Overpricing Doesn't Fool the Market

In this rising market, it's pretty easy for sellers to dream of a huge payday. As often as not, they get all they want and more.

But there are a couple of old rules that still apply today:

1) Location matters, and

2) Overprice, and you may get less.

Our case study here is 3102 Blanche (5br/4ba, 3400 sqft.).

In the hot, hot Spring this year, 3102 Blanche came out of the gates asking $2.750M.

That was $809/PSF, which would have put this home on a par, by the square foot, with two better-located sales that had closed just before the listing launched:

• 2001 Agnes (5br/4ba, 3470 sqft.) at $2.811M and $811/PSF (pictured)

• 633 26th (5br/5ba, 3380 sqft.) at $2.637M – a "gross equivalent" price of $2.700M because the buyer took no buyer's agent commissions – and $799/PSF (at the adjusted value)

Suffice it to say, Blanche isn't Agnes or 26th.

It's a busy road, and the subject property here actually has its front door facing Blanche, but no sidewalk – it's a bit of an adventure to approach the home.

The first listing ran just 35 days and quit at $2.675M.

But 3102 Blanche was back in late July with a new agent and a new price: $2.575M.

Destiny was on the side of the sellers this time. The home looked great, and it stood out at a time with little competition. There were multiple offers. [Disclosure: Dave had clients offer on this property, and their offer was not accepted.]

But even with that interest, offers weren't coming in at that revised list price.

In the end, the home closed this week for $2.450M, another 5% under asking, and $300K under the first price.

[UPDATE: After this post went up, the "sold" price on this property was adjusted to $2.480M, an increase of $30K. We're leaving this post as-is until we see the tax records of the sale come through.]

The final PPSF was $721/PSF, among the lowest of comparable homes in the Tree Section in 2015.

Take a look at some of the properties selling with similar or lower PPSFs:

• 3613 Walnut (4br/5ba, 3545 sqft.) at $2.429M and $685/PSF (pictured)

• 839 Marine (5br/3ba, 3600 sqft.) at $2.225M and $616/PSF

• 2418 Ardmore (5br/3ba, 3465 sqft.) at $2.075M and $599/PSF

Did you notice that all had significant location challenges?

While 3102 Blanche still settled at a pretty healthy number, there must be some amount of perplexity over what happened at a nearby neighbor.

620 36th (4br/4ba, 3775 sqft.) is a Mediterranean built at about the same time (2001), but it sold in June for $2.750M. Many buyers would view 36th as a less desirable Tree Section location overall, perhaps not quite as much of a concern as the Blanche location, but still no "A." And yet they got $300K more.

The unknowable question: What if 3102 Blanche had been priced in the $2.4s or $2.5s in Spring, when there were more buyers?