Odd moments in real estate pricing

So let’s say that back in 2005, you renovate a house in a geographically challenged location in Cos Cob and list if for $1.850 million. It doesn’t sell, even though you drop its price (slowly) to $1.565 and the listing eventually expires. You blame your broker, of course, and use a new agent a few months later to return it to $1.850. Surprisingly, that doesn’t work out so well so you yank the listing in April, 2007. This past November you try again, this time representing yourself, and you know better than the previous two fools: you list it for $2.2 million. And once again, to your great consternation and utter confusion, buyers refuse to recognize the teriffic value you are offering. Today, you mark it down to $1.699, $134,000 more than it wouldn’t sell for in 2005, but that was a different market, wasn’t it?

Yes it was.

5 Comments

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5 responses to “Odd moments in real estate pricing

  1. Anonymous

    Do tell more…?

    • christopherfountain

      Not much to tell until it moves (way) down in price. My guess is that the owner will end up renting it or moving into it himself. As CEA points out, these prices are not the hallmarks of a real seller.

  2. CEA

    These are not “real” sellers. They are just seeing where the market is. If he REALLY wanted to sell, -23% from your fantasy $2.2 mil price wouldn’t be your final asking.

    It would be 23% off the $1.565 you were originally willing to sell for in 2005, so $1.2 mil. And then you would sell it for $1 mil.

    • christopherfountain

      I was calculating $1.250 as its selling price, CEA, but if the owner ever does get serious and sells it, $1 million wouldn’t shock me.

  3. CEA

    well, if $1.565 was too high in 2005, and $1.3 was more the right price at that time, then -20%-25% 2005’s price, or $1 mil, is what the market predicts.

    and I’m not even a broker (thank goodness, I would alienate everybody!)

    CEA