I write educational posts on buying your home for the first time. I even posted my homebuying book at r/NewbHomebuyer go check it out

I'm taking this from a higher activity sub and giving my opinion here. Here's the post:

Story time/rant. House hunting and I’ve come across SO many listings in the Dallas burbs where it’s like the same things happening on repeat: overpriced, flaunting “new updates” that the previous owner did, rough cosmetic shape inside, and sitting on the market a long time or yo-yo-ing on and off with reductions to the tune of 1-10k.

ALL of these were bought in the past 5 years or so and it’s obvious the sellers want to make a profit or at least break even. I feel for them, it’s tough to have “won” in a competitive market and then try to sell and lose that interest rate and then some. The reality is the market is shifting and they’re shooting themselves in the foot.

Against my better judgement I offered on a house like this because I liked it, I gave a lower offer still a bit above comps despite cosmetic issues. The sellers accepted but never wasted an opportunity to mention they came down on price especially when the inspection revealed real neglect and safety issues. Needless to say I walked. I see the same pattern in listings again and again and it’s frustrating, makes me not want to look at an overpriced house from a seller who recently bought.

For anyone who bought recently and needs to sell into a very different market, my genuine advice is to try and anchor yourself in the real market value and move on from what you paid. I can’t be the only buyer turned off by unrealistic pricing.

I'll explain why this is more common than it should be.

There was a study done by Daniel Kahneman and Amos Tversky.

Participants were awared $1,000 (israeli currency) and they had to choose between a 50% chance to win another $1,000 ot take a sure gain of $500.

84% took the sure gain of $500

A separate group was given $2,000 and had to choose between a 50% chance at losing $1,000 vs a 100% chance at losing $500

69% took the gamble.

When it comes to losing money, people will take bets on the chance that they don't lose as much money.

Loss aversion.

In real estate

Where you see this in real estate is these homeowners that bought at the peak price in 2021 or 2022. If home prices have dipped since then, they'll see a loss, but they'd rather list their home and let it sit on the market to test their chances of reducing their losses.

Even if that means by the end they'll end up losing way more.

option A: Take the loss, sell the home, and move on with it.

or B: hold out for that 50% chance that some buyer comes along and saves them from the loss.

I'd bet you 69% of sellers in this situation will take option B.

Another little side effect is happening though:

For the homeowners who watch their values on zillow, the 'Zestimate', or pay attention to their neighbor's sales price might have heard a peak value and locked it in mentally.

They might consider any price less than the peak as a loss as well, saying "I could've sold for $x"

This doesn't affect people nearly as much as those who bought at peak prices, but it's still showing up in the market.

Sam

I write educational posts on buying your home for the first time. I even posted my homebuying book at r/NewbHomebuyer here's the book on reddit.

Originally shared by u/SamTMortgageBroker in r/NewbHomebuyer — view the original thread.