Why is that listing so overpriced
In most neighborhoods, list prices for homes are pretty similar. The price of homes are based on square footage and upgrades. So the other day when two homes came on the market, I wondered what might be so special about the smaller home of the two that would command such a high price.
And it turned out, it had nothing to do with the home itself.
Here's the story, let's call it, anatomy of an overpriced listing.
It's pretty easy to check the tax records and the Charleston MLS history and find information about almost every home for sale in the Charleston real estate market. If you look at things like how much a home sold for and when and if it has been listed previously and for how much, you'll find helpful clues to determining how realistic the list price might be.
Home A was built in the spring of 2004, approximately 1950 square feet and sold for $287,000. Home B, just a few streets away, was also built in the spring of 2004, approximately 2700 square feet and sold for $346,000. For the sake of example, let's just assume both homes were similarly upgraded so you would think that Home B was more expensive because it was almost 40 percent larger.
Flash forward to today and Home A has been listed for sale for $469,900 and Home B has been listed for sale for $479,900. How did Home A become so expensive if it didn't add square footage.
The answer is that Home A sold once in the interim. In the spring of 2006 almost at the peak of the market, Home A sold for $479,000. I'm not suggesting that the sellers of Home A overpaid, that was simply what the prices were back then. And I don't think they are being ridiculous like some sellers in pricing their home today, they are actually pricing it for a little less than they paid several years ago.
It's just that other homes can be offered for less because the sellers of those homes might not owe as much money if they paid less and didn't refinance and take money out of their home ATM machine.
So as sellers have been told from the beginning of time (or whenever real estate was invented), it doesn't matter what you want to sell your home for or how much you need to sell your home for, you have to price your home to current market conditions.
In this case, I think we're going to see one of two things happen on the real estate sign on the lawn of Home A.
