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If We Were Off By This Much

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bnmappraisal

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I'm finishing up a $1mil+ property. Long story short, I just wanted to comment on some of the list price to sales prices.

One example: original LP $1,850,000 and SP $1,500,000
Another: original LP $1,950,000 and SP $1,700,000

I figure, if we were off by that much in our analysis (and I've seen larger spreads) we'd be hung out to dry by our license. We get tarred and feathered sometimes over $5k (maybe less at times) and it seems agents can be "off" by hundreds of thousands!

I'm not an agent, so I don't know that side of the coin, but this happens in all price points in my market; it just seems more drastic in the high end market.
 

BRCJR

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The agent can only suggest/recommend a list price and the owner has to agree to it. It may or may not be the agents fault.
 

bnmappraisal

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I kind of figured as much. Thanks for both posts.

different motivations
I understand this part. They're supposed to try for the highest sale price for their client; I get that.

It just amazes me, though sometimes, how "off" that highest price may be. Like I said, I see it in all price points, but this one jumped out at me since that's what I'm working on today.
 

Artemis Fowl

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Not assuming your examples illustrate this:
Upselling happens. Some listing agents compete for listing contracts by promising a high sale price...often knowing that it won't sell for that much. Then they walk it down to a realistic price. It is supposed to be a no-no but it occurs frequently.
 

KYLECODY

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I kind of figured as much. Thanks for both posts.


I understand this part. They're supposed to try for the highest sale price for their client; I get that.

It just amazes me, though sometimes, how "off" that highest price may be. Like I said, I see it in all price points, but this one jumped out at me since that's what I'm working on today.


Most agents will throw whatever number up that the owner "decides" its worth. Not many agents are so successful they will turn down a listing because the owners aren't realistic and most won't tell them its not realistic and risk losing out on the commission.

Its a great big shell game to get listings too.

An agent walks into a house to give a listing presentation, gives a great speech, shows market data, closed sales, marketing times, etc and says I think the right price is around $500k.

Agent B comes in the next day sits on the couch and the couple says "so and so agent said they can get us 500k". Agent B, licking his lips at 3% says oh thats way low. This is definitely worth $550k on the low end.

Guess who the typical, everyday joe homeowners let list the home?

Then later they either get lucky and get that price (only to then hear about this bank thingie called an appraisal) or have to reduce it along the way until its reasonable and then they still have to rely on the old, mean appraiser to come in and tell them their magic house is really only worth $480k..then the World explodes. End of story.
 

Michigan CG

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When I figure a SP/LP ratio I use the most recent list price, not the original list price.
 

J Grant

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Different role ... different objectives ... different motivations

Correct.

The topic reminds why we provide a reasonable market exposure time estimate along with our market value opinion.

f a listing was priced at 1.8 million, and on the MLS for 20 months and sold for 1.5 million, but more reasonably priced similar houses, (priced at 1.6 million, for example) sold within 6-8 months, the 6-8 months is the reasonable market exposure time ( I sometimes comment market exposure time estimate assumes list priced close to appraised value with active marketing effort)
 

Terrel L. Shields

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t just amazes me, though sometimes, how "off" that highest price may be.
Why then is a "list price" even relevant and why would anyone adjust by a typical SP/LP ratio like so many do. It is a fool's errand. I see farms sell for 50% or less their "list" price. Just researched one that sold $240,000 that was once listed for $690,000, then $490,000. Meaningless information.
 

DTB

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Illinois
The purpose of a listing price is to have it low enough to generate interest while leaving room for the seller to negotiate. It is necessarily an artful endeavor.
 
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