I’ve been hearing a lot lately about price reductions, price drops, prices bottoming out, yada yada. Well here’s some news for ya. Listing prices mean absolutely nothing. Here’s why:
1) Listing prices are determined by the seller and the seller’s agent, putting their heads together and arriving at a figure which is amenable to both… but more often than not, a figure that is amenable to just the seller. Realtors will oftentimes take an overpriced listing just for the opportunity to sell the home, knowing that future price drops are part of the deal. Don’t get mad at ‘em. It’s their job to get top dollar for their seller.
2) By law, the seller’s agent owes a fiduciary responsibility to the seller. So, I ask you, could the listing price be a more biased number?
3) There are many strategies to pricing. Price low and let the market bid it up. Price right and hope for the best. Price high and see if there’s a sucker out there. Pricing strategies further cloud the “validity” of a listing price.
4) Most importantly, listing prices do not show us anything about what the market is doing. Sold prices are the only thing that show us that. Solds speak of action, and action defines the market. Everything else is just noise. Listing prices, price reductions, you name it.
- Here is a graph of the meaningfulness of listing prices. Yup, it’s displaying correctly.
Because list prices are biased, fail to speak of action, and mean nothing, so does all the hype surrounding price drops. Every time Read the rest of this entry ?
