Real Estate Bubble & Holding Realtors Accountable For Listing Prices

[celilola]

We are in a bubble in Flagstaff, AZ. Many people have long said our motto is "Poverty with a view". Area median income is $53k, the average home price is approx $350k and median rent is approx $1800. These numbers clearly don't add up.

For the past 6+/- months, we have been seeing multiple offers, offers typically exceeding listing price, lack of inventory, investor speculation on future increasing values. I am seeing the exact same thing I saw in 2003/2004, the only difference is this time I have the experience to recognize whats going on.

The last three appraisals I completed, I came in below contact price. One had three offers-located in very basic townhome development, and the listing price was $70K HIGHER than the EXACT SAME MODEL selling in September of 2016 (the accepted offer is $60k higher than the Sept sale).

When I see such a thing Ive been calling Realtors to find out what data they used to support their listing price...and you guessed it, they never have any data.

IMO, Realtors aren't acting in their clients best interest if they lead them to believe an outlandish listing price could be supported...I mean, they have a fiduciary obligation to their clients.

On the other hand, I get it...if I'm selling my house tomorrow, I am going to shoot for the moon with my list price. Although in my case, I would HOPE for a cash buyer, but I would be prepared for it not to appraise (although I have the knowledge other buyers/sellers don't).

What are you seeing in your market? Bubble? Speculation? Are you holding Realtors accountable? Should we be?

End Rant.

 

[ucbruin]

Buyers are willing to purchase at or above listing price?

Why is this the realtors' fault?

 

[jay trotta]

We are in a bubble in Flagstaff, AZ. Many people have long said our motto is "Poverty with a view". Area median income is $53k, the average home price is approx $350k and median rent is approx $1800. These numbers clearly don't add up.

For the past 6+/- months, we have been seeing multiple offers, offers typically exceeding listing price, lack of inventory, investor speculation on future increasing values. I am seeing the exact same thing I saw in 2003/2004, the only difference is this time I have the experience to recognize whats going on.

The last three appraisals I completed, I came in below contact price. One had three offers-located in very basic townhome development, and the listing price was $70K HIGHER than the EXACT SAME MODEL selling in September of 2016 (the accepted offer is $60k higher than the Sept sale).

When I see such a thing Ive been calling Realtors to find out what data they used to support their listing price...and you guessed it, they never have any data.

IMO, Realtors aren't acting in their clients best interest if they lead them to believe an outlandish listing price could be supported...I mean, they have a fiduciary obligation to their clients.

On the other hand, I get it...if I'm selling my house tomorrow, I am going to shoot for the moon with my list price. Although in my case, I would HOPE for a cash buyer, but I would be prepared for it not to appraise (although I have the knowledge other buyers/sellers don't).

What are you seeing in your market? Bubble? Speculation? Are you holding Realtors accountable? Should we be?

End Rant.

Just a couple of pennies worth; The Agent is to attempt to acquire the highest offer, if they List at XXXXXX and there is limited supply and it gets Bid Up, as long as they have the Cash Adjustment, they can make it real. The Buyer on the other hand should be paying more attention, But this is Truly an example of; "Haste Makes Waste" and won't realize it Until they want to Sell.
That's where the Buyer is at on the; "knowledgeable" end of the spectrum

 

[Walter Kirk]

Back in the last century when I took the real estate broker's course in N.J. we were taught that the listing price a broker sets on a property should be the price that the broker believes that the property will sell for.
Many brokers place "pie in the sky" listing prices just to get the seller to sign the listing contract.
Unfortunately most buyers only source of market information is the selling broker.

 

[celilola]

Buyers are willing to purchase at or above listing price?

Why is this the realtors' fault?

Shouldn't the Realtor (while upholding their fiduciary duty to the buyer) be informing them that their offer may be well out of the range of market value?

 

[hastalavista]

Shouldn't the Realtor (while upholding their fiduciary duty to the buyer) be informing them that their offer may be well out of the range of market value?

During the tech run up in Silicon Valley (circa 2000) I read in many purchase contracts a comment like this:

Buyer is advised that the purchase price may be in excess of market value.​

And, sometimes there were, sometimes they were not.

 

[Riick]

Listing broker has a duty to their client (The Seller) to get them the highest price possible for their property.
On the other hand, they are human and in tight markets, they WANT that listing, it's their bread & butter.
In my years selling, over pricing the property to get the listing was called "Buying The Listing"
Not good practice, but, it was done all day, every day, throughout the Country.

 

[Dublin ohio]

Shouldn't the Realtor (while upholding their fiduciary duty to the buyer) be informing them that their offer may be well out of the range of market value?

Buyer's agent. Probably yes. Around here. Seller's agent has no fiduciary duty to buyer. Dual agency requires agent to be neutral unless parties involved authorize otherwise. Have spoken to numerous buyer's agents in multiple competing offer situations above list price. They have all told me that they inform their clients that their offer is overly aggressive and the property very well may not appraise. Most contracts have appraisal contingency. But I am seeing more where buyer agrees to pay out of pocket if appraisal comes in below purchase price.

 

[celilola]

Listing broker has a duty to their client (The Seller) to get them the highest price possible for their property.
On the other hand, they are human and in tight markets, they WANT that listing, it's their bread & butter.
In my years selling, over pricing the property to get the listing was called "Buying The Listing"
Not good practice, but, it was done all day, every day, throughout the Country.

Agreed...the highest price POSSIBLE. An experienced and honest Realtor would look at my example of the $70k higher listing price and say, hmmmmm. When I asked the Realtor why his was worth $70k more than the Sept & July sales, he sent me sales from a luxury townhome community with historically higher property values (approx $100k-$120k higher than the subject area). How is this fulfilling their duty to that seller?
When I took my Realtor classes years ago, I dont remember anything about "buying the listing" This is exactly my point...they arent acting in their clients best interest when they do this.

 

[glenn walker]

You may be entering another Bubble but you won't know it until it blows-up