Getting Out Ahead of the Market

By Dave Fratello | March 26th, 2015

In these go-go times in the Manhattan Beach real estate market, it's no big surprise to see sellers overreach.

After all, it sometimes seems that list prices are merely the starting point for the inevitable bidding war. (See our post, "Always Over Asking?")

1622 Gates Avenue Manhattan Beach CABut there are also cases like at 1622 Gates (5bd/7ba, 5,500 sq. ft.), where sellers quickly realize that there isn't a buyer at the initial price, and make adjustments.

Gates stands out as a particularly nice, custom house. And it once did sell for $3.100M (in 2007).

This year's list price was $3.175M, but they swiftly changed that to $2.999M just 2 weeks into the listing (-$176K/-5%).

So if they began a bit ahead of the market, they saw it and made the needed changes before the listing got "old." (In MB these days, it seems that hitting 30 DOM is like a crisis.)

2412 John Street Manhattan Beach CAAnother example is the super-cool new construction in a midcentury, throwback style at 2412 John (3br/3ba, 1890 sq. ft.).

There's really nothing like it on the market to compare it to. New construction typically maxes out (3000+ sq. ft.). Here, they didn't. They went for single-story, wide-open, slick, custom and eco-friendly. It's a mix you don't find anyplace else. (See our post, "The Importance of Staging... The Driveway.")

Location's pretty good, so they launched the listing at $2.799M.

Apparently, that was somewhat above what the market would bear.

After 5 weeks, they dropped $150K (-5%) to $2.649M.

633 26th Street Manhattan Beach CAThe Tree Section listing at 633 26th (5br/5ba, 3400 sq. ft.) provides a different type of example.

They listed initially at $2.899M. For a pleasing, custom Mediterranean in a great location, and one that was all but alone in its market tier at the time, the number had some support in recent sales. 

But the market said, "no thanks, not at that number."

A $50K cut to $2.849M came about 2 weeks in. But it turns out, that was just a sign that the sellers were flexible.

The sale has now closed. The official price on the MLS and tax records is $2.637M.

In this case, there were no buyer's agent commissions paid, so the net to the sellers was the equivalent of a market sale at $2.705M.

Side note: We do appreciate it when agents list the actual sale price instead of "netting up" the sale price to account for commissions or other concessions. It is a far more honest practice.

In the end, the sellers of 633 26th had overshot the market by about $200K (7%) when they first listed. But they made quick corrections and got done a very creditable deal.

Now, who's next to make adjustments to make deals work?

We're watching two Walnut listings in particular: the flipper re-do at 3613 Walnut (newly down to $2.449M from a $2.699M start) and perhaps 3525 Walnut, now down only $25K from a start at $2.699M, asking $2.674M, but if they're motivated, we'd expect to see more off the top.

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