The stigma attaching to stale listings

I’m off to see, among other houses, 173 Stanwich Road as a potential rental for a client. I liked this contemporary back in 2003 when it sold for $1.980 million but its fate after that illustrates what happens when good houses get bad prices.

The 2003 buyer made some extensive renovations to this property but he seems to have been a big fan of electronics and spent hundreds of thousands (my guess) wiring for and installing lots of gee-whiz gadgetry – TVs in every room, surround sound, who the F knows what else. He then priced it at $3.925 million in 2005 and must have been disappointed when he discovered that buyers didn’t care about his toys. It didn’t sell until 2007 and even then only fetched $1.7 million, and that was when the market was still strong. Ouch.

The new owners have been wiser, and their rental price of $12,000 is probably reasonable – I’m about to find out.

Moral: don’t over price your house in any market, weak or strong because the longer it sits the more buyers will assume there’s something wrong with it and will be pay less and less, if anything at all, as the months and years tick by. This especially applies to sellers who think that, if they just wait long enough, someone will show up who is willing to pay a premium above market price because he likes the house so much. That buyer, if he ever existed, hasn’t been seen around here in years.


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3 responses to “The stigma attaching to stale listings

  1. Balzac

    Hello Chris,
    If an owner earned $12,000 monthly rent on this house, and property taxes took $1,000 of that, my calculator says that $11,000 net monthly rent would support a 30 year mortgage at 5% for $2.05 million. Is that math valid? Does that mean an investor could pay $2.05 million for this house, finance it 100% and be cash flow neutral? That would be intriguing. Is this an opportunity? Is this a valid summary of the price-to-rent relationship in Greenwich today?

  2. West Coast


    From the articles on renting versus buying that you have linked to in the past, if the sales price of the house is less than 15 times the annual rental value, then the house is cheap but if the sale price is 20 times the annual rental value the house is expensive. Using the 2007 price of $1.7 million, which the house is probably no longer worth, and dividing by 15 (the low end) gives an annual rent of $113k and dividing by 12 months gives a monthly rent of $9500. $12,000 seems high to me.

  3. Anon

    Wow $1.980 million in 2003! Now you can get 291 Stanwich (divisible into 2 lots) for $2 million. Not bad at all…and only minutes to town.