My neighbor Trish* calls real estate her "passion." She doesn't work in the field, but she likes to watch the DIY shows and look at pretty homes. Every so often, she calls me asking me to look up the price on a house or ask some random question.
On one recent occasion, she called me to for advice on a home she wanted to buy but did not want my representation on (I have helped her and two family members buy a couple of homes). Zillow, however, had told her the "best way" to negotiate. But, she had a few questions apparently Zillow didn't cover. From that point forward, I have been cautious what I tell her. It doesn't matter anyway. She believes Zillow, Trulia and RedFin. They know everything.
Recently, someone down the street put their home on the market. Trish, who keeps tabs on this sort of thing called me all excited. "What do you think of the price?" Truly, I had no idea. I had never been in the house. I knew nothing about it. We live in a custom neighborhood, not a tract housing development. Every home is different. When I told her the above, she didn't buy it. So, I went with my gut and gave her the price I thought the home was worth, based on the little information I had. My price was $20k under the asking price.
The home sold for the price I quoted, by the way.
Last week, Trish called me again. Some other neighbor is putting their home on the market. This time for $40k more than the home that recently sold. What did I think? So, based on nothing more than a price, I gave my opinion. The new home going on the market was over-priced. There was already a comparable home, in a better location on our street that sold for $40k less. And I was at the grocery store, could I call her back?
For whatever reason she found my limited opinion unsettling. She started countering with all she knew about this fabulous home. It has an upgraded widget that runs the somethingorother. It has a flux capacitor. It has an underground bunker with a tunnel that leads to Wal-Mart. And all sorts of other tid-bits that really have no bearing on what I might think of the price. Frankly, it sounded a lot like the home that just sold, except this new home backs a major traffic artery that runs through my city.
The truth is, the price is dictated by what someone will pay for a home. It is all supply and demand. If there is a loan on the home, then the appraiser gets involved and goes by past and present data to estimate value. All they want to do is justify the price the buyer wants to pay.
In my case, it was my day off. I had other pressing issues--like feeding my children. In fact, on this particular day, I just wanted to get off the phone. I know Trish wants to talk pretty homes with me but she will believe whatever she wants anyway, so I don't want to talk shop with her. Besides, I have done no research on this particular property and above all, I was at the grocery store and just didn't care what the price of the home might be.
*To be fair, Trish calls me about other non-real estate things too but not on this particular day.
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