I guess it must be a cultural thing. In major cities in Sweden 15% over the asking price is the asking price and 50% over the asking price, while rare, is hardly unheard of. No seller ever accepts the asking price unless they're really desperate.
$782k over asking for a house in Sunnyvale
61–70 of 209 posts
Re: $782k over asking for a house in Sunnyvale
#62Working at a huge tech company like Google or Facebook is attractive to me, but not enough to justify spending $2.5M on a smaller house, or 12x more per square foot. And this is just in Phoenix. I know there are other places with tech jobs and much lower cost of living, or better income-to-COL ratios.
> but not enough to justify spending $2.5M on a smaller house, or 12x more per square foot. Maybe it's just the wording but I don't get that. If they're paying enough that 2.5M is within reach where it wouldn't be in Phoenix is it really a problem? I'm in the middle of a job search right now and I'm finding that while absolute numbers sound appalling (ie. 2.5M for a 2,000 sq.ft. house) the income:COL is not as dramat…
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Re: $782k over asking for a house in Sunnyvale
#63For all the comments about listing shenanigans, we're overlooking a basic game theory issue here: when you set a price that looks to be near the value of the home, you're saying you're willing to accept reasonable offers. You're setting an implicit cap on the value of the home.
An obviously undervalued home, though, in addition to driving up interest (and creating a bidding war), suggests a much fuzzier cap so there's less signaling around price and a less obvious ceiling to offers. In other words, buyers are stuck wondering what other buyers might offer, rather than discussing whether to go some normative amount over the ask (like 10-20%).
Also, there's a 'curse of the winner' dynamic in auction-like environments, where the deal will necessarily go to the party that values the asset the highest. (This is evidently destructive to profits in oil and gas leasing auctions, for what it's worth.)
I think that's the dynamic, because no one is actually fooling anyone by underlisting prices, and real estate agents talk to each other and know immediately if something is priced to generate interest, or if the price is closer to what the buyer expects.
Re: $782k over asking for a house in Sunnyvale
#64Aside: I don't think it should be legal to not accept the asking price for a home. With any other thing I want to buy, if I agree to pay the list price I get the item. Sometimes I can haggle the price down but the listed price is always accepted. This system of listing a price to 'get people in the door' and then igniting a bidding war makes it impossible for anyone to shop for a house except for realtors who are 'in…
> Aside: I don't think it should be legal to not accept the asking price for a home. You're attacking basic supply and demand here. Let's say I set a list price and then figure out I could have asked for more...you want to legally bind me to sell for less than what the free market is willing to offer? Where does this stop? Should we ban speculative investments as a whole?
Would you then be okay with a grocery store demanding you pay 5x the list price for the last gallon of milk they have because the guy who also wanted it said he would be willing to pay that much?
Re: $782k over asking for a house in Sunnyvale
#65In France, there's no such thing as paying over the ask price. You are forced to sell to the first buyer who offers to pay the ask price. I suspect that this is done to prevent prices from rising too quickly.
The USA is like that as well. If you receive a cash offer with no contingencies for your asking price then you can't refuse. This is specifically to prevent discrimination against minorities.
In most real world transactions there's some back / forth with the lawyers about details (ex: "We want your ugly drapes!") as well as non-cash considerations. A seller may accept a lower cash offer over a higher mortgage based offer due to fear that the latter may fall through.
Re: $782k over asking for a house in Sunnyvale
#66Earlier quoted context omitted.
> Aside: I don't think it should be legal to not accept the asking price for a home. You're attacking basic supply and demand here. Let's say I set a list price and then figure out I could have asked for more...you want to legally bind me to sell for less than what the free market is willing to offer? Where does this stop? Should we ban speculative investments as a whole?
No, it just reverses the dynamics: instead of starting out low to get people into the door, you start with a list price that's too high. If the bids you're getting are always far below your asking price, you know the free market isn't willing to cough up what you want, and you lower the price to something that is more in range. If your initial asking price is $1MM and all bids are around $800K, consider dropping the…
And I think this system makes more sense - pricing is more transparent and saves everybody a bunch of time.
Re: $782k over asking for a house in Sunnyvale
#67> The four-bed, two-bath house — less than 2,000 square feet — listed for $1,688,000 and sold for $2,470,000. Using a ballpark figure of $500/mo per $100K of house, this comes out to $12,500/mo. That's $150K/year, mostly after tax (there's a bit of a deduction for interest but let's ignore that for now). Using the standard 30% rule, that means you should have a gross income of about $500K. What I'm questioning is, ho…
Two people working at a big tech company in the area will easily gross > 500K total comp.
Re: $782k over asking for a house in Sunnyvale
#68Earlier quoted context omitted.
> Aside: I don't think it should be legal to not accept the asking price for a home. You're attacking basic supply and demand here. Let's say I set a list price and then figure out I could have asked for more...you want to legally bind me to sell for less than what the free market is willing to offer? Where does this stop? Should we ban speculative investments as a whole?
I think he simply wants the same rules that apply to McDonalds to also apply to homes. If McDonalds has their BigMac Meal labeled with CHF 12.50 (the current price in Switzerland IIRC) the cashier won't be able to refuse to sell it to me for that price even if I look particularly hungry and it's 4 O'Clock in the morning (and might thus be ready to pay more than 12.50). At least in Switzerland you are generally oblige…
Big Macs are standardized commodities. Houses aren't. And even standardized commodities can have different prices for different customers based on geographic location, time, whether or not the customer has a coupon, etc.
Re: $782k over asking for a house in Sunnyvale
#69> The four-bed, two-bath house — less than 2,000 square feet — listed for $1,688,000 and sold for $2,470,000. Using a ballpark figure of $500/mo per $100K of house, this comes out to $12,500/mo. That's $150K/year, mostly after tax (there's a bit of a deduction for interest but let's ignore that for now). Using the standard 30% rule, that means you should have a gross income of about $500K. What I'm questioning is, ho…
For a lot of these transactions, the mortgage isn't for the full price of the home. Partially because buyers have other assets (like stock, or cash that needs to be parked somewhere).
But also because the mortgage interest deduction tops out just shy of $1m, I believe. So the government-sponsored giveaway (being able to use pre-tax income to pay for your mortgage interest) tails off quickly, and the rational calculus around loan-to-value shifts dramatically.
Re: $782k over asking for a house in Sunnyvale
#70I guess it must be a cultural thing. In major cities in Sweden 15% over the asking price is the asking price and 50% over the asking price, while rare, is hardly unheard of. No seller ever accepts the asking price unless they're really desperate.
I've read that in Sweden, participation of recent immigrants in economy is lower than in most other European countries.
Why not create some jobs for them at building new homes and propping price down? Genuine question.