and the bank accepted it. He saved $33,000 because the bank’s agent didn’t perform well and substantially underpriced the property. The bank suffered a significant loss.
ERRORS IN PRICE ADJUSTMENTS ARE COSTLY
There are times when pricing adjustments may need to be considered. For instance, let’s look at Tim and Sue’s situation.
Tim and Sue’s Home Listed @ $345,000 Comparable Listed Home A: $368,000 Comparable Listed Home B: $349,000 Comparable Listed Home C: $345,000 Comparable Listed Home D: $333,000 Comparable Listed Home E: $329,000
Tim and Sue appear to have priced their home competitively for the market but as we discussed in a previous chapter, pricing a home to "Listed Homes" and not actual "Sold Homes" is not a smart strategy.
Here is what ultimately happened to those listed homes:
Tim and Sue’s Home: $345,000 Comparable Home A: Expired
Comparable Home B: $339,000 (Reduced Price) Comparable Home C: $335,000 (Reduced Price) Comparable Home D: Sold For $325,000 Comparable Home E: Pending (Don't Know Sold Price Yet)
Comparable Home F: $326,000 (New Listing) Comparable Home G: $325,000 (New Listing) Comparable Home H: $319,000 (New Listing)
Tim and Sue now have the highest priced home in the area in their price range. When a buyer looks at the comparable home prices, it is now the worst value proposition in the marketplace.
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