4 ms·

It looks like they way under priced it on purpose. Zillow shows comps over the past year in the same neighborhood: 2.19M, 2.6M, 2.3M, 2.19M, 2.52M. This one is

It looks like they way under priced it on purpose. Zillow shows comps over the past year in the same neighborhood: 2.19M, 2.6M, 2.3M, 2.19M, 2.52M. This one is a bit smaller, but expecting a sale in that range given the other sales is not noteworthy. (The article calls this out at the end: "the median sales price of a single-family home in Sunnyvale is $2.375 million" and this one is $2.68M)

jessaustin 5y ago
One can imagine why realtors would want to underprice for publicity or whatever, but why would an owner consent to this?
- jorts 5y ago
  To drive more potential buyers to come look at it and to drive up the potential of a bidding war.
- eslaught 5y ago
  Why wouldn't an owner consent to it? The realtor's going to say: if you underprice then you'll get more offers and have a chance of starting a bidding war, which could put the sales price even higher than if you'd priced it more realistically. It seems like a pretty clear-cut case of self-interest. And in this case, it looks like it worked.
- kentlyons 5y ago
  I've had a similar conversation with my agent in the past, and the answer was to create a bidding war. Once you have one real offer you can go back and counter to all of the others to see if they'll go up, and then rinse and repeat. That isn't a story too hard to sell. The other thing about this one is that it was fixed up, so it could have been a flip. However I didn't go track down the real estate records to know for sure.
- kube-system 5y ago
  Is there a psychological angle? Exploiting FOMO to drive bids up higher?
- s0rce 5y ago
  You don't have to sell if someone offers asking and you are nearly guaranteed to get significantly more. The asking price is effectively meaningless at this point.
- carfacts 5y ago
  Lots of realtors do it in Los Angeles, casual browsing of neighbourhood sales data on sites like RealtorStats show how common it is
- jayd16 5y ago
  There's no downside to the owner. They're under no obligation to sell for asking price.
- Spooky23 5y ago
  Remember that you need to assume that every counterparty is an asshole in anything real estate, and everyone who isn’t your attorney has a grift. You can use underpricing as a tool to hide problems with the house. If you have a lot of offers with what is a closed auction, you control the flow of the process and avoid learning things that have to be disclosed. If you “suspect” that you may have mold, foundation problems, lead paint, asbestos, or other problems, you can use the offer flow to cherry pick bidders who don’t demand inspections or cash bidders who don’t have a bank or other party looking for due diligence. Your real estate agent may want to steer business to preferred partners for kickbacks or to ensure that certain home inspectors get used.
  - lotsofpulp 5y ago
    Allowing people to bid on something and negotiating prices does not make someone an asshole. I would prefer if all the negotiations were public though.
- gnopgnip 5y ago
  If you price for the amount you expect it to sell for you might only get 1 or 2 offers even in a hot market. That can still work, you can get a great offer you are happy with right away. But there is a significant risk that you won't get an offer you are happy with without this competition. A buyer who is willing to pay $2.5m might only offer $2.2m if there is no competing offer. You need to keep the home listed for a few more weeks until you get a better offer or more competition. If you put in a lower list price you will probably get 5+ offers, you can either pick the best one, or counter offer a few, and you can be almost certain that you will be under contract by mid next week if you list on a Thursday or Friday. Most people are also buying a home at the same time, if they are moving to another high cost area a delay of a couple weeks on the sale of their home can cause a lot of problems with their purchase.
tinco 5y ago
The asking price thing really messed with my mom's mind. She was trying to buy a home and everywhere she read she had to bid at least 25% over asking. And then she just added 25% to each listing and considered what was in her price range. It was really hard to convince her to make an actual estimate of the house's value and make a bid according to that, disregarding the asking price and the dumb 25% rule. It was super stressful but eventually she succeeded.
- brtkdotse 5y ago
  This has been standard practice in Sweden since the early 2000s. No one ever sells at the sticker price, the apartment is shown Sunday and Monday, then a 2-3 day bidding war breaks out and the sale closes on Wednesday. If the bidding war isn’t as successful as the seller wants the apartment is taken of the market for a week and then reappears with at 30% price jack and a title that says “fixed price! First come first served”

jessaustin 5y ago

One can imagine why realtors would want to underprice for publicity or whatever, but why would an owner consent to this?

jorts 5y ago
To drive more potential buyers to come look at it and to drive up the potential of a bidding war.
eslaught 5y ago
Why wouldn't an owner consent to it? The realtor's going to say: if you underprice then you'll get more offers and have a chance of starting a bidding war, which could put the sales price even higher than if you'd priced it more realistically. It seems like a pretty clear-cut case of self-interest. And in this case, it looks like it worked.
kentlyons 5y ago
I've had a similar conversation with my agent in the past, and the answer was to create a bidding war. Once you have one real offer you can go back and counter to all of the others to see if they'll go up, and then rinse and repeat. That isn't a story too hard to sell. The other thing about this one is that it was fixed up, so it could have been a flip. However I didn't go track down the real estate records to know for sure.
kube-system 5y ago
Is there a psychological angle? Exploiting FOMO to drive bids up higher?
s0rce 5y ago
You don't have to sell if someone offers asking and you are nearly guaranteed to get significantly more. The asking price is effectively meaningless at this point.
carfacts 5y ago
Lots of realtors do it in Los Angeles, casual browsing of neighbourhood sales data on sites like RealtorStats show how common it is
jayd16 5y ago
There's no downside to the owner. They're under no obligation to sell for asking price.
Spooky23 5y ago
Remember that you need to assume that every counterparty is an asshole in anything real estate, and everyone who isn’t your attorney has a grift. You can use underpricing as a tool to hide problems with the house. If you have a lot of offers with what is a closed auction, you control the flow of the process and avoid learning things that have to be disclosed. If you “suspect” that you may have mold, foundation problems, lead paint, asbestos, or other problems, you can use the offer flow to cherry pick bidders who don’t demand inspections or cash bidders who don’t have a bank or other party looking for due diligence. Your real estate agent may want to steer business to preferred partners for kickbacks or to ensure that certain home inspectors get used.
- lotsofpulp 5y ago
  Allowing people to bid on something and negotiating prices does not make someone an asshole. I would prefer if all the negotiations were public though.
gnopgnip 5y ago
If you price for the amount you expect it to sell for you might only get 1 or 2 offers even in a hot market. That can still work, you can get a great offer you are happy with right away. But there is a significant risk that you won't get an offer you are happy with without this competition. A buyer who is willing to pay $2.5m might only offer $2.2m if there is no competing offer. You need to keep the home listed for a few more weeks until you get a better offer or more competition. If you put in a lower list price you will probably get 5+ offers, you can either pick the best one, or counter offer a few, and you can be almost certain that you will be under contract by mid next week if you list on a Thursday or Friday. Most people are also buying a home at the same time, if they are moving to another high cost area a delay of a couple weeks on the sale of their home can cause a lot of problems with their purchase.

tinco 5y ago

The asking price thing really messed with my mom's mind. She was trying to buy a home and everywhere she read she had to bid at least 25% over asking. And then she just added 25% to each listing and considered what was in her price range. It was really hard to convince her to make an actual estimate of the house's value and make a bid according to that, disregarding the asking price and the dumb 25% rule. It was super stressful but eventually she succeeded.

brtkdotse 5y ago
This has been standard practice in Sweden since the early 2000s. No one ever sells at the sticker price, the apartment is shown Sunday and Monday, then a 2-3 day bidding war breaks out and the sale closes on Wednesday. If the bidding war isn’t as successful as the seller wants the apartment is taken of the market for a week and then reappears with at 30% price jack and a title that says “fixed price! First come first served”