The big secret

As I was leaving an open house today (boy, those are getting fraught these days) a real estate agent with a huge amount of experience and wisdom said to me, “This thing has has to be priced at X (25% lower than its asking price). I agreed – if anything, she was being too generous, but she, unlike me, doesn’t blog and keeps her opinions to herself. But her words demonstrate what I’ve said here before: agents on top of their game know an over-priced piece of erhumph when we see one – everyone knows it, we just haven’t said so before. But we didn’t sell them to our clients at that price, either. The Greenwich Board has kept an illusion going for years by showing a “sell to ask” ratio of around 96% but wouldn’t disclose that they used the last asking price, not the first. So houses would come on, sit for a good long while, drop down to the realm of what passed for reasonableness and move off the market at 15%-25% below their first price. I complained, in print, about this bit of chicanery many times to no effect – the realtors like it that way.

What’s (almost) funny now is that sellers and their agents are still trying out ridiculous prices, I guess in the hope that some sucker will bite. That’s not happening these days – it’s hard enough to convince a buyer that a certain price is a good one even after four price reductions, so my advice is that this is not the market to continue that practice. But they keep on. I can’t remember how many houses I’ve seen recently that were truly priced to sell, but if I could, I’m sure I wouldn’t need more than the fingers on one hand to count them.

4 Comments

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4 responses to “The big secret

  1. Jane

    Did you look at 37 Wesskum Wood? So cute from the street. Your thoughts?

  2. Joe

    I think there will always be a Realtor in this Town that will take a listing at any price and pray like made it will sell. Until all the Realtors tell the Sellers the truth and the Sellers can’t find a Realtor to take the listing overpricing will continue to stagnate the Greenwich real estate market. Sellers and Realtors forget in almost all cases an offer will include an appraisal contingency and if the house doesn’t appraise at the sales price – who is going to come up with the difference to make the deal, the Buyer-don’t think so, the Seller could have to, the Realtor – are you kidding – if the parties can’t overcome the difference the house is back on the market. So us Sellers must come to the realization that Greenwich real estate does go down when Trillions of wealth around the world are lost. Values will come back – they always have here – the reason they will come back is because our great Town is still a place people want to live. They just don’t want to live here right now until our real estate values reflect the realities of what is going on throughout the World.

  3. TheStreet

    RPX index is something to look at. It is a competing residential property index to the Case Shiller, but has a slightly different methodology. It is very applicable for this market because it includes foreclosures (Case Shiller does not). You can read more about the methodology at

    http://www.radarlogic.com/methodology.html

    What I think is interesting for this blog is that futures on the index are traded on dealer desks across the street. The daily closing levels are published on

    http://www.rpxdealers.com/rpx/report.html

    The New York MSA (Metropolitan Statistical Area) is currently trading at -27.98% for prices between December 2008 and December 2009. The national composite is trading at -20.72%. Implications are that the metropolitan area has avoided the pain thus far, but the losses are going to be worse than the national average going forward.

    Obviously each property is unique. But even with a unique property, if the undercurrent is ~ -30% over the next year, many hold outs are going to get smoked while waiting for the turn.

  4. CJW

    The sale-to-ask ratios that I’ve seen published are absolute jokes. A realtor here in MD recently sent one showing something like a 97% ratio for 4Q 2008. Really? At the same time, median sales price purportedly dropped something like 15%. Amazing how sellers tracked the market, no? Such foresight!

    Would Fidelity or T. Rowe get away with publishing this sort of stuff? When will NAR’s executives and that absurd economist (Lerah?) get hauled in front of Congress? Humbug!