Miami Home List Prices – Why The Disparity?

The other day I was reading a Homestead community blog and was taken aback by a comment I saw there. It seems one of the readers had a problem with “so called realtors” and the list prices they (we?) use on the homes that are up for sale.

His complaint is that in the same community there are homes listed in the 90’s and all the way up to the high 200’s. It doesn’t make sense. My fingers sometimes respond faster than my brain and I started typing out a response. Then my brain caught up with me. I thought…well, he does have a point. I myself have often been doing research for a client and find such a disparity in list prices that they are of no use to me.

So, why do we find Miami homes that appear to be similar in all ways, except their list price? Why are there homes in the same community listed for $122,000 and others at $264,000? Have we lost our minds?

Let me attempt to shed some light on why we keep seeing this:

* All the way at the top of the range we find the homes that are way overpriced. These are the ones where, undoubtedly, the owner believes the shade of gray in his granite merits a higher asking price. But wait! His view of the lake is better than his neighbor’s view of the lake; at least $40,000 better. Uh huh. Joking aside, just because the owner thinks the house is worth X, doesn’t mean that the real estate professional has to list it at X. I blame these overpriced listings on the REALTOR®. Let’s grow a backbone here and stop wasting everyone’s time listing these homes. No one benefits.

* And on the other side of the spectrum we find homes that appear to be priced ridiculously low, even in this market. When I click on them for more detail, I often find that they are short sales. I can understand this reader’s frustration. Again, it is the real estate agent’s fault. I am finding that many short sales are listed way below what they should be listed at just to get traffic. If a home is really valued at $130K, listing it at $90K will bring in prospective buyers, right? Well, yes, but this doesn’t mean that the bank, who has the ultimate say in whether to sell at that price, will approve an offer at such a ridiculous price. Again, people’s time is being wasted.

* Sometimes the lower-priced homes are not short sales though. They are REO‘s (bank-owned properties which were foreclosed). When I see an REO listed in the lower range, I know that it will probably sell quickly. Banks do not want to be property managers. They want to sell asap and so price accordingly. These prices, while not directly set by the listing agent, is greatly affected by him. The BPO (Broker Price Opinions) a listing agent does for the bank as well as the monthly market reports he provides to them help the bank determine where they should be priced at to get the most money, while still selling within 30 days or so.

* Then there are the homes listed in between the two extremes. All I can say about these is that perhaps 3 or 4 months ago the prices were appropriate but the market has continued to decline and the real estate agent has not relayed this to the seller. Again, it’s the listing agent’s fault.

* Somewhere, right above the lowest priced REO’s, you’ll find homes listed for sale that are not distress sales. That is to say, they are not short sales, REO’s, or a home where the seller is having trouble making payments. In spite of all this, they are still priced lower in the spectrum. Guess what? These homes are probably priced right. These homes are most likely listed by an agent who has let his seller know that he’s competing with 10 foreclosures for 1 buyer and he needs to price his home at a certain price in order to sell it. My hat’s off to you, listing agent!

Well, that explains the listing prices. So, is a list price indicative of a home’s value? Based on my explanation above, you can guess for yourself, absolutely not. As any appraiser will tell you, it’s all based on actual sales. It would just be easier on all if the list prices weren’t all over the place. I have to agree with that reader.

  1. Thesa Chambers

    Maggie – what an easy to follow clear explanation of the pricing we see all over the country. I will be linking back to this with a post tomorrow. You rock and will always be my Miami area REALTOR

  2. myrtle beach foreclosures

    we are seeing the same thing in our market, especially ocean front. The prices can range over $100k for the exact same floor plan, with the same view

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