A Big Markup Over '04Posted on Wednesday, June 8th, 2011 at 12:32am.
And then there are exceptions that jump out at you, like one we'll discuss below.
We first advanced that notion of 2004 prices in October 2009, when we looked at resales of several homes previously purchased between 2003 and 2006.
We continue to see trades near 2004ish prices, but it's also clear that the local RE market firmed up quite a bit after that Oct. 2009 post. So maybe people are getting bigger markups over 2004 now? Are we into 2005 now, one of the great bubble years?
To properly analyze that question, we'll need to go fetch and examine some data, as we prefer to do with big questions. So bear with us; we'll get to that shortly.
But one data point has just smashed onto the radar, sharply challenging that "2004 prices" expectation.
319 S. Poinsettia in the Hill Section, a beautiful, big (6br/6ba, 4825 sq. ft.) Craftsman that is positioned as far south as you can get – it borders Boundary Place, the alley/street that divides MB from Hermosa.
The home's got no views, it's on an odd, slanty lot along that alley and hasn't been improved from its 2004 (new) condition.
So, now, explain this:
- Oct. 2004: $2.137m
- June 2011: $2.495m (+357k/+17%)
At Poinsettia, we see a yellow flag: the buyers hired the listing agent for this deal.
The property had been exposed to the market for just 10 days in April before these buyers signed a contract. They wound up paying the start price.
There may be a time and a place for working through the listing agent – in some circumstances, this approach may be the only way to get a hot property. We seriously doubt that Poinsettia was a case where paying full price through the listing agent was the only way to submit a winning offer.
Had the buyers asked another agent – and that includes this blog's author and our network of trusted referral agents – they probably could have kept an extra $200k or so for themselves, instead of handing it to the outgoing owners of Poinsettia.
We just can't shake the sense that they overpaid substantially here, and yet what's the usual rationale for hiring the listing agent? That general sense that maybe you'll save money. Maybe.
Meantime, how much extra does it cost to hire your own, separate representation for the deal? Zero. The buyer's agent is paid out of the seller's proceeds regardless.
And what are the odds that you'll have more zealous representation from your own agent? Better than "maybe."
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