Buyer’s Market? Seller’s Market? Neither, Really.

I had another brief appearance on KING 5 News tonight. Here’s the video:

It’s a great time to be a seller… if you can afford to sell at today’s prices. And it’s a great time to be a buyer… if you can be really patient and are willing to tolerate being out-bid numerous times if you’re shopping for “move-in ready” homes in a trendy neighborhood.

Mostly it’s a frustrating time to be either buying or selling in today’s market.

As one commenter put it recently:

The “bottom” isn’t looking nearly as fun as it sounded like…

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

49 comments:

  1. 1
    me says:

    So, essentially the market’s dead and stalled ;)

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  2. 2
    John Bailo says:

    2014

    Wait for it.

    Rate this comment: Thumb up 0

  3. 3
    Bob says:

    So … Whats the story here? Why the different rounds?

    http://www.redfin.com/WA/Seattle/2607-Western-Ave-98121/unit-1103/home/64319

    Offers will not be reviewed days 1-7.Days 8-12: Offers ONLY from NSP buyers, Municipalities, Non-profit organizations and Owner-occupants will be reviewed. Days 13+:We will consider offers from all buyers. Incredible upper unit views of city, mt, sound. Very nice city living in The Vine.

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  4. 4
    Rumpole says:

    Sadly enough, that first house the reporter walk into has been on the market since October, and started off way overpriced. Houses in QA seem to be moving pretty well, but not that one; you have to price it right to begin with, or you get the kiss of death.

    http://www.redfin.com/WA/Seattle/1824-4th-Ave-W-98119/home/132792

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  5. 5
    Peter Witting says:

    RE: Bob @ 3 – Wow, I’d like to know what that’s all about, too. I am also curious what municipalities and non-profts could afford a monthly HOA assessment of $890, and why they would want to.

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  6. 6
    The Tim says:

    RE: Bob @ 3 – That’s fairly standard for homes that are bank-owned, as that listing is. Often bank-owned homes come on the market fairly seriously under-priced. This is a way to ensure that they give the listing time to get in front of everyone who may be out there looking right now. As for not taking investor offers until “days 13+,” I think there are some federal incentives for banks to sell to owner-occupant buyers vs. investors. Not positive about that one though.

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  7. 7

    I am seeing signs that the market is picking up IF the house is good shape, priced right and not a distressed sale. My two clients that I met with yesterday for applications are home buyers – not refi’s … I’m working with many pre-approved buyers who have been waiting for decent inventory to come onto the market.

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  8. 8

    Yes Tim

    We are entering uncharted waters in today’s real estate market, throw your old history books away, welcome to the Twilight Zone.

    I was pondering the accuracy of the early 90s method of acquiring pre-FC’d homes by buying them from the old owners before eviction, i.e., the old Edmonds publication “Investor’s Edge” method….it probably won’t work today. The prices of real estate had gone up or flattened [never went down] in the heydays in that timeframe, so yes, you could grab up homes for 50% off that way and easily sell ‘em for 25% off with hardly no remodeling costs [just white paint and lots of scrubbing].

    We’re entering a new paradign, baton up the hatches and get ready for anything.

    On a somewhat related note to this confusing conundrum we’re in, IMO, unemployment benefits running out and the rate going down is horrifying news for the Seattle economy. The fusion of UE benefit money is dwindling dry. I was at the WINCO grocery store last Monday after work [its usually completely packed] and it was not even half full, I swung my cart to an empty checker line. I mentioned it to the checker, she agreed it was weird too. Last night I went to the same Renton WINCO, it was far worse, a ghost town this time and the ones shopping weren’t buying big $200 loads, they were like $30-50 small loads….many empty checker lines this time.

    Have we stopped eating as much?

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  9. 9
    David Losh says:

    Once again that was a really good media presence. Glenn should be giving you at least $250K in stock for the work you have done for redfin. You are probably the most driving force redfin has.

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  10. 10
    David Losh says:

    That said, the media really must be out of touch with what has happened in the market place today. Did you hear that buyer talking about how tired she was after three weeks? What a complete crock, and as Rumpole said in comment 4, houses have been sitting on the market for months with frustrated sellers. Now, OMG, in a few weeks of activity the market is hot.

    There is always a deal, every house has a price, you just have to be patient as a buyer, or seller. Sellers shouldn’t be afraid the market will come roaring back, and they will miss out. The price is the price. If I were a seller I would be much more afraid prices will continue to fall.

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  11. 11
    deejayoh says:

    By John Bailo @ 2:

    2014

    Wait for it.

    Is there some other choice?

    Rate this comment: Thumb up 0

  12. 12

    This is a very good market for those sellers that have very clean updated houses in good locations. They aren’t going to get 2007 prices, but they aren’t going to have to put up with their houses sitting on the market for months.

    It’s even getting to the point where a move up buyer with such a house can more safely buy the new house prior to selling the old house. That’s a huge change in the market.

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  13. 13
    Blurtman says:

    The hype is palpable. Everybody join in!

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  14. 14

    FWIW, phones are ringing off the hook at the non-profit housing counseling agencies with home owners who are all of a sudden getting trustee sale date letters from their lenders. More REO inventory on the way.

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  15. 15
    Pegasus says:

    RE: Jill Schlicke @ 14 – My my…what a real estate bear you have turned into. What happened to your pink pony?

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  16. 16
    SaltyDawg says:

    I’m seeing some interesting agent behavior.

    We put in a low offer (10% off of list) for a house listed in a nice North Seattle neighborhood last week. The house is in a great spot, but was marketed inaccurately (i.e. needs much more updating than is implied in the listing), and we made our offer accordingly. It’s still a pile of money.

    From what we can tell, the agent hasn’t even delivered the offer to his client, and has not even come back to us with a counter. There are no other offers that we know of. We’re completely qualified financially (this would be a ‘move-up’ house).

    Not sure if this points to selling agents being jaded due to not being able to meet on lower offers or something else, but I find it really odd and, frankly, unprofessional.

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  17. 17
    Michelle Henneman says:

    I disagree with the last statement made on the video. While short sales do take much, much longer to close, buying a foreclosure does not. Foreclosures may not be move-in ready, however. But if you’re capable and willing to do some work, foreclosures are still a good buy.

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  18. 18

    Have always preferred Baloo over Crystal.

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  19. 19
    ray pepper says:

    RE: Jill Schlicke @ 14

    Bingo! 2013-forward will be met with unrelenting short sales and foreclosures..However, now the homeowners are far too saavy and will not just let their homes go to Trustee Sale or even leave the property post Trustee Sale without some BIG compensation. Short sale my home for FREE? Are you kidding me is what will be the conversations among upside down homeowners.

    When the millions hear what some of their neighbors got from their lender in/re to principle reduction (Ocwen Financial) while they did not it, this will lead to many more short sales and foreclosures for many many years. Bidding wars on properties? Talk of a housing boom? Please Bubbleheads do NOT engage in ANY multiple offer scenario…Decrease your original offer! You won’t get the home but who cares..You will be very happy you did..

    More and more get educated everyday and getting those homes back will become increasing difficult from a new population of homeowners that will NOT just walkaway..

    http://www.freeandclearin90.com/2010/07/how-to-stop-a-trustee-sale-that-is-next-week/

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  20. 20
    ray pepper says:

    RE: David Losh @ 9

    I would not take 250k in stock since it is worth 0 and there is a LONG LINE of VC with their hands out. Tim, take cash bonuses…CASH ONLY please..If they offer you stock options I again remind you…………CASH ONLY!………….You would be better off buying 500 Realty, Wa Law, or even Findwell shares since all three should have NO DEBT and no VC wanting anytype of returns on their investments…As the short sales and Trustee Sales continue to plague the market for years to come the drain on Real Estate Brokerages, including Red Fin, will become VERY apparent with efforts to stay afloat in declining asset environments. I assure you anymore VC put into real estate companies will be met with such HARD MONEY terms that it will never be accepted. So you are left now with what you got…..Good Luck and TAKE CASH TIM never the options.

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  21. 21
    Rumpole says:

    RE: ray pepper @ 20

    http://www.youtube.com/watch?v=07G23zMGa4g

    Straight cash homey

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  22. 22
    ray pepper says:

    RE: Rumpole @ 21

    LOVE IT!….Never saw that Vick clip!…str8 cash homey rocks!

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  23. 23
    David Losh says:

    RE: ray pepper @ 20

    It’s the only way Glenn buddy will be pay.

    Rate this comment: Thumb up 0

  24. 24
    MichaelB says:

    By Jill Schlicke @ 14:

    FWIW, phones are ringing off the hook at the non-profit housing counseling agencies with home owners who are all of a sudden getting trustee sale date letters from their lenders. More REO inventory on the way.

    This is a very important and insightful comment! As soon as it looks like we may have reached bottom, or things seem to be picking up…out comes the shadow inventory and homes flood onto the market, pushing prices down. The tide still has some distance to go out, so we will see many more who’ve been swimming naked.

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  25. 25
    julia says:

    Want to help a friend to make an offer on a new house in Renton. It’s been a few days, still waiting for the listing agent to give us answers to several questions. Seems like they are selling really fast, not eager to help us. What is the situation with the new home inventory here?

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  26. 26

    RE: julia @ 25 – It’s like the rest of King County–very little good inventory. The good stuff goes quickly.

    If the one you’re calling about is a bank owned listing I wouldn’t hold your breath waiting for a call back. IMHO, most REO agents have little/no interest in having an unrepresented buyer make an offer on one of their listings.

    To give you some idea of the market, I have a client who just expanded the search into North Kent. There I found an REO that went pending within 7 days, and the listing agent told me she had seven offers. Very nice REO. And nearby there was a much cheaper REO that had a buyer in it when I went to preview, and while I was sitting there checking out where to go next, another buyer was lined up behind me to look at the place.

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  27. 27

    RE: julia @ 25
    Not sure I completely agree with Kary here. Renton is not nearly as hot a market as parts of Seattle or the eastside, and I’m aware of some brand new houses in Renton that remain unsold. But I do agree with Kary about the reluctance of the listing agent to deal with an unrepresented buyer. At best, it’s going to be more work and more complicated for the listing agent if the buyer doesn’t have representation. I purchased a couple of homes, years before becoming an agent, by going to the listing agent directly and not having my own. And both times I felt like I wasn’t being represented and that my best interests weren’t being looked after. I know that plenty of buyers feel the same way even when they have their own agent. But a lot of agents are lazy, and don’t want possible complications. A lsiting agent dealing with an unrepresented buyer can mean more work and complications, so this listing agent may just be putting this inquiry into the “round file”.

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  28. 28
    ARDELL says:

    RE: julia @ 25

    It could be the nature of the questions that is causing the problem. Can you give us an idea of what type of questions are not being answered? For example “How much will the builder take less than the asking price?” is a question that will not likely be answered.

    Often the amount the builder offers for you to go get an agent of your own to answer your questions is more than the builder is paying their agent to represent them and not you. In that regard using all or part of the money to hire someone to answer your questions, vs using the builder’s agent, may be the message the agent is trying to send to you.

    They have provided funds to that purpose, and may prefer that you use the funds to that purpose, as is their right.

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  29. 29

    RE: ARDELL @ 28
    Take note here, folks: Kary, Ardell, and I are pretty much in agreement on this one. That doesn’t happen much, and is unlikely to happen much in the future. It’s like seeing a rare, endangered species. Kary is not calling Ardell unprofessional, Ardell is not calling Kary bullheaded and wrong. We’re all holding hands and singing Kumbaya. I predict it’ll last about five minutes.

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  30. 30
    mmmarvel says:

    RE: Ira Sacharoff @ 27

    I could have been wrong, but I felt like my agent (serving as a buyers agent) was really representing me and pushing through offers when I wanted to make them (my wife felt different, but if I’d followed her advice we’d still be looking – not a good thing). On the other side, I (through my agent) would make an offer and it would be several days to several weeks before we’d hear anything back. In some cases I tried to act on my own as well as what my agent said he did, just to see if the reaction/response was the same … it was, or should I say the lack of it was. I was very disappointed in the listing agents that I had to deal with, really made the profession seem unprofessional. SO glad to not be in the market for homes any more.

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  31. 31
    ARDELL says:

    RE: mmmarvel @ 30

    The answer to an offer 10% under list price may very well be “no response”. No answer IS an answer. Once in a while I have seen an agent ask if we could please have the seller write “REJECTED” across the front page of the offer and initial and date it to show that the seller actually saw it. But generally there is no place in our standard forms for a seller to do anything if his response is…to not respond.

    Letting the offer response time lapse with no response is a valid response to an offer, to a home inspection request, to many things in a valid real estate offer and contract. It is not necessary for a response to be more than merely letting the time lapse with no comment.

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  32. 32

    In the cases of an offer that the seller doesn’t wish to respond to, I would always at the very least call the other agent or buyer as a courtesy to say so.

    Sometimes an offer can be quite insulting to a seller. In those cases I would encourage the seller to respond, even if it was back at full price again. I have found that even if you are miles apart on price and terms, once you can get the ball rolling, some middle ground can be eventually agreed to.

    Most professionals would at least make the courtesy of a phone call to say the offer was presented and no response will be forthcoming.

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  33. 33

    RE: Ira Sacharoff @ 27 – I had missed the “new” house part of the question. I read it as a different house, not new construction. So my answer on the real estate agent not calling was only addressing an REO agent. They, IMHO, are unlikely to want the issues related to having an unrepresented buyer, especially if that might sour their relationship with their bank client.

    An agent on new construction, in contrast, probably wouldn’t have any qualms at all about dealing with an unrepresented buyer. They might actually prefer it, because their builder client might prefer it.

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  34. 34

    RE: Ira Sacharoff @ 29 – And then I go and clarify my answer. Does that change things? ;-)

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  35. 35

    By ARDELL @ 31:

    Letting the offer response time lapse with no response is a valid response to an offer, to a home inspection request, to many things in a valid real estate offer and contract. It is not necessary for a response to be more than merely letting the time lapse with no comment.

    Not only that, but if the seller does want to counter, there’s no reason at all that they need to counter within the time limit set in the offer for expiration of the offer. It might even be best to purposefully wait in some situations.

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  36. 36
    julia says:

    Thanks everyone for your response. I do have a RE license. But I’m only using it when close friends/family asking me to help with a transaction. I’m trying to find out the pricing of some must have upgrades that my friend wanted. The property is in the framing stage. It’s hard to make an offer without knowing the total cost. For some reason, it’s been a week since the listing agents promised to provide the numbers. We are still waiting.

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  37. 37

    RE: julia @ 36 – Make sure you get the homeowner’s title insurance policy, even if you have to pay for it yourself. The owner’s policy does not cover mechanic’s liens.

    The last offer I wrote on new construction the builder’s addendum did not reduce the coverage to the owner’s policy, but the escrow was in the pocket of the builder and ordered the owner’s policy. It became easier for me to pay for the homeowner’s policy myself than to continue to go back and forth with the builder’s agent. Since then I’ve taken to just paying for the policy upgrade myself on any offer where it does get reduced (e.g. REOs), rather than giving the client a choice.

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  38. 38
    ARDELL says:

    RE: julia @ 36

    Thanks for clarifying, Julia. It depends on the nature of the upgrades. Most often it is best to make an offer contingent on that list of must haves, and then there is a scheduled meeting or 2 or 3 to ascertain cost, depending on what you are asking about.

    In the normal process of new construction there are upgrades provided by people who work for the builder (millwork as example) and others provided by 3rd party companies. The 3rd party upgrades are often landscaping, fences, interior finishes such as type of tile and floorings, and lighting which is usually a different 3rd party company than the floors and tile-granite issues.

    The builder doesn’t usually get that involved in the 3rd party upgrade costs. The buyer meets with the 3rd party company at the lighting showroom and at the flooring-granite-tile showrooms. The homebuyer pays for the upgrades at the showroom and not to the builder. So it is usually not part of the process to know these things in advance of an accepted offer. Usually you can’t get a meeting at the showroom without an accepted contract.

    If you want to add a bedroom or change something substantial in the construction of the home, it is still best to submit an offer including these must haves as a list within the current asking price. Then the builder will counter which can be included and which are at extra cost and whether that extra cost can be an increased price or those extras have to be paid for out of pocket. Sometimes the extras can be paid for as part of the Earnest Money by making the cost a non-refundable portion of the Earnest Money. But usually they have to be paid for on top of the Earnest Money.

    It is often difficult to get detailed cost information without first making an offer. Something on paper is more real…and you get more real answers when you approach with an offer than when you just ask a bunch of questions.

    Hope that is helpful. Often buyers want all the answers before they make an offer, but often the answers are given to “the” buyer…vs every potential buyer who happens to ask. If they don’t like your offer price, then they don’t want to waste a lot of time answering a lot of questions.

    Put it on paper…

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  39. 39
    julia says:

    By Kary L. Krismer @ 37:

    RE: julia @ 36 – Make sure you get the homeowner’s title insurance policy, even if you have to pay for it yourself. The owner’s policy does not cover mechanic’s liens.

    The last offer I wrote on new construction the builder’s addendum did not reduce the coverage to the owner’s policy, but the escrow was in the pocket of the builder and ordered the owner’s policy. It became easier for me to pay for the homeowner’s policy myself than to continue to go back and forth with the builder’s agent. Since then I’ve taken to just paying for the policy upgrade myself on any offer where it does get reduced (e.g. REOs), rather than giving the client a choice.

    Good point. Thank you.

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  40. 40
    julia says:

    RE: ARDELL @ 38

    Thank you for the information about the new construction. Maybe we will just write up an offer with the asking price but also ask if they will include the upgrades and wait for their counter.

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  41. 41
    ARDELL says:

    RE: julia @ 40

    Do let us know how that goes. They don’t want to spend a lot of time only to find that you were thinking you would get the house at 90% off asking price. Better to put the offer up front and make it contingent on being satisfied with the answers to your many questions.

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  42. 42
    ARDELL says:

    I know people here don’t like “anecdotal great tales” from the street. I just heard one that knocked me off the chair, and I’ve heard a lot of tall tales! Multiple offers…many stories like that every day these days. But this one takes the cake!

    Only one offer. OVER asking price. Listed as a short sale and a buyer offered the price at which it would not be a short sale, so as not to go through the short sale process. Over asking…and he was the only buyer in the room.

    That’s a new one for me. Haven’t heard a tale like that before. I know it’s true as I was making an appointment to show it today and that was the agent’s “heads up”. Wow! Hard to believe, isn’t it?

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  43. 43

    RE: ARDELL @ 42 – Could it possibly be because the listing agent thought that short sales and REOs were comps for non-distressed property? Maybe he/she didn’t consider looking at what non-distressed property was selling for?

    Do you have any idea how much over list the offer was? If it was less than 10% the listing agent probably made a mistake and the buyer is possibly getting a bargain.

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  44. 44
    ARDELL says:

    RE: Kary L. Krismer @ 43

    No, Kary, because it was listed for a long time at higher prices. It wasn’t new on market. Someone just wanted it…and now. One of the strangest scenarios I have heard. The Listing Agent was very surprised…and happy.

    I could probably do the math to figure out the offer price, but it’s not even pending yet, which is why I was calling to show it tonight. So no…I wouldn’t know the actual price. Only that my client would have to beat it since they are finalizing it tonight. She was just giving me the heads up so I wouldn’t waste my time showing it.

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  45. 45

    RE: ARDELL @ 44 – Maybe the buyers were the last people in the country doing a 1031 exchange, and that one was the only one left on their list of possible properties! ;-)

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  46. 46
    julia says:

    RE: ARDELL @ 41
    The builder wants full price. The upgrade was pretty expensive, they are only giving a few hundred dollars for closing cost. BTW this is a cash offer. It seems to be a seller’s market. The builder at the new community I’m living in is only taking full price offer on presales as well.

    The short sale story is very interesting.

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  47. 47
    ARDELL says:

    RE: julia @ 46

    It’s not uncommon for builders to be wanting…and getting…full price. Pretty standard really. If they can’t get full price, they drop the asking price down eventually…and then get full price. Negotiating with builders is not the norm. Never has been.

    It’s generally easier to get more concessions from builders in the 4th quarter vs this time of year. Full price with lots of concessions is usually Oct 15 through year end.

    Best of luck to you! If you email me at ardelld@gmail.com and tell me who the builder is, I might be able to add something.

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  48. 48
    ARDELL says:

    RE: julia @ 46

    What was the upgrade? I was able to get a builder to move a wall to get rid of the loft and add that space to the 3rd bedroom for free last year after high season. Got lucky.

    Were you modifying the floorplan?

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  49. 49

    RE: ARDELL @ 47 – Builders have a lot more incentive to get full price, especially if they still have other buildings in the same development. Sales prices are recorded of public record and the price concessions they make will be known. Thus they’re more likely to hide them by including extras, etc.

    When Joe Blow is selling his house, a $20,000 price reduction costs him (arguably) $20,000. When Builder, Inc is selling a house, a $20,000 price reduction costs them $20,000 times the number of units they have left.

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