Homebuying is a ‘stupid system’: Bay Area homebuyers frustrated by rampant underpricing in real estate listings

 





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Homebuying is a ‘stupid system’: Bay Area homebuyers frustrated by rampant underpricing in real estate listings.

Understanding the Pricing System


That's the way the system's been set up for 200 years. And yeah, you can change it. In a perfect world, you could say this is the price, right?

When you look at a car, you think, oh, that's the starting price, right? Or you go to a store and you buy a bag of rice or a bag of flour, and that's the price. You don't really argue it. But the way the system has been set up is for capitalism to take its best shot at it. Is it perfect? No, it's frustrating.

I get it. 


Buyers' Frustrations and Strategies

I work with buyers and I'm frustrated. sometimes sellers get a little bit greedy and they overprice it. it makes sense that you understand what the pricing value is of that house and you drop it down a little bit. And yeah, you're going to have to overbid.

If you're educated and you educate yourself as a homebuyer, which these people obviously weren't. They just got frustrated and then they're complaining and then they think, Oh, we should do something about it. So they call up this reporter at Silicon Valley. Com and go, it was a surprise. We definitely felt like we had to increase our offer price based on the competition.

Competition is set to ensure that the seller maximizes their return on investment. It's been like that for years. It's frustrating, but as a listing agent, it's something that I know how to use as a tool to make sure that you as a buyer are going to pay the most.

Money for it. Part of my pitch is I break buyers because if I have four or five buyers or 15 or 20 buyers, I'm going to break all of them except for one and it's a chess game That's how the negotiation process works. But on the flip side, if I was a seller and I was like we really should only just take 1 or 1.7. That's because they're frustrated. Am I doing my job? Would you hire me if I did that? Or would you fire me? I get it across the country. 


Market Trends and Statistics

32 percent of homes sell above the asking price because there's competition. Look here just in the Bay Area. Alameda County is sixty-six points one percent over the list price or of the listing sold 66 percent sold over the list price and Santa Clara is sixty-six points siThe sales to list price ratio in the Bay area has fluctuated over time. Yes. Times are good. 


Real Estate Negotiation Tactics


There's more competition and yeah, I don't know how to explain it other than if you really want that house, you better buckle up and buy it or you wait until the houses reduce in price, and this is a good segue. Real estate is like little league soccer when you put little kids in front of a soccer ball and you have, whatever, 10 or 11 kids on each side The ball goes into the upper right-hand corner and all the kids run up there.

And start fighting for that ball. And then the ball goes into the bottom left-hand corner, and they all run and scurry down there. And that's just how it is. It's the shiny new object model of how things are. Buyers are smart. Buyers are educated. They take the time to understand the value of that home.

And if it's overpriced for its condition, it's location. And what that market is going to get left behind. Simple, very simple. We have 130 homes that are active, of 1, 000, that have reduced their price because Sellers thought their house was worth more than what the market was willing to pay.

Greed, dollar signs in their eyes. I always say, look, if you overprice your house, you're going to have your house sit. And then the concept is I don't have to sell if I don't want to. Why would I waste my time putting your house on the market? Spending 12, 15, 2, 000. On getting your house ready for sale, including, marketing and selling and what have you Why would I spend my time and energy if you don't have to sell? So you either sell your house or you don't, or you get somebody else to do it. Cause I can't waste my time on that. I don't say it with ego or hubris. I'm just saying that if you're going to engage with the real estate agent. Make sure you know what you're talking about because if it sits on the market, you're only hurting yourself as a seller.

I think I looked at this one right here in Toulouse, this one right here. Let's take a look at this guy right here. 



Santa Clara County Price Reductions 

Case Study: Lean Avenue Property

Lean Avenue, just popped on the market. 18 days ago, the original list price was 1.4 on 1.1 0. 5, 1 to 1, but it's up at 1.5, 5 now. So maybe it went up and then now it's down. So I don't know what this one's doing and look, this is not what you do. This should never be the first picture.

That should never be, especially since it's fake grass, this right here, that should have been the first house, especially with the box brownie background, should have been your first picture I think this is a flip they flipped the hell out of this one.

I've been through this. I did what you should be wary of fixing flips. This one looks like it's done pretty well. Good luck to you. I buy houses. I'm frustrated, too, and that's just the way the market is. And it's not just the Bay Area. It's all across the United States.

I'm sure Canada's like that, too. I think all over the world, for the most part, if you're selling a house, you want to get the most out of it. The best way to do it is to find out what your price average is. For your home, for the condition location and market conditions lower it just a little bit to attract as many buyers as you can and if you don't want to do it. Be a renter, right? I don't know what else to tell you there.  




Los Gatos Home of the Week 

Los Gatos House of the Week

Los Gatos house of the week, San Benito Ave. Not my listing. Wish it was five bedroom, four and a half baths, 4, 000 square feet built in 2007 and it's walking distance to Santa Cruz, which is the main street. Let's take a quick look at all these pictures. This is a beautiful house.

I would love this house and it's listed at 5. 5 million. Maybe I'll just cut a check. This is awesome.

I love the fact that the pool is the tier for a sloped Background or backyard. I think it's really nice. It gives you a little bit of depth to your yard. It has an age as well. And that comes with floor plans. Floor plans are great because when you're online shopping, you get to understand and get a look and feel of what that house is going to feel like before you actually step foot into it—and it's the internet guys.

It's the era of the internet if you can't get floor plans, then why are you in business?


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The segment of this episode has been brought to you by the home inspection checklist. If you're thinking about selling your house, download this home inspection checklist. This in no way should supersede a professional home inspection. This gets you on your journey to do repairs so that your home inspection is huge all repairs that you do should be documented in your disclosures. it's going to save you a lot of grief in the background weekly high low We'll get into that in a minute. 



Santa Clara County High's and Low's

Weekly Highs and Lows

Here. I wanted to show you something really quick I'm adding the highest list price And the lowest list price. I think I did this years ago when I first started doing it. And for some reason, we've been stuck on the same active for so long. It's boring. So I'm reintroducing the highest and lowest list price. And we'll go back to this chart in a second. So let's take a look. Voorhees is the most expensive home sold this week. It's 14 million.

It has one picture because it sold in nine days and it sold for 300, 000 over the list price. And the lowest one was 760, 000. And that's Chestnut Street, a mere three bedroom, two bath, 2, 500 square feet. That's a great buy. Even though it's older, it's 2, 500 square feet. It doesn't look like much, but. It's a total fixer, I would love to have that and just work on it and make it pretty. It's a handyman special. And then here's the one that's the highest list price to sales price ratio, which is 135%. The original list price was 1. 8 sold in six days and sold for 2.5 million in Santa Clara. That's awesome. Good for you. But again, going back to the frustrated, rampant underpricing, this might have been underpriced by a lot just to attract and get it sold. It doesn't matter what you list. If you're a buyer's agent, you should be producing a CMA or comparable market analysis on every house you write on.

So your buyer is educated on what offer, and what price you should be writing on. Because if you're not writing an offer based on comps, your offer is not going to get accepted. And then the lowest list price to sales price is 1.48, and it sold for 1.27, which is 85%.

So this is a good example, Four bedrooms, three baths, 1800 square feet. If you look at the comps, just the comps and not the fact that you're on a busy road, your house should have sold for 1.48, but it took 36 days to sell. Why? Because. It was right next to a busy road that made your house functionally obsolete. That's the term we use in the appraisal world to say that your house is not going to sell for as much as this house right here because you're on a busy road. Oh, but we're right next to This park CoyoteParkk. Yeah, that's great.

But you still have a lot of road noise and road noise will kill the cell of your house period. That is really close to the flight path. Location, pricing, market condition, and the condition of the house. It all boils down to what a buyer is willing to pay for it.

And if you overprice it, there you go. All right, we have 1, 035 homes active for sale in Santa Clara County. 130 of those have been reduced, which is 12. 56%. And that's about the average for the last couple of months. Last sold or the last seven days, we've sold 136 homes. There you go.


Final Advice for Buyers


So again, I feel for you if you're a buyer, I do, I truly do, but educate yourself. Understand that if your max price is 1.8 million, Go down to 7 and look in that pool. That's what these guys did not do. They got into it and they like kids looked at the brand-new listings.

They didn't look at the houses have been on a market for. 60, 90 days. Those aren't going to be the most perfect ones, but if you want a house at list price, look at the ones that have been list price reduced or have been on market for 30 days or more. There you go. That's the most sound advice I can give you.

That's free. I'm Vito with Abitano. Thanks for watching. We'll see you out there.




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Vito Scarnecchia

Real Estate Broker, Veteran, Dad

DRE#: 01407676

408-705-6817

Vito@abitano.com

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