It’s more “over asking” action as the sale of 410 Jessie #302 closed escrow yesterday with a reported contract price of $440,000.
Keep in mind that while last listed anew for $399,000 (for an official 10% over asking), the Mint Plaza condo had previously been listed for $499,000 (for an unofficial 12% under asking). And more importantly, the property had previously sold for $580,000 in September 2007, an apples-to-apples drop in value of 24%.
But hey, over asking and in only 55 days if you ignore the 100 days on the market prior to its relisting (which MLS based reports will do).
∙ Hales Warehouse (410 Jessie) Gallery Of Listing(s) Along Mint Plaza [SocketSite]
Why are these MLS games even legal still?
I know some RE bulls get upset by this continued flow of commentary, but I feel that the only way to combat the silliness of RE “data” is to highlight this again and again until the public loses all faith in these types of RE “statistics”.
maybe then the NAR and the various local RE trade associations will offer more meaningful data to help interested parties make informed decisions.
IMO misrepresenting the market does not help the real estate agent’s cause. It keeps seller expectations too high and slows their willingness to lower prices to attract a buyer.
We all know about “location location location” but IMO another possibly equally important factor is “price price price”.
distorted data prevents price discovery. this lowers transactions. RE agents make their $$ based on RE transactions.
“….but I feel that the only way to combat the silliness of RE “data” is to highlight this again and again until the public loses all faith in these types of RE “statistics”.
That would be true if the public at large were paying attention to the types of commentary flows you describe. Unfortunately, the only people paying attention are the real estate obsessives that frequent sites like SS.
Even if a huge expose of these dubious RE stat manipulations were to hit the mainstream media, the public at large would still have faith in so called “official stats” because, as has been proven again and again throughout history, the public at large is pretty damn gullible.
[Editor’s Note: Well over 30,000 real estate obsessives are plugged-in. Perhaps they’ll tell two friends. And so on. And so on…]
Who is it who thinks they NEED to pay over asking in this market? They must have been in love with this placee.
asking price and asking price statistics remain 100% irrelevant to any investment decision. can we stop discussing it?
it might only be useful as a signal that “i have to sell” or “i don’t care if i sell”
“Even if a huge expose of these dubious RE stat manipulations were to hit the mainstream media”
Yeah, the real problem is that the media uncritically publishes NAR/CAR numbers and doesn’t care. This is what the vast majority of the non-obsessed look at when they are trying to decide how the real estate market is doing. As it is, everyone who isn’t “plugged in” tells me constantly “it’s a great time to buy!”
“asking price and asking price statistics remain 100% irrelevant to any investment decision.”
For a rational investor, yes. For the people who think they’re investors, no. These stats are very important to casual buyers and sellers because it’s the only report they get on the state of the market, beyond the salesman-stuff. People who are casual buyers and sellers care a lot whether prices are over asking or under asking and by how much. If people were rational, we wouldn’t have had nearly as many overbids for pergraniteel poorly designed poorly located hosues.
this really isn’t that hard to figure out. if your agent has access to the MLS, just have him or her show you the history of the listing. this whole “official” “not official” argument is boring. mr. editor (and those that comment), when you complain about the lack of transparency with the stats or think that some stats are being hidden, you’re only speaking about the last listing stats or the “official” stats, which frankly, don’t mean sh*t. what buyer isn’t going to ask for the history of the home? what agent is going to keep that information from their client (stupid question, i’m sure there are several, but you shouldn’t be working with them)? if an agent types an address into the MLS, the entire history comes up, every single time the property was listed, sold, withdrawn or expired. there is nothing hidden, it’s all there in a beautiful, easy to digest spreadsheet of sorts. That agent and/or buyer/seller can see how many days TOTAL the listing has been on the market, what the price history has been, etc. BAM, you have a complete picture. why do you call the most recent “official?” what are these “official” stats being used for? if agents want to use them to promote how amazing they are (“look at me, i’m a listing agent that sold this place for 24% over asking!!! hire me to sell your place”), before you hire them, ask to see the entire history of the property.
Socketsite is not the only place to find the “official” numbers. in fact, you’ll get a more complete picture (and a much easier database to search) by using the MLS and seeing the complete property listing history (every time the property was listed in the MLS). this blog often gives the impression that they are the end- all-be-all with “real” numbers. it’s a joke. it’s hard to search this blog for property history. it’s easy to find posts about what a great watchdog they are though ;p it’s much easier and more complete to use the MLS.
this blog and subject is so tired.
As someone not associated with the RE industry in any way, just someone who happens to own a house and reads SS primarily for entertainment and, to a certain minor extent, to keep abreast of developments in the RE industry, I do also sometimes marvel at the obsession with “DOM” and “over asking” on SS.
I have no way of knowing if I’m typical, but I can tell you that when I bought my current place, both of those statistics were not really something I considered or cared much about in my search and eventual purchase.
The main thing I cared about was what was the universe of places available and their prices (including what I thought I could knock them down to and whether they were worth that price to me personally).
I didn’t care two hoots about anyone else’s “over asking” status, any more than if I was buying something on EBay I would care about what the final price was vs. what the seller hoped they could get. It was worth to me what it was worth to me, regardless of how that compared to the sellers “asking price”, and whether some place got “over asking” never really entered into my considerations about some other, different place.
I only cared a tiny amount about DOM when considering how likely it might be for the sellers to accept a lower price. In that case I would look at the history of that specific place, and I wouldn’t care too much about overall averages of DOM for other places. It is true, I suppose, that a naive person could take the DOM on the MLS at face value for those purposes, but I never did that.
I’m sure there must be some people who care about DOM and “over asking” statistics, but for regular buyers I’m not sure it is quite the horrible conspiracy it is sometimes made out to be here.
Having said all that, that’s not to say that SS shouldn’t continue to point out that such statistics as published are generally meaningless. It is a good thing to have counterpoints to the selling/marketing tactics used in any market, not just RE. Perhaps in that sense, SS is performing the “Consumer Reports” function for RE, so more power to ’em.
Yeah, what regularjoe said. 🙂
I appreciate what SS has to offer, whether I agree with it in total, in part or if even at all. It’s nice to know that I”m not alone in my almost distrust of RE agents and the RE industry in general.
When I make offers on places, I offer what I”D be willing to pay for the property. I don’t even care much for the comps, so those stats don’t mean much to me. Just because Joe Schmoe was willing to pay $50K or $100K over asking doesn’t mean that I should use his stupidity to make my own decisions. If I had done that, I’d be one of the schmoes that is now underwater.
I’m happily still waiting . . .
Mint units are somewhat bravely located and hit the market with premium finishes and pricing. That prices have come down so far is a sign that this development aimed a bit too high, which many people noticed from the start.
The usual complaints about MLS are a distraction, and only got brief mention in this post which was obliged to be specific about recent and previous listings and sales.
“I’m sure there must be some people who care about DOM and “over asking” statistics, but for regular buyers I’m not sure it is quite the horrible conspiracy it is sometimes made out to be here.”
I go to a decent amount of opens now as I did during the boom, and I certainly remember neighbors marveling at “X over asking” for the house down the street during the boom and asking for the name of their agent. Lots of real estate marketing is word of mouth, and being able to say these sorts of things can be valuable. You also used to get comments like “10 offers, 4 above asking” to show the frenzy. Maybe this kind of stuff doesn’t matter in September 2010, but it did matter at one point.
In addition, as I said before, the aggregate stats are juked by all of this behavior, and the aggregate stats are what the media publishes and uses to make generalized statements about the real estate market. People whose chief knowledge about real estate comes from the Chron only see these juked stats, and that’s a lot of people.
It’s Econ 101 that an efficient functioning market requires perfect information.
When there are actors in the market who hold a monopoly on market information (e.g., the NAR and the various local RE trade associations) and who manipulate such information to present X as Y (i.e., to present a property as having sold at 10% over asking after 59 days on the market, as opposed to 12% under asking after 155 days on the market), they are undermining the efficiency of the market to profit at the expense of other less informed market participants.
I agree with ex-SFer when s/he says “I feel that the only way to combat the silliness of RE ‘data’ is to highlight this [manipulation] again and again until the public loses all faith in these types of RE ‘statistics’.”
The net result is an extremely jaded and cynical set of market participants who enter the market with the assumption that all information they are told is a lie until and unless indepedently verified.
And it goes without saying that triple kudos are due to sites like socketsite and redfin for calling attention to the manipulation and for making market information more widely accessible.
Any time you have something like RE, where there tend to be many different items with many different characteristics and situations, and an exact price is not readily apparent, and where any individual can ask any price they feel like, it always seemed intuitively obvious to me that any “over/under asking” statistic is not going to have any deep meaning (other than perhaps some mild indication of either frenzy level or seller inability to set proper prices, but then only maybe and only inexactly).
It can be difficult to know what a piece of RE is worth. Therefore, it doesn’t seem particularly strange to me that a seller might try a high price first, then work their way down until they find what the market will bear. Given that completely rational behavior, I’m not sure what “asking” should be for purposes of that stat in such a case.
Some on SS seem to think that sellers should always immediately know and ask exactly the right price, and anything else must be a deliberate ruse to taint the “over asking” stats.
Others seem to think that whatever the first price the seller happens to ask, no matter how mistaken they turn out to be (whether innocently or deliberately), and no matter how long ago they tested the waters, then that first price must always be used as the basis for “over/under asking” stats.
Me, I always thought (even in the boom times) that “over/under asking” was a statistic not much worth paying attention to, because there is way too much inexactness in it and it doesn’t really have much meaning. I didn’t think most people put that much stock into it, any more than they put stock in “list prices” for cars, electronics, or anything else. But since I haven’t taken any surveys, I don’t really know how such stats are generally interpreted by the public at large. I could very well be the only one who thinks this way.
Why is it legal? Because the NAR is a huge institution that spends enormous dollars lobbying to protect their fiefdom as long as possible. To their advantage, home buyers are fundamentally an “amateur” market in that most people only buy a house once, twice, three times etc in a life. Playing with DOM numbers . . . Why is it legal for these new condo developments to list official sales prices excluding huge incentives or cash back– to keep their comps looking good? Why are Chronicle “news” articles just advertising for the r/e industry (usually one of the top 3 stories on sfgate is a house listing).
R/E agents get offended by this talk and there are some value-added agents, but the public feels this way because the majority of us have been blatantly lied to many times– it’s an unregulated industry where the NAR wants as little data out there as possible so they can sell on story and misinformation. 5-6% commission for what?
@sfrenegade: “Yeah, the real problem is that the media uncritically publishes NAR/CAR numbers and doesn’t care.”
I think you can replace NAR/CAR with virtually any organization and the statement would still be true.
Mark D. “The net result is an extremely jaded and cynical set of market participants who enter the market with the assumption that all information they are told is a lie until and unless indepedently verified.”
Thank you for summarizing my feelings about both the real estate and finance industries.
“As it is, everyone who isn’t “plugged in” tells me constantly “it’s a great time to buy!””
wow, constantly huh? they must be ignorant..or maybe they have noted that you can find good distressed deals and interest rates of 4.5% for 30 years. of course we plugged in folk on ss know that its never a good time to buy…
“or maybe they have noted that you can find good distressed deals and interest rates of 4.5% for 30 years”
I haven’t seen that many deals, but 4.5% is worthless if the price sucks, unless you’re one of those people who only looks at the payment when you buy something. Only financially unsophisticated people think the primary concern for a large purchase like this should be the interest rate you get on a massive amount of debt. Debt is not wealth.
anonee, you’ve suggested on multiple threads that there are tons of distressed deals out there, but even professionals like sparky-b have suggested that there aren’t very many, and the few that there are go quickly with thin margins. More and more you sound like one of those guys who had lucky market timing and are trying to rub it in people’s faces.
“More and more you sound like one of those guys who had lucky market timing and are trying to rub it in people’s faces.”
its tipster who makes it sound like there are tons of deals out there (marina is 40% off! and other such crowing..)
as for the lucky market timing i admit i have had some. in fact i know of flippers who made their own luck and its always good timing for that. take for example 1130 cole. bought in mid ’09 and flipped in mid ’10.
[Editor’s Note: Don’t confuse a down to the studs development project with a “flip.”]
Lucky market timing is only meaningful if you cashed in on your paper gains. In 5 years, or 10, the paper gains may have evaporated, or even become paper losses (with inflation factored in etc.).
On the other hand, 1130 Cole appears to be a success story any way you slice it.
“in fact i know of flippers who made their own luck and its always good timing for that. take for example 1130 cole. bought in mid ’09 and flipped in mid ’10.”
No doubt savvy investors can do well in all types of markets. I just think it’s an odd suggestion that there are tons of deals out there now. It seems like a lot of people focus on the prices of yesteryear with an anchoring effect, as I mentioned on another thread with respect to a house.
I certainly go to my share of opens all around the Bay Area and occasionally accompany friends to them too. What’s always odd to me is that people with rundown houses, poorer relative locations, poorly constructed additions, odd or bad layouts, etc. often think their houses are worth what Jones’ house down the street sold for. The problem with that argument is that often the Jones’ house doesn’t have all of the problems that their house does. There’s certainly an element of self-delusion out there. Even within a neighborhood, I’ve seen good houses listed for prices higher than what crap houses that are currently listed sold for during the boom, but those good houses appear to be a far better value than those crap houses.
The best blog about this phenomenon is Burbed, where you often see houses further down the Peninsula for absurd prices, despite their rundown condition, poor general appearance, and poor locations (even sometimes where they might as well be on the Caltrain tracks or one of the freeways because that’s how close they are). My friend I mentioned yesterday noticed the same thing in Santa Monica; there were some houses trying to unsuccessfully match their bubble sale prices that were almost under I-10 (some where at certain times of day the freeway viaduct would likely cast a shadow on the yard, if not the house).
when I put my unit up on the market last year I was guided by my RE agent and “quickoffer”. Stats that showed I would have no problem getting above asking due to the stats. I listed, after 6 months had to finally sell for $100K less than listed. According to quickoffer, I undersold by 25% or some weird number. The stats really don’t mean much. I was happy to only have to adjust $100K although would not have initially listed if I knew I would sell for what I did. Too far down the rabbit hole.
The market is very local and very person-driven.
In the few deals I have followed there is this unit that got stuck for 4 months all summer with no takers. Then out of the blue 3 competing offers and the place gets contingent, maybe at or over asking. Sure there was a reduction 2 weeks before, but a lot of this is very random when looking closely.
A place might not sell at all for no fault on the place’s part, but because there are not enough buyers interested in this type of property at that time. Of course in a massively seller market, everything and anything could sell at almost any price. No more so today.
That has to be tough for agents who are sometimes stuck with a property and no real reason for not selling it, even if they use everything in their “toolbox”.
At this point, a price reduction is sometimes the best resort to wake up fence-sitters 😉
“[Editor’s Note: Don’t confuse a down to the studs development project with a “flip.”]”
why not? the strategy is exactly the same. to wit: buy the under priced potential, exploit that vision, sell for a profit.
just like 1130 cole.
No it’s not the same.
1130 Cole required a contractor with at least $1 million available cash to be ready when a property bought as part of a Ponzi scheme is lost halfway through a rehab attempt. A flip requires little cash, and less knowledge.
I think your example really points out how hard it is to find a deal right now…
Anonee’s simple advice for a profitable “flip” reminds me of the old Steve Martin routine:
Do you want to know how you can make a million dollars and not pay any taxes?
First….you make a million dollars.
Then…you don’t pay any taxes!
It’s that simple – you make a million dollars and then you don’t pay any taxes. You see there? Pretty simple plan!
So you ask, what do you do then, if the tax man comes to your door and asks you, ‘Why did you make a million dollars and not pay any taxes?’ And do you know what you tell him?
‘I forgot.’
That’s it – ‘I forgot.’
See, it’s not that hard at all, you too can make a million dollars and not pay any taxes!
I’m a “flipper”, ummm… developer. Seriously, if we are going to get in to semantics, I would define a flip as buying a property, doing cosmetic changes only, which typically in SF only requires over the counter permits or none at all, then selling. Most of these deals counted on both cheap capital and quickly rising real estate prices to make any profit. As a developer, there are still good deals out there, but one must move fast and having lots of cashola to close the deal is key IMO. Profits are made in this market by knowing how to get the entitlements and how to build quality for less. Simple, yet hard to do.
“A flip requires little cash, and less knowledge.”
if you say so. its great how these armchair qb’s can tell us how to make $$ even when they’ve never done so, and to disparage those who actually do.
actually I was a real estate agent for 4 years, and represented a couple flippers during my time, and the modus operandi was to buy with 0-5% down, slap some paint on, maybe put in some ikea kitchen cabinets if they felt bold, and sell after 3-6 months for ridiculous profits.
One of my clients had 15 different properties scattered throughout the bay area going like this one time.
A flipper is a very different beast from a developer or rehabber.
“Most of these deals counted on both cheap capital and quickly rising real estate prices to make any profit.”
This is probably the best characteristic of “flipper” as opposed to “developer.” The developer actually is able to “buy the under priced potential, exploit that vision, sell for a profit.” That’s why I suggested a good developer could do this in any market. The flipper just benefits from the rest of the market being in a bubble and does very little of real substance in and of themselves.
I’m not sure who is being disparaged here besides the amateur pergraniteelers during the boom, some of whom were late on their timing and got slaughtered as a result. I think everyone reasonable acknowledges that 1130 Cole was good development.
“I’m not sure who is being disparaged here besides the amateur pergraniteelers during the boom, some of whom were late on their timing and got slaughtered as a result. I think everyone reasonable acknowledges that 1130 Cole was good development.”
Exactly. I think 1130 Cole was beautifully done, and the developer/rehabber looks to be a smart businessperson, and is most definitely NOT anything near what I would consider a flipper.