mousey at greaterfool.ca 18 Feb 2011 1:07am – “I noticed a double lot property listed on the MLS in the “hot hot hot” Cambie area of Vancouver. It had heritage features and was not obviously a knock down. It was priced at just under 1 million which is about $300,000 less than that knockdown on a regular lot in the same area that sold about 2 weeks ago. Had to phone the real estate agent and ask what was wrong with the property. The agent said there was nothing wrong with the property and that it had been listed for about 1.5 million just recently. The plan was to sell it in one day and that they expected to receive 20 or 30 offers right away. There was no expectation that it would go for 1 million. The price looked wrong right off the bat, but I felt bad for the young families who might have actually thought that the asking price really was the 1 million as opposed to the opening bid price in a land auction.
Further, a house down the street that couldn’t sell for about 1.2 million last fall is now back on the market as priced to sell for just over $1.3 million. There is something truly wacky about our little jewel on the coast. The lattes must be spiked, I swear.”
We would always expect realtors to be using whatever strategies it takes to sell properties, regardless of market conditions. Currently, however, there are perhaps an unusually large number of stories of strategies designed to manipulate buyer psychology. Helicopters, Paid for line ups, Media coverage, Deadline pamphlets, ‘Land auction’ pricing. It seems we have a narrowing market with hot and cold patches. This could be a ‘distribution top’ pattern, where smart money and insiders are unloading and market darlings show a last hurrah. All against a turbulent and frantic circus-like backdrop. -vreaa
Desperation is what you are describing. People don’t need to be desperate if “all is well.” You will never hear a RE agent tell you they are not doing so well, as they need to perpetuate the myth of the “house prices always go up.” You can prove, with a historical graph, that RE prices sometimes go down, a lot. But a RE agent won’t indulge a conversation about that. And the media contributes to the myth by repeating it and discounting any proof that a housing correction can occur.
Putting a ridiculously low price to get multiple offers is a legitimate tactic to sell a house quickly, but if it is then portrayed to the media as the norm, then it is outright intentional deception, which of course is par for the course today.
If you repeat a lie over and over on the MSM it becomes reality.
Yes,RE agents like mist sales people need to paint a positive picture. What I liked during the mini correction in 09 was that agents would tell me people always need to buy or sell houses but they themselves worked hard for their clients and therefore were doing okay. I miss that sense of competition where they were really trying to build a relationship because times were tougher.
Q – What is the difference between 1925 Florida and 2011 Vancouver? …
A – Nothing. (except climate)
He, I walked to Granville Island the other day and at the border of it to the West there are a ton of Condos with their own little “Lagoon” and all that.
Usually I walk along the water but because I came from the south this time I went along the street. Outside of the driveway entrance to the Condo Complex there were at least 10 “For Sale” listings out there. I have never seen that many listings in that area.
I admit, those units do look nice from the outside, but that’s also probably why so few usually sold, now it seems half of the people are trying to “cash in” before it’s too late.
I actually took a shot of the ads:
http://img59.imageshack.us/i/p1020475h.jpg/
Michael, the other thought that comes to mind is that the building may have gone leaky, so some owners are trying to get out while they can…
Are the tactics any different or more prevalent, or are we just more sensitive to them?
The longer the bubble continues the more frustration mounts.
Quote: “I felt bad for the young families who might have actually thought that the asking price really was the 1 million.”
LOL… No offense. If any young family is prepared to drop $1 million on a house, the only feeling I have is one of complete indifference (unless you count the belief that they are being stupid in the extreme).
These tactics increase when the peak is near, or recently passed, because they want to keep the momentum up as long as possible. Nobody likes to see their gravy train end. Eventually after the correction is in full swing, RE industry people will accept the obvious, and these tactics will diminish. As things get worse, some RE agents will look elsewhere for work. Eventually stabilization will return.
These tactics are used because they seem to work. Last I checked listings were still increasing, meaning there is still some level of price discrimination going on.
When all listings below 2mil vanish in bidding wars I’ll say the market is crazy, otherwise it still looks like marginal money to me.
Yeah, I agree this could all be due to our perception and sensitization.
No absolutely definite evidence that marketing strategies are any more nefarious than usual.
FWIIW, traffic on blogs predominantly bearish about Vancouver RE seems to have increased. Apparently more comments and discussion at VCI; definitely increasing traffic here at VREAA (also more incoming links).
Back when I used to live in the GTA, I read an article from Toronto life magazine 6 or seven years about this very technique being standard operating procedure for Toronto realtors. It is very effective at turning every purchase into an auction, although in Toronto they were under listing by about 5% rather than the 37.5% they are doing in this anecdote.
First rule in a distributive negotiation is don’t make the opening bid.
It is still common in Toronto to deliberately under-price houses.