Why are homes being sold for almost 2x their Market Value?

Question

I am looking at har.com (Texas Real Estate website) and there are many homes selling for almost 2x their listed "market value". People can list their home for however much they want correct? How do I know that listing prices are not artificially inflated? For example, if someone has a home worth 300k, can they list it for 500k just to see if anyone will buy? I do this all the time on ebay, Amazon and some people still buy things that are actually worth 2-3 times LESS.

For example, the home 2834 Southmore Blvd, Houston, TX 77004 has a stated Market Value of $188,330 but is listed for sale for $311,000. Is this price way too high? There are homes around it that have market values of $160k or even lower, so wouldn't $311,000 be a rip off? I am not sure how to analyze this...

Greg H. · Answer

Just to expand on what Jim said.  Tax Value in Texas means absolutely ZERO.  Zillow's Zestimate means absolutely ZERO.  I have purchased properties for $50000 that have a Tax Value of $100,000 as well as properties for $100000 that have a tax value of $50000 and both were good deals

In Texas, we dot not disclose sales prices like many other states.  A Cash Deed in Texas will read $10 and other valuable consideration.  If the buyer gets a loan, the amount of the loan is disclosed but you have no idea whether the down payment was zero or 50%.  The only way to get accurate comps is from an Agent

Jim Cummings · Answer

Bryan

YES - it's possible to list a property on the MLS at any price desired - and there are Agents that will list it at ANY PRICE!  Getting it Sold at the inflated List Price is another question.

My guess is - you are looking at Values derived from "Taxing District" data. Texas is a NON-DISCLOSURE State - meaning when a Property Sells & Closes, the actual SOLD Price is NOT recorded in the legal records of the county or state.

If the property is Sold through an MLS, the SOLD data is recorded in the MLS Sold Records - available to all members of the MLS. Competent REALTORS will base their estimate of Value (thus asking price) on Comparable Sold Properties.

Chris Martin · Answer

It is the public interest to know of the transaction. I think @Greg H. is talking about the consideration for the transaction. If tax ownership records are withheld from lenders and insurance companies, how do they do business? And if the answer is 'just let lenders and insurance agents in'... then what about mechanic's liens? And how does the school system verify addresses? On and on...

JD Martin · Answer

It's not really possible for something to sell at "2x their market value" because market value is the price at which the property will sell. Short of something nefarious, ie some type of collusion designed to artificially inflate prices, the value of the property is what someone will pay for it. Thus, I would say that the HAR numbers are inaccurate, at least for whatever you're looking at.

Nick C. · Answer

Sounds like the har.com "market value" is way off, how are they coming up with it? Anyone can list their home for whatever they want. I wouldn't depend on any website to determine market value. That needs to be determined by looking at comparable sales in the area.

Greg H. · Answer

Agreed, I should have worded it better as I was referring to the need or lack there of  for sales prices to be published

Bryan Tasumi · Answer

Thank you everyone for all of your replies. Any other replies will be appreciated so keep them coming!

Vivek Khoche · Answer

@Bryan Tasumi-  I don't want to put the numbers on more or less but buying and selling is between two parties. It's quite common to seller ability to charge premium or buyers ability to get discount. In the free market economy you can't control prices. I used to be merchant banker in my previous life and I can tell you lot of stories about selling promises at premium.

Good Luck

Vivek

Greg H. · Answer

I would ask the exact opposite.  Why should a transaction between 2 private parties be public information?

Brent Coombs · Answer

@Bryan Tasumi, have you accidentally used the wrong grammar by phrasing your question: "being sold"? ie. Did you really mean: "why is the ASKING price almost 2x market value"?  They are very different questions!

As you already alluded to, you/we DON'T "know that listing prices are not artificially inflated"!

I do find it curious that Texans are so coy about the sale price (ie. ACTUAL market value) of their homes...

Why are homes being sold for almost 2x their Market Value?

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