There is such transparency in the real estate industry these days, thanks to countless apps and websites that report homes actively listed for sale, recently closed sales, and even homes that might be offered for sale in the near future.
Buyers can keep a close eye on their favorite neighborhoods to watch for new listings, then, keep an even closer eye on what’s going on in the neighborhood once they’ve pulled the trigger, made the purchase, and moved in. On the flip side, homeowners often use the abundance of available housing information to keep tabs on their home value – sometimes for timing a re-finance, or setting up a Home Equity Line of Credit for countless uses, or for timing the sale of their home.
Sometimes, there’s a little blip in the data - one of those Arsenio Hall moments that makes you put your finger on your forehead and say “Hmmmmmm.” When a house sells for less than what the current fair market value might appear to be based on the data available, it might make one ask “why’d they let it go for that?” Here are a few explanations.
Because there are conditions you don’t have access to - While all of the recent upgrades look great in the photos you can pull up on your laptop or your phone, what you can’t see it that the roof is completely shot and the seller didn’t want to replace it, so there was an adjustment made in the purchase price to reflect the magnitude of the cost of a new roof. Maybe the sellers had an offer in on their replacement property and rather than lose the great deal they got on that house (which was contingent on the sale of their current house) on both price and interest rate, they were willing to take a little hair cut on their sale to put their purchase together. In most cases, you don’t have access to back stories like this to explain the variances in price.
Because the math worked – Maybe it had been a rental property for a number of years, the tenants moved out so there was no more rental income, there was more wear and tear that you can discern from the photos or from just driving by, and rather that spend $50,000 to make repairs and upgrades, the seller decided that avoiding the cost of the work and the cost avoidance achieved by reducing their exposure to mounting carrying costs for the time it would take to do the work and then get the house sold, made that lower-than-market price makes sense to them.
So if you come across a blip in the market you’re watching, depending on your motives for watching the market, don’t panic that the bubble is bursting and doom and gloom are just around the corner. There may be a reasonable explanation you may or may not ever know about.
Leslie Sargent Eskildsen is an agent with Realty One Group. She can be reached at 949-678-3373 or firstname.lastname@example.org.