Often misunderstood if not misrepresented as a sign of a bullish market, we harp on touts of “over asking” all the time. And when we do, we’re often met with a minor chorus chant of “you’re the only ones that care.”
So riddle us this, when 2939 and 2921 Vallejo sold for a combined $9,500,000, having been listed for $8,500,000 and $2,250,000 respectively, and the MLS was updated to report the combined sale price on the listing for 2939 while the listing for 2921 Vallejo was simply withdrawn, why wasn’t the list price on the listing for 2939 Vallejo updated to accurately reflect the combined transaction as well?
Keep in mind that industry statistics and newsletters with respect to the market, as well as agent league tables, are based on the data which is self-reported on the MLS.
∙ Over Asking! (But Four Percent Less Than Seven Months Ago) [SocketSite]
∙ Over Under Asking For 2939 Vallejo (Plus The Lot Next Door) [SocketSite]
Two units listed separately never reflect the combined sale price. Look at the price of any 2 condos and/or TICs compared to the price of the combined 2-unit building. You always get a deal buying in bulk. So if the combined entity did not have a list price, then there can be no above or below “asking” because “asking” was not defined.
Or, I suppose another acceptable answer is, who cares?
Maybe it’s the same reason certain ECONOMISTs celebrate 2.5% GDP growth during a year of 10% GDP deficits 🙂
“Two units listed separately never reflect the combined sale price. Look at the price of any 2 condos and/or TICs compared to the price of the combined 2-unit building.”
First three two unit buildings I pulled up:
602-604 29th Street: listed for $1,750,000, sum of two separate listings: $1,750,000
764-766 Clayton: listed for $2,238,000, sum of two separate listings: $2,238,000
56-58 Divisadero: listed for $3,674,950, sum of two separate listings: $3,674,950
What the fail are you talking about Dave?
“Two units listed separately never reflect the combined sale price.”
True though if value(A)+value(B) > value(A+B) then why was a MLS price for the combined deal reported as the sales price for just the house ? There are other options :
1. delist both A and B, create a new listing for A+B (at what price ? The combined actual sale of “at listing” ?) and report the sales there
2. report the sale as “confindential”
3. distribute the sales price across the two listings proportionally
None of these alternatives are ideal and completely accurate though they all present a more accurate picture to the downstream stats. But what none of these alternatives do is to report a sale over asking.
The only way to accomplish a truly accurate report would be to create three listings : A, B, and the overlapping A+B each with their prices set to the realistic value(A)+value(B) > value(A+B) as Dave suggests. Whenever whatever sells, delete the irrelevant overlapping listing(s) and report against the apples-to-apples listing. I’m not sure the MLS rules would allow that though it does appear that the MLS rules don’t fully cover all cases that occur in the field.
“Two units listed separately never reflect the combined sale price.”
That’s not true. In my experience a multi-unit building that is also listed in parts almost always lists for the total of the units.
Leave it to the queen of “confidential” sales to figure out a new way to game the system!
Riddle me this, riddle me that, any plugged in person knows that the only thing relevant here are final comps and accurate disclosure. How many times have we seen two condos listed individually and the same ‘multi-unit house’ listed for sale as well. I can think of dozens upon dozens of cases. The most recent case that comes to mind (aside from this one) is 2727-2729 Pacific Ave. It was listed as a separate dwelling (2729)and a combined unit multi-family home. Well, it sold as a combined entity and the MLS entry was updated to “sold” and the 2729 listing was “withdrawn”.
The MLS is an extension of a marketing tool to some extent and should be viewed as such IMO. It is not a complete and accurate record of real estate activity, by far, and there are many gray areas. Consider it an extension of the laughable NAR Reporting, which pretty much everyone tuned out in 2008.
There is another milti-MLS listing currently over at: 2615-2623 Pacific Ave. This was actually sort of confusing on the MLS initially and from what I was told by the agent, the MLS forced them to de-list and correct this one since they listed it as a SFH and a series of condos. They had to relist the SFH as a multi-unit. So the MLS does attempt to monitor some of this stuff FWIW, not that I give them any real credit here though.
As for 2939 and 2921 Vallejo I’m not sure what the big fuss is here? 2939 was sold and the lot was included in the sale. It was marketed separately and I’m sure it was possible (although not probably) that the home and the lot could have sold to different parties. They “withdrew” 2921, and updated the MLS record for 2939 to “sold” and they updated the MLS description to include “House was sold together with lot at 2921 Vallejo”. I’m not really sure what all the ire here is all about. Sure the other site stretched a bit and shouted “over asking!”. But that is MLS Math, which is all together questionable, but a lot more reliable in general since the requirement to disclose final sale price. But in this case, there were only 3 options. #1) what they did. #2) adjust the MLS listing price to $9.5 to reflect that it sold for ‘asking’, or #3) adjust the MLS list price to 8.5+2.25 to show that it sold for under asking. Personally, I couldn’t care less about the option chosen as this is a confusing sale and there really is no ‘correct’ answer that I am aware of; and to top it off, over/under asking is a lame metric anyway.
Anyway, there is no riddle here and the joke is on all of us for wasting so much brain power on worrying about “over/under asking”.
“…the only thing relevant here are final comps and accurate disclosure.”
Now that you mention it the comp issue is a bigger concern. If I were drawing up comps for a client I’d start with a MLS query of homes within a certain radius, with matching characteristics (#BRs, #BAs, parking, etc.) and roughly the same square footage. Then I’d review each unit from that query and knock out those that aren’t true comps for various reasons : adjacency to a busy street or currency of the remodel for example. Maybe someone in the biz can comment on the methodology.
So what matters here WRT comps is whether or not every agent using this sale as a comp will drill down into the sales record listing and notice the annotation “House was sold together with lot at 2921 Vallejo”. Those agents who do notice that comment should reject this sale as a comp. Those who don’t will consider this to be a $9.5 SFH comp and disregard the bonus lot which certainly carries significant value.
The answer to the riddle is that they did this to hit you over the head with the following:
Everything, and I do mean everything, in real estate is done by the agents to mislead. It’s all done to get people to pay too much. Period. If the realtor you foolishly hired starts handing you stats, even actual sold prices of homes, you should thank him or her, then go home and throw the stats, the info, everything right in the trash. It’s all a lie. The whole thing is a set up to mislead you. All of it.
Then go out and hire yourself a discount broker and make an offer or just make an offer to the agent with no broker at all. Why pay someone who is part of a system to mislead you? Are you really that stupid? Exactly what do you think the agent is doing for you other than to try to trick you.
Even if the agent has never put such a misleading stat into the system, if they are part of a group that doesn’t provide even the most basic sense of honesty, why work in that system? What exactly is it doing for you? Why perpetuate a system that consistently lies to you?
Here’s the deal eddy: there was an asking price for what got bought. It was posted plainly for everyone to see. What got bought was below the asking price by a very easy amount to calculate. They add the two asking prices up and that’s what the asking price was.
Otherwise, why not just let them put in what they were really willing to accept as the asking price for every property? “Well, we listed it for $800K, but we were really prepared to accept $700K and someone offered us $750K, so we changed the asking price to $700K and posted it as a $50K over asking sale!” No. That isn’t how it works.
In any event, anyone using any statistic from a realtor or realtor group really needs to have their heads examined. Anyone even USING a realtor needs to have their heads examined. Why would you pay someone to lie to you?
If there are separate APN and individual listings for each lets take the gross $9,500,000 sale price and assign a value to each sold APN as a % of the gross…83% and 17%. So we’d end up with a value for each…$7,885,000 and $1,615,000 (% developed from relationship of gross list price). And report on MLS the individual sale of each. We know the Assessor will need to do some work if the two parcels are not merged.
Eddy wrote “There is another milti-MLS listing currently over at: 2615-2623 Pacific Ave. This was actually sort of confusing on the MLS initially and from what I was told by the agent, the MLS forced them to de-list and correct this one since they listed it as a SFH and a series of condos. They had to relist the SFH as a multi-unit.”
Since “Dwelling Unit Mergers” are a capital crime in this city, the question is whether it can comfortably be used as a SFR. Does it feel like a house? Was it originally built as a house or as units? Its legal status will matter much less than its architectural integrity as a house.
TMOD, no one runs comps and looks at whether the house sold for over or under asking???? That is the only thing that is questionable here. Price per square foot is the name of the game. But $/psf never tells the entire story either since you have to look at lot size, exterior features, etc… And if you’re buying a $9.5M home I would sincerely hope your agent would review all relevant comps in detail. But even on a smaller transaction the same rules apply. It’s buyer beware.
@Tipster, I mostly agree w/ your comments, but the truth is that most people are not qualified to serve as their own representative, and I’ve long said that having a proper buyer agent is smart. But even the best buyer agent is mis-incentiviced. But the system is geared to make people feel like buying a home isn’t so scary when in fact it is a very critical asset / transaction for everyone involved.
Anyone even USING a realtor needs to have their heads examined. Why would you pay someone to lie to you?
Herein lies the problem: Buyers don’t pay anyone, but they have the most to lose and are the most critical component to any transaction. So again, buyer beware. But the one thing buyers do have is that the agent does work for them and only the buyer can make the final decisions. So make them work for their money.
“the agent does work for them”
WRONG, WRONG, WRONG, WRONG, WRONG, WRONG, WRONG, WRONG, WRONG, WRONG, WRONG!
The agent works for HIMSELF, then his agency and then to boost the market, thereby increasing his commission for the next sale. His client’s interests are dead last. I doubt most realtors even remember they actually even HAVE a client except for that nuisance it takes to get “their” commission.
Listing prices aside, you are quite possibly the worst negotiator on the planet if you can’t generate a lower price by bidding on an entire building versus buying the individual units separately. That’s what the fall I am talking about. Has anyone on this blog ever actually bought real estate before?
not tippy-he’s too smart for that!
what with “It’s all a lie. The whole thing is a set up to mislead you. All of it.”
its a grand realtor conspiracy people!
anyway, $9.5Million is a poor result here obviously.
good thing the watchdogs are on it lest people get fooled into throwing their multi-millions around by the universal broker conspiracy (tm.)
jeez, some might think that these listings are flying off the shelf! buy now or be priced out with your multi-million dollar chump change!
So, due to a 2-for-1 deal the closing price of this house is misrepresented by plus one million, or +10.5%. Are there any other structural biases built into the MLS? Are there any that cause the closing price to be misrepresented low?
(and oops, the amount of the price sold error should probably be thought of as somewhat highe, depending on how you calculate the likely actual market price of the separate lot and apportion the 9.5 million). But let’s not let that distract from the question, are there any MLS structural biases that result in price sold errors on the LOW side?
This was low-hanging fruit for manipulation on MLS. It doesn’t top the fake sale used to hide foreclosure that was pointed out a few weeks ago, but it’s still pretty transparent manipulation. A compilation of stats wouldn’t catch something like this, and someone could easily be fooled that this is a comp when looking at MLS without checking the note. When you’re in this price range, you outsource your petty tasks like buying and selling real estate to the little people and you are easily convinced when your little person says that so-and-so’s house down the street sold for over asking, even though it didn’t, because you don’t pay attention to the real estate market carefully.
wow sfr,
“When you’re in this price range, you outsource your petty tasks like buying and selling real estate to the little people and you are easily convinced when your little person says that so-and-so’s house down the street sold for over asking”
really? i have not found this to be true. quite the opposite in fact. i think the rich and poor alike tend to enjoy their ‘retail therapy’ rather than just outsource it to some easily fooled ‘little person’. is this some theory of yours pieced together by watching ‘the rich and famous’ or is there some link you could point us to?