While it makes headlines and provides an excellent topic at cocktail parties, the sale of a Sunnyvale home that sold for almost 800k above its list price, does not paint an accurate picture of our local real estate market. Don’t get me wrong, the market is still a strong seller’s market with limited inventory. Frustrated buyers are still subject to multiple offers and overbids. However, let us look at the reality of this sale.
The home was substantially underpriced relative to recent sales of similar properties. How do I know this? I did what any competent Realtor would do, I verified it with our real estate database, the Multiple Listing Service (MLS). I pulled sales of 4 bedroom homes with similar characteristics as the subject home that sold just prior to the subject property going on the market. I targeted single family homes located in the surrounding neighborhood that were of approximately the same size, condition, lot size, and schools. Note: there is no such thing as an identical comparable home, so I had to make slight adjustments to come up with comparable properties. What did I find?
There were three 4-bedroom homes of approximately the same size, condition and location as the subject property. All three were located on lots that averaged approximately 8k square feet. All three were listed between $1.8m and 2.0m and sold between $2,300,000-$2,370,000. The main difference between the subject property and these homes was the lot size. The subject property’s lot size was substantially larger (approximately 5k square feet). Given it’s lot size, it is pretty easy to conclude that it would sell for a premium. Which it did.
Is our real estate market really going crazy? Maybe. Are buyers having a tough time securing homes given our limited inventory? Yes. The market is what it is. Buyers and sellers need to work with Realtors who understand our market and who can weed out hype from reality. In this case, an artificially low list price led to an artificially high difference between the list price and the actual sales price.
I leave you with this – over 20 years ago, a competing broker told me “you can either list it low and watch it go or list it high and watch it die.” I think in this case it was a matter of listing it low and watching it go…with a lot of fanfare.