I left this story in the comment section in June when Winstanley was pending – it closed yesterday so we can finish the saga. Surfrider had asked when I knew the market had changed, and I filed this response:
It was in mid-May.
Example:
Here the timing was perfect – they hit the market in early March. They listed for $2,985,000, and boom, it gets bid up to $3,100,000. I did a video so you can compare too:
https://www.compass.com/listing/13557-penfield-san-diego-ca-92130/1524821148249056649/
It was inferior to this nearby house on Winstanley in just about every way, which went active on May 15th:
https://www.compass.com/listing/13335-winstanley-way-san-diego-ca-92130/1576977769399823273/
On May 21st, I saw it on broker preview, and the listing agents asked me what I thought. I usually never answer because most agents can’t handle the truth and just get defensive and want to argue instead. But these agents were long-timers so I thought they might appreciate my feedback.
I said that it felt like the market had shifted, and it was going to get harder to sell homes from now on. I told them about Penfield, and how I thought they had gotten lucky. The agents didn’t jump up and agree with me, but I could tell that they had their reservations too. All good agents feel it.
Their listing on Winstanley was priced at $3,199,000, and three weeks after I saw them, they lowered the price to $3,049,000. It went pending four days later.
Even though Winstanley had 500sf more square feet and a better kitchen (Penfield’s kitchen cabinets were painted), it will end up selling for less. If they wouldn’t have lowered their price early, they could still be sitting around unsold too!
Here’s the end of story:
Winstanley closed for $2,900,000, which was $200,000 less than the inferior house on Penfield, and then this smaller house around the corner closed for $2,800,000. So just when the Penfield sale made the neighbors think their homes were worth somewhere into the $3-millions, two sales indicate otherwise only three months later.
Both of those recent sellers bought their house in 2005 and paid in the $1,300,000s.
This could happen in any neighborhood too. Existing homeowners have so much equity that if buyers lowball them by a couple of hundred thousand dollars, they can easily make the deal if they want to. The time of the year is one of the critical components too.
It’s how you can lose 5% or 10% of your imagined equity in a matter of weeks – poof, just like that.
Can we call it “paper equity” instead of “imaginary equity?” On paper the Penfield buyers are looking at a 10%+ loss. I am sure they never imagined that.
I used “imagined” which I thought was appropriate for people who like to dream about their home’s value. The amount imagined yesterday may be just that – a dream.
Because the market conditions play a vital role in how much a buyer will pay today, every home’s value is fluid and a moving target.
Prices fluctuate daily in the stock market. Stocks change hands every second and the actual value of your home changes every -5-7 years or even decades when it is actually sold.
Can you imagine if there was a “ticker tape” running on the bottom of your TV screen or cell phone that listed what people perceived the value of your home.
Totally agree Jim. I think I remember reading your post. I know exactly what you are talking about. How about the Agents that show your listing after their “clients” see the house without them at the open house (totally fine by me) then Agent calls next day to show the listing but does not mention clients saw it yesterday (not so fine would have been courteous) and then after showing contacts me to show another house in neighborhood that I told Buyers about the day before. I told them to have their agent call “x” to see that house and asked who their agent was. They responded they weren’t sure if said agent was still in the business. Again, I said that was fine. It appears a very rude awakening is coming. What say you JTR…?
Haven’t you always thought it was a strange come-on with both Zillow and Redfin that they offer to show you a house within minutes?
It must have been happening regularly that buyers would jump to have a free, no-obligation tour with one of those unsuspecting volunteers, then have Aunt Bea write the deal.
Now that every buyer needs to sign a written contract to see a home, those days will be gone. It will be better for Zillow and Redfin agents who have to take those calls, but they will need to be clear that to see the house, the buyer will need to sign an exclusive contract with them.
It will be the end of the part-timers and weekend warriors – they won’t have enough game to convince a buyer to commit to a contract, unless they are a relative? Who knows how any brand-new agents will be able to enter the business now?
I still haven’t seen any pure buyer-only brokerages appear yet. But somebody is going to try it.
When pure buyer brokerages appear should I ever consider selling a property I will solicit offers for taking my listing. This works both ways. I’m sure I am ahead of this curve but change my mind.
I’m sure it’s coming and you could probably get someone to pay you a point for your listing today. But what do you get? Somebody who has to find his own buyer because there’s no $$ left for a buyer-agent.
Imma jus’ gonna go with an open auction. Know any good help that can do that? Straightforward and open/transparent. Contract with a seller agency at terms. Potential buyers can either try to wing it or hire their own good buyer help. My expenses are known. I don’t care what the buyer does as long as they perform. That’s a big thing. An unrepresented winning bidder can expose themselves to serious financial penalties for not performing. This is yet another place where good help pays off.
Two week review period for all buyers to see it and get their own home inspection (on top of the one we provide).
Then the winner at the auction is buying with no contingencies. If they don’t perform, they lose their 3% deposit.
Those buyers/offers in Los Altos were waiving all contingencies without seeing any home inspection.