellers and their economic conundrum

[raptorduck]

I heard an NPR report through Patrick.net this morning that rang very true. It indicated that in an up market sellers tend to price their homes 12% above what they think the market values them at and in a down market 33% above what they think the market values them at.

The professor of behavorial finance said that this was due to a refusal to accept any loss over what the seller paid for the house. This even if the seller bought at the peak of the bubble.

I found this confirmatory of a number of seller experiences I have had. My favorite I have shared on this board before. It is a house in RSF that I have written an offer on only to find the seller counter me at a “higher” price each time I came back. Her house has been on the market since 2006 (she takes it off and relists it to help hide this fact) and she has “increased,” not decreased, her asking price and her unpublished lowest acceptable offer. This last round after we came back to her for another go she told us her minimum was $150k higher than the prior minimum she had told us the last time around, which was, in turn, $200k higher than my maximum. Comps in her neighborhood that had a similar asking price when she started, now are selling for another $200k or more below my maximum, or $550k below her current minimum! She is into the house for just a little less than my final offer (including improvements), so it is probably at her break even point. She bought in 2003.

I have seen other odd seller behavior, but this is the most extreme one. She has also cancelled at the last minute (I mean just hours before) two showings and as many of you know, I come from out of town.

I know of another seller who starts at price X and then lowers the price 2 or 3 times, overall by as much as 22% from the original price, then takes it off the market for a while, and relists at the original asking price and starts all over.

As I prepare to be a seller up here, I am doing all I can not to fall into that trap and just price my home to market and sell it fast. We will see if I become part of the seller conundrum or not.

[Ex-SD]

Raptorduck: From your previous posts, you appear to be a logical, rational guy who does his research, gathers all the facts and then makes a decision based on your family’s needs (including the emotional needs of your wife). I don’t know if you’ve ever been in sales but with ANY product, pricing is paramount if you want to move it quickly. Pricing slightly under the real market value will quickly get the attention of a greater selection of qualified buyers and save you a lot of watching/waiting time that you will encounter if you price it otherwise. Every time I have ever sold a home, I used this approach and I never had a home take longer than a month to sell.
Just my two cents………………

Good luck!

[noone]

Speaking of emotions and pricing, did you also hear the NPR report that said that people’s perception of prices can be thrown by using exact numbers. For example $437,116 feels like a discounted price, triggering the “this must be a bargain” response. Whereas some round number like $400,000 doesn’t have that bargain feel to it and seems higher. Throw some odd digits in there, and we assume some special discount rate must have been used to get to that price.

[raptorduck]

I did hear that researcher describe on NPR a pricing study for various things and then included real estate. I was hoping nobody would bring it up though. 😉

[JustLurking]

Don’t worry, Raptor. None of us are going to buy your house anyway. 😉

[Deal Hunter]

Very funny story about a seller….I got a call from a very irrate friend who wanted to sue her realtor for “making” her buy a rental property that is now $44K upside down. She needed my help to write up her case against this realtor.

So, she bought the home in August of 2007 for $202K. The latest comps in the area show that her suggested listing price if she wanted to sell now is $155K. So she wants to sue the realtor for her $47K “loss.”

She put 0% down and the builder paid all her closing costs. Her total mortgage was $1988 per month. She rented the house immediately and was able to get $1100 so her total monthly negative was $888. Her first mortgage payment was due in October and since then she has paid $6,216 toward the mortgage. Also in October, the realtor sent her a “client reimbursement” for $2000. So now, her total out of pocket to date is $4,216. Now, on top of that, she can write off her negative and other landlording related expenses on Schedule E of her tax return and would stand to write off up to $26K from her adjusted gross income.

Now she is furious. First because she is $47K upside down and second because she really doesn’t have much of a case against her realtor. What a conundrum!

[Deal Hunter]

Very funny story about a seller….I got a call from a very irrate friend who wanted to sue her realtor for “making” her buy a rental property that is now $44K upside down. She needed my help to write up her case against this realtor.

So, she bought the home in August of 2007 for $202K. The latest comps in the area show that her suggested listing price if she wanted to sell now is $155K. So she wants to sue the realtor for her $47K “loss.”

She put 0% down and the builder paid all her closing costs. Her total mortgage was $1988 per month. She rented the house immediately and was able to get $1100 so her total monthly negative was $888. Her first mortgage payment was due in October and since then she has paid $6,216 toward the mortgage. Also in October, the realtor sent her a “client reimbursement” for $2000. So now, her total out of pocket to date is $4,216. Now, on top of that, she can write off her negative and other landlording related expenses on Schedule E of her tax return and would stand to write off up to $26K from her adjusted gross income.

Now she is furious. First because she is $47K upside down and second because she really doesn’t have much of a case against her realtor. What a conundrum!

[Deal Hunter]

Very funny story about a seller….I got a call from a very irrate friend who wanted to sue her realtor for “making” her buy a rental property that is now $44K upside down. She needed my help to write up her case against this realtor.

So, she bought the home in August of 2007 for $202K. The latest comps in the area show that her suggested listing price if she wanted to sell now is $155K. So she wants to sue the realtor for her $47K “loss.”

She put 0% down and the builder paid all her closing costs. Her total mortgage was $1988 per month. She rented the house immediately and was able to get $1100 so her total monthly negative was $888. Her first mortgage payment was due in October and since then she has paid $6,216 toward the mortgage. Also in October, the realtor sent her a “client reimbursement” for $2000. So now, her total out of pocket to date is $4,216. Now, on top of that, she can write off her negative and other landlording related expenses on Schedule E of her tax return and would stand to write off up to $26K from her adjusted gross income.

Now she is furious. First because she is $47K upside down and second because she really doesn’t have much of a case against her realtor. What a conundrum!

[Deal Hunter]

Very funny story about a seller….I got a call from a very irrate friend who wanted to sue her realtor for “making” her buy a rental property that is now $44K upside down. She needed my help to write up her case against this realtor.

So, she bought the home in August of 2007 for $202K. The latest comps in the area show that her suggested listing price if she wanted to sell now is $155K. So she wants to sue the realtor for her $47K “loss.”

She put 0% down and the builder paid all her closing costs. Her total mortgage was $1988 per month. She rented the house immediately and was able to get $1100 so her total monthly negative was $888. Her first mortgage payment was due in October and since then she has paid $6,216 toward the mortgage. Also in October, the realtor sent her a “client reimbursement” for $2000. So now, her total out of pocket to date is $4,216. Now, on top of that, she can write off her negative and other landlording related expenses on Schedule E of her tax return and would stand to write off up to $26K from her adjusted gross income.

Now she is furious. First because she is $47K upside down and second because she really doesn’t have much of a case against her realtor. What a conundrum!

[Deal Hunter]

Very funny story about a seller….I got a call from a very irrate friend who wanted to sue her realtor for “making” her buy a rental property that is now $44K upside down. She needed my help to write up her case against this realtor.

So, she bought the home in August of 2007 for $202K. The latest comps in the area show that her suggested listing price if she wanted to sell now is $155K. So she wants to sue the realtor for her $47K “loss.”

She put 0% down and the builder paid all her closing costs. Her total mortgage was $1988 per month. She rented the house immediately and was able to get $1100 so her total monthly negative was $888. Her first mortgage payment was due in October and since then she has paid $6,216 toward the mortgage. Also in October, the realtor sent her a “client reimbursement” for $2000. So now, her total out of pocket to date is $4,216. Now, on top of that, she can write off her negative and other landlording related expenses on Schedule E of her tax return and would stand to write off up to $26K from her adjusted gross income.

Now she is furious. First because she is $47K upside down and second because she really doesn’t have much of a case against her realtor. What a conundrum!

[raptorduck]

JL. My house is just like the majority of older Pardee homes in CV down to the lot size, well except it is not near the beach and in Northern California.

My neighbor decided to sell his house to himself for $150k less than the most recent comp. Got to love the interfamily transfer comp killers. When a buyer’s agent does a comp search, he/she will find my neighbor’s house listed for 0 days and imediately sold. This was almost 6 months ago. Funny, the house sold, but the new buyer looks identical to the prior owner, down to his wife and kids. He even drives the same 10 yr old car.

Well, I am going to list it for the lowest price/sf in the area and move on. All I need is one buyer. It will be the fist fully remodeled home in my neighborhood to go up for sale, ever.

[raptorduck]

JL. My house is just like the majority of older Pardee homes in CV down to the lot size, well except it is not near the beach and in Northern California.

My neighbor decided to sell his house to himself for $150k less than the most recent comp. Got to love the interfamily transfer comp killers. When a buyer’s agent does a comp search, he/she will find my neighbor’s house listed for 0 days and imediately sold. This was almost 6 months ago. Funny, the house sold, but the new buyer looks identical to the prior owner, down to his wife and kids. He even drives the same 10 yr old car.

Well, I am going to list it for the lowest price/sf in the area and move on. All I need is one buyer. It will be the fist fully remodeled home in my neighborhood to go up for sale, ever.

[raptorduck]

JL. My house is just like the majority of older Pardee homes in CV down to the lot size, well except it is not near the beach and in Northern California.

My neighbor decided to sell his house to himself for $150k less than the most recent comp. Got to love the interfamily transfer comp killers. When a buyer’s agent does a comp search, he/she will find my neighbor’s house listed for 0 days and imediately sold. This was almost 6 months ago. Funny, the house sold, but the new buyer looks identical to the prior owner, down to his wife and kids. He even drives the same 10 yr old car.

Well, I am going to list it for the lowest price/sf in the area and move on. All I need is one buyer. It will be the fist fully remodeled home in my neighborhood to go up for sale, ever.

[raptorduck]

JL. My house is just like the majority of older Pardee homes in CV down to the lot size, well except it is not near the beach and in Northern California.

My neighbor decided to sell his house to himself for $150k less than the most recent comp. Got to love the interfamily transfer comp killers. When a buyer’s agent does a comp search, he/she will find my neighbor’s house listed for 0 days and imediately sold. This was almost 6 months ago. Funny, the house sold, but the new buyer looks identical to the prior owner, down to his wife and kids. He even drives the same 10 yr old car.

Well, I am going to list it for the lowest price/sf in the area and move on. All I need is one buyer. It will be the fist fully remodeled home in my neighborhood to go up for sale, ever.

[raptorduck]

JL. My house is just like the majority of older Pardee homes in CV down to the lot size, well except it is not near the beach and in Northern California.

My neighbor decided to sell his house to himself for $150k less than the most recent comp. Got to love the interfamily transfer comp killers. When a buyer’s agent does a comp search, he/she will find my neighbor’s house listed for 0 days and imediately sold. This was almost 6 months ago. Funny, the house sold, but the new buyer looks identical to the prior owner, down to his wife and kids. He even drives the same 10 yr old car.

Well, I am going to list it for the lowest price/sf in the area and move on. All I need is one buyer. It will be the fist fully remodeled home in my neighborhood to go up for sale, ever.

[JustLurking]

Don’t worry, Raptor. None of us are going to buy your house anyway. 😉

[JustLurking]

Don’t worry, Raptor. None of us are going to buy your house anyway. 😉

[JustLurking]

Don’t worry, Raptor. None of us are going to buy your house anyway. 😉

[JustLurking]

Don’t worry, Raptor. None of us are going to buy your house anyway. 😉

[raptorduck]

I did hear that researcher describe on NPR a pricing study for various things and then included real estate. I was hoping nobody would bring it up though. 😉

[raptorduck]

I did hear that researcher describe on NPR a pricing study for various things and then included real estate. I was hoping nobody would bring it up though. 😉

[raptorduck]

I did hear that researcher describe on NPR a pricing study for various things and then included real estate. I was hoping nobody would bring it up though. 😉

[raptorduck]

I did hear that researcher describe on NPR a pricing study for various things and then included real estate. I was hoping nobody would bring it up though. 😉

[noone]

Speaking of emotions and pricing, did you also hear the NPR report that said that people’s perception of prices can be thrown by using exact numbers. For example $437,116 feels like a discounted price, triggering the “this must be a bargain” response. Whereas some round number like $400,000 doesn’t have that bargain feel to it and seems higher. Throw some odd digits in there, and we assume some special discount rate must have been used to get to that price.

[noone]

Speaking of emotions and pricing, did you also hear the NPR report that said that people’s perception of prices can be thrown by using exact numbers. For example $437,116 feels like a discounted price, triggering the “this must be a bargain” response. Whereas some round number like $400,000 doesn’t have that bargain feel to it and seems higher. Throw some odd digits in there, and we assume some special discount rate must have been used to get to that price.

[noone]

Speaking of emotions and pricing, did you also hear the NPR report that said that people’s perception of prices can be thrown by using exact numbers. For example $437,116 feels like a discounted price, triggering the “this must be a bargain” response. Whereas some round number like $400,000 doesn’t have that bargain feel to it and seems higher. Throw some odd digits in there, and we assume some special discount rate must have been used to get to that price.

[noone]

Speaking of emotions and pricing, did you also hear the NPR report that said that people’s perception of prices can be thrown by using exact numbers. For example $437,116 feels like a discounted price, triggering the “this must be a bargain” response. Whereas some round number like $400,000 doesn’t have that bargain feel to it and seems higher. Throw some odd digits in there, and we assume some special discount rate must have been used to get to that price.

[Ex-SD]

Raptorduck: From your previous posts, you appear to be a logical, rational guy who does his research, gathers all the facts and then makes a decision based on your family’s needs (including the emotional needs of your wife). I don’t know if you’ve ever been in sales but with ANY product, pricing is paramount if you want to move it quickly. Pricing slightly under the real market value will quickly get the attention of a greater selection of qualified buyers and save you a lot of watching/waiting time that you will encounter if you price it otherwise. Every time I have ever sold a home, I used this approach and I never had a home take longer than a month to sell.
Just my two cents………………

Good luck!

[Ex-SD]

Raptorduck: From your previous posts, you appear to be a logical, rational guy who does his research, gathers all the facts and then makes a decision based on your family’s needs (including the emotional needs of your wife). I don’t know if you’ve ever been in sales but with ANY product, pricing is paramount if you want to move it quickly. Pricing slightly under the real market value will quickly get the attention of a greater selection of qualified buyers and save you a lot of watching/waiting time that you will encounter if you price it otherwise. Every time I have ever sold a home, I used this approach and I never had a home take longer than a month to sell.
Just my two cents………………

Good luck!

[Ex-SD]

Raptorduck: From your previous posts, you appear to be a logical, rational guy who does his research, gathers all the facts and then makes a decision based on your family’s needs (including the emotional needs of your wife). I don’t know if you’ve ever been in sales but with ANY product, pricing is paramount if you want to move it quickly. Pricing slightly under the real market value will quickly get the attention of a greater selection of qualified buyers and save you a lot of watching/waiting time that you will encounter if you price it otherwise. Every time I have ever sold a home, I used this approach and I never had a home take longer than a month to sell.
Just my two cents………………

Good luck!

[Ex-SD]

Raptorduck: From your previous posts, you appear to be a logical, rational guy who does his research, gathers all the facts and then makes a decision based on your family’s needs (including the emotional needs of your wife). I don’t know if you’ve ever been in sales but with ANY product, pricing is paramount if you want to move it quickly. Pricing slightly under the real market value will quickly get the attention of a greater selection of qualified buyers and save you a lot of watching/waiting time that you will encounter if you price it otherwise. Every time I have ever sold a home, I used this approach and I never had a home take longer than a month to sell.
Just my two cents………………

Good luck!

[pfflyer]

Raptor, In your opinion are the homes in your price range “worth” 2003 values. I’m looking at a different sector but trying to assess what year these will fall to before they make sense again.

[raptorduck]

Pfflyer. I suppose so, but what do I know? Some homes I have looked at are worth near what they are asking for them IMHO, but most are overpriced. That is still the majority of listings in the areas I am looking at. So seems the conundrum holds true.

As for those few that are worth near what they are asking, those are the ones that had multiple offers and that I got out bid or outsmarted trying to buy.

[raptorduck]

Pfflyer. I suppose so, but what do I know? Some homes I have looked at are worth near what they are asking for them IMHO, but most are overpriced. That is still the majority of listings in the areas I am looking at. So seems the conundrum holds true.

As for those few that are worth near what they are asking, those are the ones that had multiple offers and that I got out bid or outsmarted trying to buy.

[raptorduck]

Pfflyer. I suppose so, but what do I know? Some homes I have looked at are worth near what they are asking for them IMHO, but most are overpriced. That is still the majority of listings in the areas I am looking at. So seems the conundrum holds true.

As for those few that are worth near what they are asking, those are the ones that had multiple offers and that I got out bid or outsmarted trying to buy.

[raptorduck]

Pfflyer. I suppose so, but what do I know? Some homes I have looked at are worth near what they are asking for them IMHO, but most are overpriced. That is still the majority of listings in the areas I am looking at. So seems the conundrum holds true.

As for those few that are worth near what they are asking, those are the ones that had multiple offers and that I got out bid or outsmarted trying to buy.

[raptorduck]

Pfflyer. I suppose so, but what do I know? Some homes I have looked at are worth near what they are asking for them IMHO, but most are overpriced. That is still the majority of listings in the areas I am looking at. So seems the conundrum holds true.

As for those few that are worth near what they are asking, those are the ones that had multiple offers and that I got out bid or outsmarted trying to buy.

[pfflyer]

Raptor, In your opinion are the homes in your price range “worth” 2003 values. I’m looking at a different sector but trying to assess what year these will fall to before they make sense again.

[pfflyer]

Raptor, In your opinion are the homes in your price range “worth” 2003 values. I’m looking at a different sector but trying to assess what year these will fall to before they make sense again.

[pfflyer]

Raptor, In your opinion are the homes in your price range “worth” 2003 values. I’m looking at a different sector but trying to assess what year these will fall to before they make sense again.

[pfflyer]

Raptor, In your opinion are the homes in your price range “worth” 2003 values. I’m looking at a different sector but trying to assess what year these will fall to before they make sense again.

[Author]

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