After two months on the market, the list price for 428 28th Street was reduced from $1,199,000 to $999,000. A month after that, the price was bumped back up to $1,195,000. And today the property remains available. As a reader recently wondered about another property, could this be an example of betting on a bidding war which fails to materialize?
∙Listing: 428 28th Street (3/2) – $1,195,000 [MLS]
I have seen this house and it is rather cramped with lots of narrow, steep stairways. Good for a mountain goat. But, I’ll give them credit for getting a piano in there!
I think the original comment nailed it. A detached house just went on the market on 16th Avenue near Kirkham for less than 900,000. Since an attached house nearby just sold for over a million its definitely a bidding war that is sought. Of course if that doesn’t happen and the seller is given an offer above asking, but under the expectation the seller will likely just reject all offers. The entire process will have been a waste of time for prospective buyers. There is something to be said for truth (and honesty) and not to mention respect for the buyers’ time in expectations and ‘for sale’ prices.
Is that the front of the house or the back? Let’s face it – it’s an ugly house and I wouldn’t pay half that for it. People need to wake up and realize that if they have an ugly house, it needs to be priced accordingly. But, who am I kidding, some sucker will come along and pay way over a million just to own in SF, because “SF is a world-class city where real estate only goes UP!” Has anyone looked outside recently? It’s freezing in June and been gloomy for weeks.
Agree with the comments about house – and I would love to see a planned bidding war fizzle out.
But what’s the deal with this weather? We have the coldest daytime temperatures in the country. Hope we’re not in for another Mark Twain summer. I would think that this would put a bit of a chill on the market.
The Dude likes the Spanish tile on the elevated garden shed. I feel 10 degrees warmer already.
“Of course if that doesn’t happen and the seller is given an offer above asking, but under the expectation the seller will likely just reject all offers”
If the property is listed at $999,000 and has received an offer at $999,000, the seller owes the listing agent the 3% (or whatever has been negotiated) commission. Seller and listing agent have signed a contract which stipulates exactly that. If the seller decides to reject the offer, he still owes the listing agent the sales commission. The fact that San Francisco listing agents don’t seem to enforce the terms of the sales contract is tantamount to fraud in my opinion and helps drive up the market for buyers. If sellers were obliged to accept an asking price offer, they would think twice about listing their property at artificially low prices.
This house has been on an off the market for at least the last 12 to 18 months. The price then was higher too by at least 100K or so. We looked at it during our delusional pursuit for a single fam, fully detached in that area. Though we could get it for good price since it had been on the market for so long — then we saw the ramshackle craziness of it and understood why no one wants to own this bizarre place.
If the seller and listing agent agreed to the strategy to exact the highest sales price by pricing it low why would the listing agent enforce it? (assuming that something isn’t written into the listing agreement stating that the seller has the right to refuse or counteroffer any offer)
I don’t undestand the fraud statement. Fraud to whom? People who can’t control their emotions?
While it’s a crappy practice it’s realtiy. Get over it.
This house was on the market last summer — the facade was recently re-painted and the staging is slightly different since then; perhaps that resets the clock but it has seen way more than two months on market. I checked it out last year. It’s a great neighborhood and the house has some interesting and open features. The reason I passed was the mansard roof in the upstairs bedrooms was a problem for me. It would probably be ok for kids though.
The reality is that the pricing “game” is not fraud. But as a real estate agent I have for several years deplored the inherent dishonesty and (in my opinion) lack of ethics in listing a property for less than the seller is willing to sell it for. It is legal, but lacks respect for the buyers’ time and emotions.
“It is legal, but lacks respect for the buyers’ time and emotions.”
I sold two houses in the last five years. In each of my listing contracts (standard California listing contract) I was obliged to pay my broker his/her commission if he/she presented a willing and able buyer. The fact that real estate agencies do not enforce the terms of the sales contract smack of fraud to me and serve only one purpose: to screw the buyer by artificially inflating prices i.e. facilitating bidding wars.
Just a quick nod of agreement to Anon Agent. The “game” also makes it difficult for those that don’t want to play. If seller prices at what they actually want for a property many buyers won’t even look because the assumption is that the ‘real’ price is 100-200,000 more. A real shame.
The stated “price” is only an invitation to make an offer (in terms of contract law). It is not an offer that can bind the seller when a buyer offers the sales price. A binding contract of real property requires a written offer (by the buyer) and acceptance (by the seller).
Blind bidding also sucks. You might overbid way more than the next guy. Some have suggested an open bid system, similar to an auction, where buyers stand on the porch at a stated time and date and shout out what they will pay. That seems fair.
The standard California listing contract states that the sales commission is due when a buyer made an offer at asking price. Whether the seller accepts the offer or not is irrelevant. I am not talking about the obligation to actually sell. I am talking about the obligation to pay 3% commission to your listing agent if someone made an offer at asking – regardless of whether or not you accepted the offer. This is the issue here. If real estate agencies were to enforce the listing contract i.e. collect their 3% of commission if an offer was received at asking, people could still list at a low price, but at the risk of losing 3%.
No risk, no reward. That’s how it works in a fair market.
Anonymous at 4:27 PM says:
The standard California listing contract states that the sales commission is due when a buyer made an offer at asking price.
How is this true – let’s say the buyer makes an offer at asking price, it’s accepted, but later it falls through in escrow because, say, the buyer used his inspection contingency to get out of the deal. An agent doesn’t get paid in that case since the house doesn’t actually sell – so are agents committing fraud by not making the seller pay them commission at that point?
If I had to guess, the agent advises the seller what the approximate real value is. Then they discuss how they might be able to get more in a bidding war if they under price the property by 100,000 or so. It would be difficult for an agent to make the seller pay them the commission if it was the agent advising the seller to under price the property with the expectation of getting more than the real value.
I’m not blaming the agents exactly as I think most sellers know how the “game” is played and expect their agent to play along. You can’t let the seller off the hook for trying to start the bidding war in the first place.
“I’m not blaming the agents exactly as I think most sellers know how the “game” is played and expect their agent to play along. You can’t let the seller off the hook for trying to start the bidding war in the first place.”
Well, a contract is a contract. Why not simply change the standard California listing contract and say that listing prices are meaningless and are merely intended to solicit the highest possible number of bids.
And, yes, if the offer gets withdrawn because escrow won’t close, no commission is due. That doesn’t invalidate my argument.
Considering 1 in 50 CA residents has a RE license, I wonder when a mom-and-pop RE operation would start enforcing the contract to get commission on this kind of listing price, after unable to sell for months or years.
I don’t have the facts but I assume that most of the business of selling real estate in San Francisco goes to the big real estate brokerage firms and not to mom and pop who happen to have a RE license.
The Dude says the fair price is what the market will pay and that a seller’s agent is working for the seller, ifin you can call it working.
a seller can sign a clause with their agent stating that they can “reject any and all offers”. this protects them from having to pay the commission if an offer is made at asking but less than they are willing to accept. you’ll often see “seller may reject any and all offers” on the flier.
I saw a house in Oakland and after 30 days on the market I asked my agent if I can buy it for asking, she said she would check the interest and never called me back, it has now been removed from the MLS.
No War, No Sale