When the internet took over the real estate business 20+ years ago, the dumbing-down of the valuations began. Now that we are making life-changing decisions based on split-second exposure to imagery from a hand-held device, the process has gone binary – a quick yes or no, without much other consideration.
It’s not just the buyers – realtors do it too.
When searching my new listing in Carmel Valley, the first comparable sale that pops up is this model-match that sold for 16% less in May:
The possibility that somebody got a deal in Carmel Valley doesn’t even occur to us, and because we’re accustomed to making snap decisions, just the price disparity alone will cause most to swipe to the next listing – and not give it another thought.
Let’s look deeper, shall we? There are three ways to evaluate what happened:
What is the neighborhood history? We’ve been having record-setting prices everywhere this year, and in most neighborhoods, the last sale is the highest sale ever. Is the $1,880,000 the highest sale ever in the Lexington tract? The answer is NO. There have been 15 sales higher than $1,880,000, including the previous $1,900,000 sale on Shannon Ridge that was across the street, on the non-view side. Nine sales have closed above $2,000,000, with the highest being $2,350,000. My list price of $2,250,000 is within reason.
What was the condition of the comp? Those who are used to examining the MLS photos will notice right away that the condition of 5414 Shannon Ridge was all original, which are the homes that struggle to sell these days.
What was the listing history? Shannon Ridge first listed for $2,195,000 in June, 2019. The listing agent refreshed the listing three times will gradual price reductions, and in April, 2020 the price was down to $2,095,000. According to the listing agent, they had shown the home 190 TIMES, so they had to think they were close, but the covid had just hit and they had to be exhausted from so many showings. They lowered the price to $1,995,000, and the next day took $1,880,000 – a drop of $215,000 within 24 hours.
There we have a good explanation of why they dumped on price (original condition and covid freak-out), and why it’s a one-off.
Will buyers today be willing to look deeper than one bad comp?
I think so – we received the first offer last night!
The pro video: