[habosa]

Aside: I don't think it should be legal to not accept the asking price for a home. With any other thing I want to buy, if I agree to pay the list price I get the item. Sometimes I can haggle the price down but the listed price is always accepted.

This system of listing a price to 'get people in the door' and then igniting a bidding war makes it impossible for anyone to shop for a house except for realtors who are 'in the know' and can tell you the real price based on listing.

[lsadam0]

> Aside: I don't think it should be legal to not accept the asking price for a home.

You're attacking basic supply and demand here. Let's say I set a list price and then figure out I could have asked for more...you want to legally bind me to sell for less than what the free market is willing to offer? Where does this stop? Should we ban speculative investments as a whole?

[blackskad]

No, it just reverses the dynamics: instead of starting out low to get people into the door, you start with a list price that's too high. If the bids you're getting are always far below your asking price, you know the free market isn't willing to cough up what you want, and you lower the price to something that is more in range. If your initial asking price is $1MM and all bids are around $800K, consider dropping the list price to $850k and see if they want to play now.

That's the usual dynamic in Belgium.

[loeg]

So why is this better, exactly? Seems like it just takes longer to accomplish the same goal (finding FMV). Buyers are still not guaranteed their offer will be accepted unless they gratuitously overpay (by offering list price).

[blackskad]

You're assuming all the sellers are always overpricing by a very large percentage and that nobody accepts a lower offer.

What usually happens though, is that you determine an estimated FMV (eFMV) based on recently sold properties in the neighborhood that are similar in size. Experienced realtors are usually quite good at this. You can add a factor to the eFMV to get your list price. As a seller, in the worst case, you may have to drop your list price to your eFMV. Best case, you get a nice bonus. When there are multiple bidders around your eFMV, but under listing, you have some leverage to get a higher bid. Let's assume your eFMV is 850K. "Look, I have a bid of 850k. You're at 825k. My list price is 900K, but if you bid 875k now, it's yours guaranteed." It looks like a steal in the buyers eyes ("25k below list price!") and you get a nice 25k bonus over the eFMV.

As a buyer, this silent "list price is always accepted" rule, gives you the ability to properly filter properties because the list price functions as a cap. This saves both buyer and seller time because you're not chasing unreachable properties. You can also get a realtor to get your own estimated FMV for the property that looks interesting. It's up to you to decide if the certainty of the buy is worth the difference between list price and your eFMV. If not, you can always bid something lower, closer to your eFMV but with the possibility that someone outbids you.

The process usually is really fast, because realtors are good at estimating a FMV, most sellers realize they shouldn't expect a huge premium over that estimate and buyers accept a premium for the certainty of an immediate sale.

[loeg]

I'm not assuming nobody accepts a lower offer. Just that sellers will overpice FMV by some margin (as you confirm) and eventually accept the highest bid under list (seems confirmed too).

[Splines]

And I think this system makes more sense - pricing is more transparent and saves everybody a bunch of time.

[ahakki]

I think he simply wants the same rules that apply to McDonalds to also apply to homes.

If McDonalds has their BigMac Meal labeled with CHF 12.50 (the current price in Switzerland IIRC) the cashier won't be able to refuse to sell it to me for that price even if I look particularly hungry and it's 4 O'Clock in the morning (and might thus be ready to pay more than 12.50). At least in Switzerland you are generally obliged to honor your displayed prices.

I have never bought a home (I'm a 23 y/o student), and I don't know if the process in the US would be comparable to the process in CH, but if a home is labeled with a price of say CHF 1'250'000 I expect to be able to walk in there with a bag with 1'250 CHF 1000 bills and pay for the house without additional price haggling. However I can imagine that this is not how it works (apart form the "pay with cash" part, which I know works for sure).

[lisper]

Big Macs are standardized commodities. Houses aren't. And even standardized commodities can have different prices for different customers based on geographic location, time, whether or not the customer has a coupon, etc.

[lsadam0]

I understand, but where does that stop? What if McDonalds raises the price in the next minute, should they be required to honor the previous price? This just screams of unnecessary, unenforceable regulation.

If the average market price for my neighborhood raises after my listing, am I not permitted to raise the price? How would you apply this reasoning to a stock market?

[lightbyte]

Would you then be okay with a grocery store demanding you pay 5x the list price for the last gallon of milk they have because the guy who also wanted it said he would be willing to pay that much?

[lsadam0]

That's not a good example. If a supply shortage drove price that high, what choice would I have? However if the store clerk is demanding 5x asking price without basis, I'll just go to another store. That's just how supply + demand works. That house went for 782k over the asking price because it can. This isn't a case of the supplier being unreasonable.

[sulam]

You can, with a modicum of effort, learn the market as well or better than a real estate agent. You're only interested in a small slice of the houses that are on the market (at least in the Bay Area, supply is very low here). It's worth going to open houses, looking at asking prices, and then following up on what happened to that property. Spend at least 6 months getting to know the market for the neighborhoods and type of home you're interested in before you shop seriously. And keep in mind that you may be disappointed more than once along the way.

Finally, the "asking" price is not a contract. When my wife and I bought our house, there was a competitive offer that included "lifetime" seating at a popular restaurant near us. We had both offered slightly over asking, and this was 2009, so not exactly a "hot" market. Your solution would basically ask sellers to treat their house like a commodity, which might make sense in a spec home or developer deal, but really makes zero sense for two parties who are each making what is likely the single largest financial transaction of their life.

[rtpg]

>You can, with a modicum of effort, learn the market as well or better than a real estate agent

This is the sort of reasoning that people say that pay for the used car salesman's boat.

You are going to buy, what, 5 houses in your life? If you're a big mover.

Real estate agents spend their entire life doing the thing you do once every couple of years at most. Why do you think you'd be better than them?

This is like saying that you, as the person who walked out of a 48-hour boot camp, can code that JS program better than the veteran programmer because she doesn't specialize in Javascript.

You want to spend 6 months doing research? Real estate agents are spending years! There's a bit of principle-agent problems when working in this, but still. Beyond the information parity, there's simply knowing how to do sales and getting people to sign the contract.

[OrwellianChild]

It sounds like you haven't been in the presence of incompetent real estate agents... (which is good!) Anecdotally, however, by being in the market for housing for about 18 months, my level of knowledge and preparedness about individual properties, their attributes, and their value is now exceeding 80% of the agents I speak with. This is in Seattle, mind you, where prices are increasing off the charts. In a volatile market like this, it's harder for agents to learn their market and then rest on their laurels, so many fall behind.

[sulam]

I used to know how applets worked really well. That knowledge isn't so useful anymore.

Real estate agents have the same problem.

Of course they know more than I do about the process of buying a house. But knowing whether a house is worth more than asking and roughly how much over -- I can learn that specific piece of info for the houses I care about and my knowledge will be roughly equivalent.

[maxerickson]

That just shifts things to everybody listing their house for far more than it is worth.

The response to that is to either not worry about it or to have some entity fixing prices...

[JumpCrisscross]

> With any other thing I want to buy, if I agree to pay the list price I get the item

This is a modern phenomenon wholly reliant on the predictable cost of industrially-produced goods. Houses are different. Your proposal would lead to: most people (a) listing at $100 billion, (b) giving no listing price, or (c) becoming reliant on third-party pricing consultants, since you only get one chance to get it right.

[gist]

> makes it impossible for anyone to shop for a house except for realtors who are 'in the know' and can tell you the real price based on listing.

Impossible and not easy for you?

So that is the harm you are stating? That you don't want to put the effort into understanding the market enough (without a realtor) to know the value of what you are buying? Plenty of people operate fine under the current system.

What's next? Do you want to have a lottery with a fixed and low price. That way people with more money and so on don't have an advantage.

Things are never equal. Some people have an edge. This edge is not entirely a realtor skimming as I think your comment implies.

> This system of listing a price to 'get people in the door' and then igniting a bidding war

Is it wrong for ebay to do this as well?

[habosa]

Follow up: well, this was an unpopular comment!

I am not saying we should simplify house buying to the same process as buying a cup of coffee.

I am saying that there is probably some price for which you're willing to forego negotiation and just sell it. This is like the ebay "Buy it Now" price. I think when most people list their house, they have this number in the back of the mind.

So let's start by putting that price out there. And maybe some basic conditions about how you'd like to be paid. If the perfect buyer comes along, you're done! This is currently not possible with our system. If the house is listed at $100k and I am willing to pay $150k I still start by offering asking to feel out the seller. If they had listed a "Buy it Now" price we could be done instantly.

Now let's say nobody wants to pay your buy it now price, they are free to make a lower offer. In the worst case, we get back to where we are now.

For all of the argument saying how hard it is to price a home and how nobody can get this number right because every home is unique, I don't think this is any harder than picking a list price in the current system. Most realtors pick the list price hoping to get x% more, depending on their market. Just include that x% in your "Buy it Now" price and be done with it.

[matt_wulfeck]

What problem does that really solve? Most people shop on Redfin anyway, which gives a fairly accurate estimate for what the house will sell for.

[OrwellianChild]

It might help to think of this like a "Reserve Price" on an auction. The listing price illustrates the lowest price at which the seller will sell with no questions asked. This doesn't mean they can't sell lower - it just requires negotiation. Likewise, if there are multiple competing bids, it clearly has to go to the highest bidder.

There are instances of this kind of price movement in commodity products too, depending on demand. A rapidly selling product will get a bump to its MSRP, while the introduction of a competitor will cause price competition. It's not all that different in methodology - it just moves slower.

Be grateful that your local supermarket is no longer a street market, where each price has to be negotiated and haggled. Price discrimination there is rampant, so each buyer gets a personalized price tailored to extract as much as possible while still completing the sale.

[TheSpiceIsLife]

One issue I see is: houses aren't like any other item, there are exactly only one of each house. If you miss out on the house you want, you can't go across town and get another one just like.

Edit to add: Also, it occurs to me, if you go to ebay.com you can bid at auction for general consumer goods. So there's that.

[KekDemaga]

When selling a house you want some ability to be selective on buyers. Some properties won't be able to be mortgaged as is under some of the special programs (VA loans require particular building codes and standards in addition to the standards required for conventional loans for example) as often the seller is buying a new property with the proceeds of sale, delays that one of these special programs might create may be costly to the seller.

[IncRnd]

You are trying to stack the deck in your favor, making the seller pay for a portion of your house...

Why is it "fair" for the buyer to be able to offer less, when they determine the house to be worth less than the ask, but the seller shouldn't be able to ask for more, when they find out there is a lot of interest?

You will find that your suggestion will make all houses more expensive.

[francisofascii]

Price is a big, but not the only factor when choosing a buyer. The highest priced bid doesn't always get the house. Factors such as inspection contingencies, settlement dates, financing, what the buyer plans to do with the house, etc all play a role in the transaction. If a person wants to buy your house and tear it down, you should not be obligated to sell.

[mikeash]

It doesn't seem practical to avoid the need for an expert when buying unique, hand-built items that cost multiple times the buyer's annual salary. Not everything needs to be condensed down to a one-click buying experience.

[aetherson]

Woo! Now everyone's house is listed for $100M!

[Shivetya]

however a home is a unique item, limited in availability. Hence it warrants allowing others to offer more for it. plus just as it is the right of buyer to haggle for the best price it does not always mean the lowest