A 1,300 sq/ft house in Sunnyvale, Calif. has sold for $823,000 over asking(mercurynews.com)
mercurynews.com
A 1,300 sq/ft house in Sunnyvale, Calif. has sold for $823,000 over asking
https://www.mercurynews.com/2021/12/20/photos-single-family-sunnyvale-home-sells-for-more-than-800000-over-asking/
100 comments
It looks like they way under priced it on purpose. Zillow shows comps over the past year in the same neighborhood: 2.19M, 2.6M, 2.3M, 2.19M, 2.52M. This one is a bit smaller, but expecting a sale in that range given the other sales is not noteworthy. (The article calls this out at the end: "the median sales price of a single-family home in Sunnyvale is $2.375 million" and this one is $2.68M)
The asking price thing really messed with my mom's mind. She was trying to buy a home and everywhere she read she had to bid at least 25% over asking. And then she just added 25% to each listing and considered what was in her price range. It was really hard to convince her to make an actual estimate of the house's value and make a bid according to that, disregarding the asking price and the dumb 25% rule.
It was super stressful but eventually she succeeded.
It was super stressful but eventually she succeeded.
This has been standard practice in Sweden since the early 2000s. No one ever sells at the sticker price, the apartment is shown Sunday and Monday, then a 2-3 day bidding war breaks out and the sale closes on Wednesday.
If the bidding war isn’t as successful as the seller wants the apartment is taken of the market for a week and then reappears with at 30% price jack and a title that says “fixed price! First come first served”
If the bidding war isn’t as successful as the seller wants the apartment is taken of the market for a week and then reappears with at 30% price jack and a title that says “fixed price! First come first served”
One can imagine why realtors would want to underprice for publicity or whatever, but why would an owner consent to this?
Remember that you need to assume that every counterparty is an asshole in anything real estate, and everyone who isn’t your attorney has a grift.
You can use underpricing as a tool to hide problems with the house. If you have a lot of offers with what is a closed auction, you control the flow of the process and avoid learning things that have to be disclosed.
If you “suspect” that you may have mold, foundation problems, lead paint, asbestos, or other problems, you can use the offer flow to cherry pick bidders who don’t demand inspections or cash bidders who don’t have a bank or other party looking for due diligence. Your real estate agent may want to steer business to preferred partners for kickbacks or to ensure that certain home inspectors get used.
You can use underpricing as a tool to hide problems with the house. If you have a lot of offers with what is a closed auction, you control the flow of the process and avoid learning things that have to be disclosed.
If you “suspect” that you may have mold, foundation problems, lead paint, asbestos, or other problems, you can use the offer flow to cherry pick bidders who don’t demand inspections or cash bidders who don’t have a bank or other party looking for due diligence. Your real estate agent may want to steer business to preferred partners for kickbacks or to ensure that certain home inspectors get used.
Allowing people to bid on something and negotiating prices does not make someone an asshole.
I would prefer if all the negotiations were public though.
I would prefer if all the negotiations were public though.
You don't have to sell if someone offers asking and you are nearly guaranteed to get significantly more. The asking price is effectively meaningless at this point.
Why wouldn't an owner consent to it?
The realtor's going to say: if you underprice then you'll get more offers and have a chance of starting a bidding war, which could put the sales price even higher than if you'd priced it more realistically.
It seems like a pretty clear-cut case of self-interest. And in this case, it looks like it worked.
The realtor's going to say: if you underprice then you'll get more offers and have a chance of starting a bidding war, which could put the sales price even higher than if you'd priced it more realistically.
It seems like a pretty clear-cut case of self-interest. And in this case, it looks like it worked.
If you price for the amount you expect it to sell for you might only get 1 or 2 offers even in a hot market. That can still work, you can get a great offer you are happy with right away. But there is a significant risk that you won't get an offer you are happy with without this competition. A buyer who is willing to pay $2.5m might only offer $2.2m if there is no competing offer. You need to keep the home listed for a few more weeks until you get a better offer or more competition.
If you put in a lower list price you will probably get 5+ offers, you can either pick the best one, or counter offer a few, and you can be almost certain that you will be under contract by mid next week if you list on a Thursday or Friday.
Most people are also buying a home at the same time, if they are moving to another high cost area a delay of a couple weeks on the sale of their home can cause a lot of problems with their purchase.
If you put in a lower list price you will probably get 5+ offers, you can either pick the best one, or counter offer a few, and you can be almost certain that you will be under contract by mid next week if you list on a Thursday or Friday.
Most people are also buying a home at the same time, if they are moving to another high cost area a delay of a couple weeks on the sale of their home can cause a lot of problems with their purchase.
I've had a similar conversation with my agent in the past, and the answer was to create a bidding war. Once you have one real offer you can go back and counter to all of the others to see if they'll go up, and then rinse and repeat. That isn't a story too hard to sell.
The other thing about this one is that it was fixed up, so it could have been a flip. However I didn't go track down the real estate records to know for sure.
The other thing about this one is that it was fixed up, so it could have been a flip. However I didn't go track down the real estate records to know for sure.
Lots of realtors do it in Los Angeles, casual browsing of neighbourhood sales data on sites like RealtorStats show how common it is
There's no downside to the owner. They're under no obligation to sell for asking price.
Is there a psychological angle? Exploiting FOMO to drive bids up higher?
To drive more potential buyers to come look at it and to drive up the potential of a bidding war.
My son notes that he can buy in his midwestern hometown, the fanciest house on a bluff overlooking a river and a park on an acre and with 3000 sq ft, for what in Santa Clara would buy a burned-out trailer.
But then you would be in that midwestern town ... not saying thats bad but it better be what you want. There is a reason the median price in Sunnyvale is already $2.3M. No snow, 300+ days of sun ... running a little low on water tho. Ive lived all over the country and while Central Coast Ca is relatively expensive compared to other places I could never be as happy elsewhere. Edit: Further, I am willing to bet whoever bought the house in Sunnyvale still works (probably a lot). If you buy a $2.3M house in the midwest you aint commuting to a job.
Yes you are commuting to your job when offices open. Suburbs of the big Midwest cities have lots of 2.3mm+ prices and you work downtown in finance, tech or whatever. Quite a few inner-city houses built by the original rich classes of those cities demand those prices too.
Go where you are happy, spend as much as you want. Sunnyvale is a cultural desert compared to the Twin Cities, Chicago, Detroit. And on its way to being a real desert too.
Go where you are happy, spend as much as you want. Sunnyvale is a cultural desert compared to the Twin Cities, Chicago, Detroit. And on its way to being a real desert too.
This particular house is a 15 minute walk or 5 minute bike from the new Apple headquarters as well.
300+ days of sun is awful. I'm not even joking. No seasons, no thanks!
You're casting a very narrow net on what you consider "the midwest" there. I assure you that there are literally millions of people here that both live in $1+ million dollar houses and commute into work every day.
I'm one of them :/
I'm one of them :/
It's like Chicago doesn't exist in the collective conscientious of the east and west coast white collar class. ILL is a dumpster fire of a state, but the COL to quality of life ratio is pretty excellent as far I'm concerned.
Minneapolis, Madison, Milwaukee, Detroit are all fun cities too. I say this as someone who went to college in Boston/NYC and lived all over the Acela corridor and London.
Minneapolis, Madison, Milwaukee, Detroit are all fun cities too. I say this as someone who went to college in Boston/NYC and lived all over the Acela corridor and London.
> ILL is a dumpster fire of a state
True, but New York City has a per-capita municipal debt load double Chicago's, Connecticut and New Jersey are really the only two states in more dire financial straits than Illinois and for the pleasure of living back east I get to pay what seems like an order of magnitude more in taxes and housing costs.
And obviously California is California. Loved, loved, loved it when I went to college in Los Angeles but have no real desire to ever work there. Maybe once I make my 50th million I'll be on the next flight out.
Once climate change starts destroying the coasts and warming the interior, we'll see how bad the hick midwest really is :)
True, but New York City has a per-capita municipal debt load double Chicago's, Connecticut and New Jersey are really the only two states in more dire financial straits than Illinois and for the pleasure of living back east I get to pay what seems like an order of magnitude more in taxes and housing costs.
And obviously California is California. Loved, loved, loved it when I went to college in Los Angeles but have no real desire to ever work there. Maybe once I make my 50th million I'll be on the next flight out.
Once climate change starts destroying the coasts and warming the interior, we'll see how bad the hick midwest really is :)
> New York City has a per-capita municipal debt load double Chicago's
But also a higher per capita GDP and faster economic growth.
But also a higher per capita GDP and faster economic growth.
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Everyone’s calculation of utility is different, but Chicago/IL land also has a non explicit cost of land prices being held down by expected increases in taxes disproportionate to increases in other parts of the country, due to disproportionate levels of debt per taxpayer.
Instead of your land appreciating by a few hundred thousand, it might only appreciate by a hundred thousand, which is a decent difference in return for many people.
Obviously, that is offset by needing less cash upfront, but it does make the CoL calculations less obvious in favor of Chicago.
Instead of your land appreciating by a few hundred thousand, it might only appreciate by a hundred thousand, which is a decent difference in return for many people.
Obviously, that is offset by needing less cash upfront, but it does make the CoL calculations less obvious in favor of Chicago.
Well, I live here because I need a house, not as an investment property. That might be why the housing situation in California is a superfund site and in Chicago I live in an expensive house because I want to.
I do not think it matters if a house is an investment property (i.e. not the house you are living in) versus a house you need (i.e. to live in). My point is the cost of living calculation also involves the opportunity cost of the difference in land price appreciation.
Of course, this opportunity cost only exists if you have the opportunity to choose between two or more locations.
Of course, this opportunity cost only exists if you have the opportunity to choose between two or more locations.
My ROI on the extra million I'd spend has far better returns in the equity markets than even the most broken California real estate markets.
ROI would have to be calculated using the levered amount. Even paying $2.7M cash for this house, you can refinance and take out 80%, and have the $2.7M asset for $540k in a non recourse state with a non callable margin loan. And with capped 2% property tax increases.
Plus you get to live in it. Plus you get CA amenities (value dependent upon individual preferences, but obviously valued very highly amongst people with money). One of those CA amenities is very worker friendly non compete laws and strict limitations on what employers can claim is theirs, a not insignificant benefit for knowledge workers in my opinion.
Plus you get to live in it. Plus you get CA amenities (value dependent upon individual preferences, but obviously valued very highly amongst people with money). One of those CA amenities is very worker friendly non compete laws and strict limitations on what employers can claim is theirs, a not insignificant benefit for knowledge workers in my opinion.
Ah, but $1 million allows me to borrow upwards of $6.5 million at 0.75 percent from my broker. Real estate allows significant margin for the lower and middle class, but there's literally zero overlap between those people and people buying $2.75 million homes in Sunnyvale. Way better off leveraging your SPX shares than a house.
> Real estate allows significant margin for the lower and middle class, but there's literally zero overlap between those people and people buying $2.75 million homes in Sunnyvale.
People buying $2.75 million homes in Sunnyvale are largely either working (knowledge workers dependent primarily on wage labor) or middle (petit bourgeois; independent business owners and workers with mixed dependency on wage labor and capital investments) class.
People buying $2.75 million homes in Sunnyvale are largely either working (knowledge workers dependent primarily on wage labor) or middle (petit bourgeois; independent business owners and workers with mixed dependency on wage labor and capital investments) class.
I suspected this would be brought up, which is why I tried to pre-empt it by specifying that a home mortgage has special conditions that make it not 1 to 1 comparable to other leveraged investments, such as non callability, non recourse (in California), you get to live in it, and you get to live in that specific location (assuming you value it).
I recognized that, which is why I tried to stick to a high-net worth situation like this particular one.
I'm far better off buying a $300k house than having $60k in investments but those comparisons become a bit more fuzzy at these 7-figure numbers.
I'm far better off buying a $300k house than having $60k in investments but those comparisons become a bit more fuzzy at these 7-figure numbers.
It exists. But it's viewed as houses in the middle of a cornfield or a decaying steel town, no decent jobs, no culture, lousy weather, etc.
To the last point, there are a lot of people, especially on the West coast who really can't imagine living anywhere with real winters. To be honest, you don't hear much about Boston either although I think it's something like #3 in VC funding and has a lot of tech of various kinds.
To the last point, there are a lot of people, especially on the West coast who really can't imagine living anywhere with real winters. To be honest, you don't hear much about Boston either although I think it's something like #3 in VC funding and has a lot of tech of various kinds.
>It exists. But it's viewed as houses in the middle of a cornfield or a decaying steel town, no decent jobs, no culture, lousy weather, etc.
Who views it that way? People who have never been there and also know nothing about it? People who have never left California?
Who views it that way? People who have never been there and also know nothing about it? People who have never left California?
I don't actually think anyone -- statistically speaking -- from California views Chicago that way. There is a stereotype of Californians which feels unusually pernicious which I see a lot on HN, generally either from people who have never been to the Bay Area or feel they "escaped" the Bay Area and take every opportunity to tell people that they bought an 8000 square foot mansion for $100K, pay $7.99 a month for 100Gbps internet service, and so on.
I kid, but seriously, many of us have actually been to other cities across the United States and the world and have appreciation for them. There are many places I would be happy in besides the SF Bay Area. I would be able to find friends and good microbreweries and good craft coffee, cocktail bars, interesting cheap restaurants, interesting expensive restaurants, museums, nature hikes, the whole shebang. Some of my absolute favorite examples of each of those are outside the SF Bay Area! It's simply that so far, I haven't found a metro area (at least in the US) that can combine a similar concentration of such places with a comparable climate, tech job market, and markedly cheaper cost of living.
I kid, but seriously, many of us have actually been to other cities across the United States and the world and have appreciation for them. There are many places I would be happy in besides the SF Bay Area. I would be able to find friends and good microbreweries and good craft coffee, cocktail bars, interesting cheap restaurants, interesting expensive restaurants, museums, nature hikes, the whole shebang. Some of my absolute favorite examples of each of those are outside the SF Bay Area! It's simply that so far, I haven't found a metro area (at least in the US) that can combine a similar concentration of such places with a comparable climate, tech job market, and markedly cheaper cost of living.
Boston has the combination of yankee hospitality and New Jersey charm, just substitute rotaries for “no left turns”.
It’s also an old place with weird enclaves unknown to outsiders. You may find your lovely townhome is adjacent to a superfund site.
It’s also an old place with weird enclaves unknown to outsiders. You may find your lovely townhome is adjacent to a superfund site.
Tech scene in Boston is really huge. It’s a bit less “Facebook for cats” than Silicon Valley and tends to be more stuff that needs the big brains from MIT and the like. Moderna is a great example.
Pharma/biotech is particularly big but look at a magazine like Tech Review and there's a lot of diversity.
In addition to the weather (which really isn't that bad), part of it is I think that a lot of people with SV companies tend to think of tech as "what SV companies do" which naturally leads to them seeing less "tech" in other places. (Though there are sizable outposts of quite a few West coast employers at this point in addition to the home-grown ones.
Tech actually in the city was almost non-existent for a long time. Hence the Route 128 computer companies. But that's shifted a fair bit again over the past 20 years.
In addition to the weather (which really isn't that bad), part of it is I think that a lot of people with SV companies tend to think of tech as "what SV companies do" which naturally leads to them seeing less "tech" in other places. (Though there are sizable outposts of quite a few West coast employers at this point in addition to the home-grown ones.
Tech actually in the city was almost non-existent for a long time. Hence the Route 128 computer companies. But that's shifted a fair bit again over the past 20 years.
> Minneapolis, Madison, Milwaukee, Detroit are all fun cities too
Different ideas of fun abound, but I doubt the people getting nervous at the uptick of crime in California cities are much interested in Detroit and it's second-highest-in-the-nation rate of violent crime.
Different ideas of fun abound, but I doubt the people getting nervous at the uptick of crime in California cities are much interested in Detroit and it's second-highest-in-the-nation rate of violent crime.
Fair enough. There are many urban centers in the midwest that are very expensive. But im pretty sure we were not talking about those places. Edit: Also rural centers that are very exclusive (Jackson Hole etc).
Jackson Hole is certainly not in the Midwest. I'm not especially familiar with exclusive rural areas in the Midwest but they may well exist.
Yeah, I couldnt think of any either.
Lake Geneva, Wisconsin?
Sunnyvale’s in the south SF Bay Area. The central coast is further south and considerably less expensive but also more isolated.
The other thing persistently lowering quality of life all over CA besides water getting scarce and high taxes is the wildfire smoke. There are benefits to CA, but there are definite downsides.
The other thing persistently lowering quality of life all over CA besides water getting scarce and high taxes is the wildfire smoke. There are benefits to CA, but there are definite downsides.
Im not sure what you mean by high taxes. A house in texas comparably priced to mine is almost 3x my property tax and I get the majority of my income tax back. Texas sales tax is like 1% less than in my town. I just dont see it.
>A house in texas comparably priced to mine is almost 3x my property tax
A house in Texas comparably priced to yours is probably 14 acres in central Dallas.
A house in Texas comparably priced to yours is probably 14 acres in central Dallas.
And again, then youd be in Dallas (which has harsher water restrictions than here now). Ive been there, I bought here. Im glad everyone that is there enjoys it tho.
As someone in Dallas, not quite, but your point is still valid :)
NorCal and SoCal are attitudes more than actual points. I consider Monterey Bay to Morro Bay Central Coast. I live 3 miles from Monterey Bay and ~40 from Sunnyvale. Greater area San Jose people seem to consider themselves 'Bay Area' rather than NorCal but it is easy to spot the ones that do consider themselves NorCal.
> There is a reason the median price in Sunnyvale is already $2.3M
Primarily the dire lack of housing and the local politics that keep it from being built.
Granted, you'll always be able to get more land in the midwest, but the lack of homes is a policy choice.
Primarily the dire lack of housing and the local politics that keep it from being built.
Granted, you'll always be able to get more land in the midwest, but the lack of homes is a policy choice.
The demand curve of deep pocketed buyers is just as important as the supply curve of housing they want (location, size, quality, etc).
> No snow, 300+ days of sun ... running a little low on water
All reasons I will never live in California. My ideal is four seasons, generous servings of rain and snow throughout the year, ideally never above 60 F, and not worrying about water. I do whatever I can to encourage people to keep flocking to NYC/LA/SF/etc so they stay out of everywhere else
All reasons I will never live in California. My ideal is four seasons, generous servings of rain and snow throughout the year, ideally never above 60 F, and not worrying about water. I do whatever I can to encourage people to keep flocking to NYC/LA/SF/etc so they stay out of everywhere else
That's cool. To each there own.
A friend of mine lives in a 2k person town in Wisconsin, about a 30min drive from Madison. The house next to his is on the market for ~$100k (3 bed room, in need of some maintenance).
It some ways it's unreal that a house can be that cheap, but considering that I'm not even buying at that price is probably the reason why its that cheap.
It some ways it's unreal that a house can be that cheap, but considering that I'm not even buying at that price is probably the reason why its that cheap.
It's not the house but the land. I've seen rundown shacks where I am sell for $1.5m because they're nice allotment size against a large lake. New owners knockdown the shack and put up a new build.
When I had a house in Claremont, CA I often found myself traveling a lot. I used to play the "what will my house buy here?" game. Invariably it was always something much nicer, but I liked living in Claremont. I lost that house to unemployment in the 90s recession/housing market crash. Every so often I'll look at it on redfin. It's been improved a fair amount since then, but not so much that it seems like it's really worth 5 times what I paid for it in the 90s.
Are you accounting for the currency being worth less per unit than in the 90s?
From https://www.usinflationcalculator.com I get that the value of the house should have increased by 92.4% from the purchase price in 1993. The last sale (four months ago) was up by 438%¹. It gets worse if I go from the sale price in 1997 where inflation shows 73.2% but the increase was 525%
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1. To be explicit, the house sold for 5.48× more than the purchase price.
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1. To be explicit, the house sold for 5.48× more than the purchase price.
Salary differences are huge, though. I recently got an offer for a $100k perm. raise + relocation benefit on top of that to move to Mountain View - and I'm not in a cheap city. My current company as well, if you move somewhere cheaper in the current remote work environment, they cut your salary.
beamatronic(9)
Is it common to use the forward slash as a separator between sq and ft? My physics brain reads that as squares per foot, which doesn't make much sense.
In 1972, people still kept chicken in the area, the place was completely undeveloped and had no jobs to speak of, correct?
I have chickens. Its not uncommon in the bay areas if you have a bit of yard.
And, I assume, you're not in an HOA. Are HOAs common in the Bay Area?
No HoA. I do see them around usually for multi-tenant places tho.
When I lived in Sunnyvale and worked on Kiefer Rd, making Sunnyvale paper, I wouldn't call chili's a night out. There was all kinds of excellent Asian food, loads of Indian grocery stores/bakery/sweetshops and strip clubs weren't bad.
Meanwhile, a 4,826 sq/ft house in Los Altos Hills sold for almost $2 million above asking (~35%) after 16 initial bids and a bidding war among 3 of those bidders.
https://www.redfin.com/CA/Los-Altos-Hills/25680-Elena-Rd-940...
https://www.mercurynews.com/2021/12/02/even-less-affordable-...
https://www.redfin.com/CA/Los-Altos-Hills/25680-Elena-Rd-940...
https://www.mercurynews.com/2021/12/02/even-less-affordable-...
FYI, Redfin publishes the average percentage that homes in an area sell for relative to last asking price. For Sunnyvale, it's 9% above [1].
(I'd argue that highest asking price would be a better comparison, since the seller might have dropped the price. But still useful.)
[1] https://www.redfin.com/city/19457/CA/Sunnyvale/housing-marke...
(I'd argue that highest asking price would be a better comparison, since the seller might have dropped the price. But still useful.)
[1] https://www.redfin.com/city/19457/CA/Sunnyvale/housing-marke...