Where’d They Get THAT Number??

Ever ask yourself that while looking at a new listing whose asking price seemingly bears no connection to market reality?

In my (Realtor’s) experience, a good one-third of the time, the explanation is just one click away — on the property tax statement showing what the owner originally paid for the house. 

Yup — they’ll agree to sell only if they can break even (actually, unless they plan to sell it themselves, that will still leave them down 6% to 7%).

And what if the would-be Seller is asking over their purchase price, even though the market may be down 10% to 40% since they bought?

It’s a fair bet that the difference is equal to what they subsequently put into the home.

Unfortunately, historical purchase price (plus improvements) is a very poor proxy for current market value, especially when either:  a) a considerable amount of time has elapsed; or b) markets have changed dramatically.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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