[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.