plog (what we ponder)
march 09
"Buyer Beware"
It seems strange to us that in the midst of the “housing crash,” some realtors are still trying to sell properties at grotesquely inflated prices. And now that taxpayers are being asked to subsidize mortgages, we believe real estate transactions are everyone’s business, so here’s a fresh example for your consideration.
The property below was purchased in February 2001 for $200,000. At that time, 200k was not terribly unreasonable. However, eight short years later and the asking price is now $529,000. No, that’s not a misprint: $529,000 for a 20-year-old, 1,200 sq foot home in a middle-class neighborhood.
What’s absurd about it?
It means the owner expects a return of 20% for each year he owned the property or in other words, he expects to nearly TRIPLE his money after eight years---that’s a 165% mark up! Nice work if you can get it. But more than that, this seller is asking $52,200 more than the currently assessed value of $476,800! This means that he wants a good 10% more than what the tax man thinks the house is worth! In our book, that's absurd!
We are fairly confident this house won’t sell for the asking price, but it still amazes us to see a home so blatantly overpriced in this downward market. You can easily argue that people have a right to sell at whatever price the market will bear, but now that we are all paying for each other's homes, we believe we have some duty to warn buyers.
