Interesting Ardell Quote

[ayles]

This just boggles my mind. Are home sales not part of a free market? I think somebody skipped the supply and demand lecture in econ 101.

"I am having a very difficult time training some agents who still want to believe that "a house is worth what a buyer is willing to pay for it." That is just SO not true. That runs more along the lines of "A sucker is born every minute."

[biliruben]

She is preparing to list her own house. For a bunch. So we will see if she is right.

FWIW, my guess is she's a pretty good Realtor, so I wouldn't put it past her to get top-dollar in this transitional market.

She doesn't seem to fear chasing the market down nearly enough (or at all), however, so she may be in for a rude awakening in 6 months.

[kpom]

She has acknowledged that the house will not sell quickly.

I agree that she seems to have high-quality RE skills, so it will be interesting to see how well she does with her own house.

[Alan]

If a house is not worth what someone will pay for it then how much is it worth?

Is she implying that it is worth more or less than what someone is willing to pay for it?

[perfectfire]

Looks like mark to model vs. mark to market is playing out at many different levels within the economy.

[Alan]

In the context of her RCG post, that statement makes sense.

Why does an agent know the "value" of a house when helping a seller price it, but not when helping a buyer purchase?

I didn't actually know this was a problem.

[rose-colored-coolaid]

[Alan]

I think her statement is more about the attitudes of other agents than market forces. Suppose you hired an agent to help you sell your house and asked him what it was worth. If he answered, "whatever a buyer would pay for it" then you would likely not be very happy. Extend that out a bit more and it becomes an excuse to not do work to build an accurate predictive value of what a buyer will pay. You either price it too high and say "be patient -- we just have to find the buyer who will pay this," or you price it too low such that it sells immediately and you point out "that is what a buyer was willing to pay -- I am so smart."

Saying that a house is worth what a buyer is willing to pay is true, but it isn't particularly useful.

[kpom]

This seems to be the new RE talking point - the Seattle RE Professionals Blog has also been talking about the difference between Value and Price. They aren't very able to articulate the difference between the two, but I think that the point is that if a house has high Value, that you should buy it now, even if you suspect that Price is going to fall 10% over the next year.

[deejayoh]

I think a house is worth what a bank is willing to lend.

At first I was going to post that as a joke.

then I realized it was true.

[Alan]

[davidlosh]

I read the entire Ardell post and it got worse. Most buyers are geographic; North, South, near a landmark or such. The radius search shows all things in a price range or bed to bath ratio. From that search a market analysis can be made by clicking a few buttons on the NWMLS web site. Before I write an offer I do a market analysis and give a price opinion. It's my job. It's what people pay an agent for. If the agent is giving a discount they are still obligated to act in the best interest of the buyer as a buyer's agent. Without an analysis and price opinion there is a lack of due diligence by the buyer's agent.
The buyer then makes an offer based on what they will pay for the property. Most of my offers are low, some are at list price, and never do I represent a buyer in a multiple offer situation.