The Comps

Typically, when somebody buys a home they do a study of the comparable value of similar homes in the area to determine what offer to make on it. These comps are usually 6 months or so old (or less). I hear alot of discussion about comps lately and I have to say this…the comps right now are completely irrelevant. Who cares about the comps! Sales comps from way, way back in December 2011 are as relevant as sales comps from December 1990 if you ask me. The market heated up so much about the first of February that everything has changed with regard to value. A very great percentage of new listings are being sold with multiple offers and significant over bids right now…as a result prices are rising. The comps right now don’t matter.

I had a conversation with 2 different clients this week about Jan Majeski’s listing at 844 Vega in Foster City. After doing some study on Redfin and Zillow they were convinced that Vega was priced too high at $998,000. They pointed to the 4 bedroom house at 154 Mira which sold on January 27 and closed at $900,000 as proof that Vega was too high. Here’s how I saw it:

1. Vega is a much better house, significantly more upgraded and, unlike Mira, repaired it’s foundation issue.

2. A similar house on Beach Park, a much busier street, sold for over $988,000 and is in escrow

3. Most importantly, Mira sold just before the market launched into orbit.

As it turns out, Vega got 4 offers and went over asking and closes on April 25. I really can’t imagine the kind of stress appraisers must be under right now. Trying to make things work when you don’t have any comps but have an offer $100,000 over asking and hearing that there was 11 offers on that place must be a tad disconcerting. It’s happening though. I ran a video here a couple of weeks ago of an insane open house on Newell in Palo Alto. That house was on a busy street, had a stoplight right next to it and was listed for $1,395,000. It closed last Friday for $1,900,000. So much for those comps!

Seriously, for right now at least, forget about those comps when writing an offer. Buying a house right now is scary and risky and actually that process is probably worth several more blog posts!

 

 

 

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