Sold Price $135k below List? Ouch!
One of the characteristics of a Buyer’s market is Buyers wresting steep discounts from the Seller’s asking price. Even so, a $135k discount — from an already reduced $800k asking price — stands out for sheer magnitude (note: to see the unabridged report, go to “display” in the lower left and select “Property/Agent Full”):
Is the market really that soft?
First, the original asking price, $850k, was, shall we say, aggressive, based on what I know of the comp’s (“comparable sold properties”) — quite a bit, considering that I’ve sold millions of real estate within a few blocks in the last few years.
Second, based on the time that elapsed between when the home went pending and when it closed — one week — you’d speculate that the Buyer paid cash. With tightening underwriting standards and fewer well-qualified Buyers out there, an all-cash offer warrants a nice discount.
Third, the home was a “spec” (speculative) remodel done by a builder-remodeler. By definition, such homes are vacant — no one is deriving any benefit from them. Meanwhile, the holding costs continue to mount along with the time on the market.
Whereas many long-time owners can be quite emotional –and therefore stubborn — about taking price reductions, corporate sellers tend to be more dispassionate and bottom-line oriented. Closing by year-end may also have had favorable tax consequences (if indeed the Seller took a loss).
Finally, the home sold in mid-December. Ordinarily, this is already a seasonably slow time of year for the Twin Cities housing market. However, with all the economic turmoil the last few months, December this year was colder than the thermometer.
In such an environment, a heavily “discounted” offer is better than none at all.