August 26, 2013
Nearly Sixty Percent Over Asking And Highly Engineered
Having been listed for $1,399,000, it shouldn't come as any surprise that sale of 367 Liberty Street sold for well "over asking" with eleven offers as the list price was at least $400,000 less than what the seller was actually seeking according to a plugged-in source.
With a reported contract price of $2,200,000, however, the "57 percent over list price" stat for the Liberty Hill home with "expansion potential" and big views might still raise an eyebrow or two.
Then again, maybe it won't as remodeled homes on The Hill have been rather hot with the home in front having sold for $3 million in 2012 as did the hidden home behind to which a million-dollar-plus remodel is in the works.
First Published: August 26, 2013 4:00 PM
Comments from "Plugged In" Readers
I wonder what it would have sold for if it was staged? Actually, it's nice to see the home empty for a change. I could do without the 84 pics of the neighborhood.
Can't tell if there is some implied hint at the buyer here?
Also, FB closes at 41.31, AAPL at 502, TSLA... you get the point.
Still, with the headlines starting to take a turn, I'm sensing a disturbance in the force.
Posted by: eddy at August 26, 2013 5:40 PM
With respect to our working headline which has since changed ("Nearly Sixty Percent Over Asking, Forty Of Which Was Engineered"), while the sale at $2.2 million was 60 percent over asking with the $1.4 million list, a sale at $2.2 million would have been 20 percent over asking on a $1.8 million list (i.e., 40 of the 60 points were engineered).
Of course a higher list price likely wouldn't have attracted as much attention or attachment, which is the name of the listing game. And in fact, one could argue that it was the 20 percent over $1.8 million which was actually engineered.
Posted by: SocketSite at August 26, 2013 6:10 PM
I apologize, in advance, if this question was answered previously: couldn't the under-pricing strategy backfire on the seller in terms of having to pay the listing agent if at least one buyer submits an offer at the artificial low price?
Posted by: jack at August 26, 2013 6:30 PM
The other problem with the underpricing strategy is that the folks in a position to pay 2.2M are looking at homes listing for 2M+. If the listing price is significantly under what they expect to pay, it might not appear on their radar -- redfin searches allow a 'minimum price' and I can imagine most people would rather have all those pesky 1-bdrm TICs just disappear, so they'd filter them all out.
Such buyers, and the sellers of underpriced houses like this, would need to rely on the buyer's realtor keeping an eye on things....
Posted by: around1905 at August 26, 2013 6:39 PM
@around1905 this is a fixer, people who bid on fixers (whether developers or folks doing it for themselves) don't have a price range. Most make all cash offers, it's not about "budget" but rather what makes sense for them.
Posted by: someone at August 27, 2013 9:08 AM
This whole notion that there was a whisper price is nonsense. This mythical $1.8M ask price isn't anything more concrete than the actual asking price. And the highly engineered 'over asking' price. Come on. No one knew what this would sell for and if comps were so accurate they would just set a sticker price and people would come and buy it on a first come first serve basis. Does 'asking price' matter? Of course it does. Do people get emotional about a home and overbid? Every single day. But this isn't an auction where people are bidding and re-bidding in an open forum. Every buyer and their agent have a conversation and pick a number they feel is an accurate assessment of what it will take to secure the house and they submit it. That's it. The buyer picks a winner. This house went from listed to in escrow in 14 days. Setting a low asking price is a strategy that clearly some people think is a game. There is a house out on 25th ave that had to reduce its price by 50k recently and it just went into escrow a few days later. Do people really believe that if this house was priced 600k lower that it would have sold for more? To be honest, no one really knows. Each sale represents its own little microcosm of economic market efficiency. I do think that there is some corollary impact on the psyche of the failed offerers who are more likely to overbid on the next home; but I don't think it has a direct impact on the subject home. As I've said for many years, the only price that matters is the closing price. Over-ask and under-ask are interesting stats and they are useful to some degree. Under-asking is probably a more telling statistic as it represents an agent over estimating a homes value and no one wants to sell a home under-asking (even though it doesn't really matter). This could just be an agent or an unrealistic home seller.
I'll add that an agent artificially lowering the asking price of a listing, once the known sale price is determined is, in fact, "engineering" the stats. Not that this would ever happen of course, /snark.
[Editor's Note: While you're welcome to your opinion, it's not nonsense nor myth and was definitely more concrete than the strategically selected list price.]
Posted by: eddy at August 27, 2013 11:34 AM
^ I tend to agree with the Editor. I've sold property where I know what price I want and then discuss with my agent the best strategy to receive that price or more. In some cases sellers will categorically tell agents if I don't receive X dollars I'm going to take the house off the market. It's then up to the agent to decide if they want to take the listing. In this case, it's entirely plausible that the seller had a minimum of $1.8M. Where it gets murky is whether the seller should list at that price. I think it's a legitimate tactic to price lower than your reserve price but I know a lot of people who think it is dishonest. In this case it is a moot point because the home sold well over $1.8M.
I do agree with Eddy that the 57% over asking statistic has limited value. Closing price is far more valuable than asking price.
Posted by: Willow at August 27, 2013 1:40 PM
The emerging "auction" convention in the pricing of SF real estate seems to brilliantly serves the collective interests of realtors. It means that the selling broker is virtually certain to get a commission (at least if the contract links the commission to securing an offer at list price), and it seriously hinders the emergence of discount brokerages such as redfin on the buyer side. Buyers (except perhaps for professional flippers) need to hire brokers in order to realistically gauge what to bid.
That said, it remains something of a puzzle to me why the auction model doesn't strengthen the hand of discount brokerages on the listing side. If the listing agent is just providing a stager and marketing materials, couldn't this be done more cheaply by a new market entrant who is paid hourly, rather than the standard 5% - 6% commission price?
Posted by: observant neighbor at August 27, 2013 3:38 PM
I have no doubt that your sources and information as to this $1.8m whisper price are solid and I was not calling out your editorial reporting of this information.
I'd posit that this home sells for +/- 1% of its sold price if it was listed at $1.8M or $1 dollar. I guess the question here is, "can you engineer the selling price?"
We've seen a few high end homes sit for an extended period only to magically as sold way below the asking price. A home is worth what someone is willing to pay.
Posted by: eddy at August 27, 2013 5:22 PM