Sell or Hold in Oakland, CA

[Julie L.]

Hello, 

I am new to BP and have been listening to podcasts, going through forums and posts. What a great site to connect us REI's and tons of useful information that already has been put in motion. I have started working with an agent I found here as well for out of state purchases. Great communications already!

Wanted BP's advice regarding selling a property in Oakland, CA. We listed it 2 weeks ago and have not had any offers on the property. Oakland has been hot and heavy for the last couple years so we aren't sure what's happening. We are trying to decide whether we should pull it off market and put back into the rental market and hold for a couple years, see what happens with the market OR keep on market for another 1-2 weeks and sell when an offer comes in. 

Our goals: We wanted to use the funds to do buy/hold rentals and flips and become more invested in RE over the next 5 years in and out of state. We updated the property and have incurred holding costs while the property has been vacant with remodeling. 

Should we just hold and use equity to buy more properties or sell for what we can get and use the cash to finance new purchase down payments? 

Any advice would be helpful! Thank you all! 

[Chris Mason]

Hi @Julie L.,

That typically means you priced unrealistically high. However, in our area, it can actually mean you priced it accurately.

Allow me to explain.

Listing agents have been getting stupid with asking prices for the last few years, which can bite you in the butt if you list honestly/accurately. This cult of the bidding war nonsense, the idea that your home will magically sell for way more money if you list it low. I do not believe this to be true, incidentally, I think agents just want a) busy open houses to drum up future clients and b) to be able to brag about their high % that go for more than asking (convincing a home seller to list low is way easier than actually adding value to the transaction) when trying to get future clients to sign listing agreements. 

Unfortunately, however, this game can have negative consequences for people that list and price accurately. 

Example: Home is listed for $500k. Let's suppose $500k is a  ballpark fair price for it and you'd be happy if you got $505k or $510k. But many househunters, aware that listing agents typically list low in our area, might assume you want $575k for it - which is too much. 

You've got folks that want a $600k home, so they look at homes listed for $500k to compensate for the pattern of stupid asking prices in our area, but your home looks crummy compared to the $600k ones... because it's a $500k home, which is why you listed for $500k!

And then on the other side you've got folks who want a $500k home. They want a home just like yours, but set their search criteria for the $400k-$450k price range (same basic reason as above) and miss it.

(Incidentally, this makes the annoying "list low!" thing a negative feedback loop because now you are encouraged to list low even though you might not otherwise be so inclined & might prefer to just be a straight shooter. :\ )