This Idea Is Submitted With Tongue Buried Deep In Cheek
Sometimes I can only shake my head as I look at some of the listings in the MLS. Most good agents won’t take a listing that is overpriced… and if so, it’s usually not overpriced by much.
When studying recent sales, I notice that the trend for a home to sell within a few percentage points of its current list price continues. Ultimately, it all comes down to supply and demand. If we can’t increase the demand – maybe we should restrict the supply… especially of overpriced listings.
Well I came up with an idea. What would happen if a property tax reassessment could be made when a seller put their property on the market?
As my good friend Jeff Brown would say, ‘Now don’t jump the gun, locomotive breath.’ This knife would cut both ways. For those who are paying low property taxes – they would see a tax hike. But for foreclosures and other distressed properties – they would see a tax reduction.
The benefit of using this system is that sellers would be much more reluctant to put their property on the market for some ridiculous price. The tax assessor would be able to say – Hey, you’re the one who said your property was worth that much – quitcherbitchin.
On the other hand, buyers like some of my current clients would get a break on the purchase of their next homes. For example, on one property we are considering, the current taxes are nearly $7000 a year – but those taxes will be reduced by at least 40% after the purchase and subsequent reassessment. Having that reassessment right now would reduce the upfront costs of the purchase – not to mention that more buyers could qualify to purchase a property like this.
There you go. I’ve tossed a grenade out there for you. Anyone feelin’ froggy?
laurie mindnich says:
Your suggestion is well taken. “Flushing” out the market is an easy “fix”, with small, and sometimes not, lost fortunes between that (as a seller), and the practical thing to do. With NY later-to-the-“party”, your perspective is valued- thanks. More for sellers that NEED to due to a selling requirement, to chew on.
July 20, 2008 — 6:22 pm
Chris says:
The market is flushing out itself. As one agent I know says their are two kinds of sellers; “those who want to sell their house, and those who want to keep owning it.” That latter type are getting frustrated and yanking their property off the market.
July 20, 2008 — 7:07 pm
Kevin Boer says:
Not a bad idea at all, kind of like the suggestion to dissuade people from pimping their listings on Zillow by having it get instantly assessed if a new kitchen mysteriously appears!
Your idea may or may not work in terms of reducing MLS inventory. In terms of helping with the subsequent re-assessment, that’s a moot point here in the People’s Republic of California, in which our famous Proposition 13 (which limits property tax increases to around 2% per year) has its counterpart in Proposition 8, which allows for re-assessments if property values go down.
July 20, 2008 — 7:07 pm
Don Reedy says:
Doug,
Heresy I say! Heresy! Are you advocating for the truth? Can’t say one thing…mean another? Listen to some Clapton for some old fashioned advice on this….
July 20, 2008 — 7:08 pm
Doug Quance says:
>Laurie: This market needs less inventory. If they’re not serious – they need to get out.
>Chris: While many are retreating after many, many months of “no sale”, there are others bringing more inventory on the market.
>Kevin: Ah Prop 13… Howard Jarvis… remember it like yesterday. I was living in San Diego at the time…
Gotta love your take with Zillow! Ha!
>Don: Great tunage. Thanks!
July 20, 2008 — 7:29 pm
Utahluxury.com says:
I definitely believe that we have an oversupply, but I believe it is of short sales and foreclosures. Honest Joe cant sell his home simply because the market wont let him.
The real predicament is that we are now hurting the people who had honest 30 year mortgages.
July 20, 2008 — 8:49 pm
Barry Cunningham says:
“The benefit of using this system is that sellers would be much more reluctant to put their property on the market for some ridiculous price”
How about an easier way…the “professional” real estate agent simply refusing to list a property that is above the price of the average of the 3 most recently closed homes. (comparable neighborhood, confguration ..etc..)
And if an agent takes such a listing they have to pay a “sin tax” ,if you will, that requires the listing agent to only receive say 1% of the commission.
Why put a tax on the Seller? It’s the agent who inevitably is bringing the overpriced home to market. No one is holding a gun to their head. It’s not the Seller’s fault.
As an agent I think more need to go on a listing diet and learn what to eat and what not to eat. Fatty listings should never be on the menu.
Taxing the Seller, IMO, is penalizing the wrong person. The agent is the culprit here. That is irrefutable.
July 21, 2008 — 4:40 am
Geno Petro says:
I think it is a notable tongue in cheek idea–one of the best I’ve come across lately. And in keeping with Don Reedy’s thinking, if you shot the sheriff then you might as well shoot the deputy as well.
July 21, 2008 — 5:14 am
Hunter Jackson says:
Barry,
Fatty foods have been on my diet since starting real estate last year. I agree, the nutrisystem, if you will, method of listing will definitely help. God knows I’ve cut back on what I will take. My money is more valuable to the seller if the seller definitely wants to sell their house.
July 21, 2008 — 8:07 am
Sean Purcell says:
Barry, stopping by to remind us it is (and always will be) the agent’s fault. Always good to see you! 🙂
July 21, 2008 — 9:35 am
Barry Cunningham says:
C’mon Sean..the Seller can’t list the overpriced home. Can’t hold a gun to the agent’s head..so absent the terrorist Seller what is it that you have left.
An agent who took the overpriced listing. You disagree?
Is there an unklnown entity in the room that whispers in the agent’s ear? In this instance can it be anything other than the agent who is the culprit here?
If I am wrong, by all means..let me know.
July 21, 2008 — 9:50 am
Barry Cunningham says:
Hunter, you have your head screwed on straight and you don’t appear to need the dress rehearsals of listings that are bloated and a waste of time. The slimmed down listing will actually get you paid. I mean we are in this business to actually make money..aren’t we?
July 21, 2008 — 9:53 am
Doug Quance says:
>Utah: Oversupply is a function of both too many sellers and not enough buyers. The foreclosures wouldn’t have that kind of impact if there were enough buyers to take up the slack. The equation needs both components, IMHO.
>Barry: I see your point. But keep in mind the number of newfangled discount agencies that list properties without even seeing them. In those cases, you can’t point to the agent as the source of overpricing. Ultimately, the seller chooses the list price – the agent can only choose to list… or not to list.
>Geno: I knew I could count on you for the analogy. 🙂
>Hunter: You picked a fine time to join this profession. At this point, you need to list to get buyers… and you’re more likely to take an overpriced listing than an experienced agent. A regular catch 22.
>Sean: Barry still makes a valid point…
>Barry: BTW, many of the overpriced listings I have seen are owned by the agents who can’t sell them… and many of those have been foreclosed upon as well.
July 21, 2008 — 10:49 am
Jeff Brown says:
Hey Doug — CA is already half way there. When a sale closes and the price actually exceeded the current assessed value, you get a ‘supplemental’ tax bill almost before the ink on your grant deed is dry.
July 21, 2008 — 10:53 am
Doug Quance says:
>Jeff: That’s kind of understandable. A market sale is the best true indicator of a property’s current value.
July 21, 2008 — 11:00 am
Sean Purcell says:
Barry,
Why put a tax on the Seller?
I agree and would add: why put a sin-tax on the agent? The market works. Not always pretty but usually very efficiently. The last thing we need is more “enlightened” taxes, fees, etc. to help people make the decisions that some government entity thinks they should make.
If I am wrong, by all means..let me know
I didn’t comment that you were wrong… I was only admiring your consistency.
July 21, 2008 — 12:17 pm
Barry Cunningham says:
Sean you are correct…a tax on either side would be absurd..was just playing along with the fantasy.
Consistency..Absolutely!
July 21, 2008 — 1:35 pm
RonOrr.com says:
Good ideas, we do need less inventory and things will start to move faster, when will the inventory be back to a normal level everyone?
July 21, 2008 — 9:30 pm
Tom says:
Here is a contrarian point of view. The over priced listings give the buyers something to look down on and the buyers agent the chance to highlight the well priced listing.
If the homes on the market do not have to sell, all they are doing is fueling the medias obsession. Inventory never intended to sell, which an over priced home is, is just window dressing. Skews some numbers but other that drive us crazy, but really do not affect the marketplace.
It is the homes that are well priced but still do not move or have the buyers think they can whittle down even more is the problem. It is the mortgage lenders that will not lend on fair value because they have been burned is the bigger issue.
July 22, 2008 — 11:29 am