Tuesday, May 19, 2009

New Trend: Not Reporting Sale Prices

There is a new trend in Los Altos and Los Altos Hills - not reporting the sales price of a newly sold home. Why? Simple: It prevents showing the gap down in prices.

The irony is that most of the actual sales prices, viewable by agents and not the public, is off the list price so little as to wonder why the buyer and seller bothered worrying about it. I've seen a few of these transactions and the final sales price doesn't seem low enough to warrant withholding it. So if withholding the price is supposed to prevent people from seeing a price that the buyer and seller feel is too low to show the rest of the market and yet the prices really aren't that low, then why bother?

Good question. There are a couple of impacts these decisions have; not having data for comps or appraisals and skewing the "final sales price as a percentage of ask price" statistic.

Not having data for comparables is an issue because it means that another home coming on in the area may be priced too high to sell. That will hurt all the other homes in the area.

Skewing the percentage of ask price statistic is also bad because it is a valuable indicator of how well the local market is doing. Los Altos homes, for example, typically sell for 96-104% of asking price depending on the property, location, and price - on a historical basis. However, with missing data that statistic could be artifically high which would indicate a stronger market in Los Altos than really exists. This could actually help the local market but do so artifically. If additional inventory comes on the market based on an unreal, perceived strength - prices could start trending down again.

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