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Funny, reading some of the responses. Saw the exact behavior described RE a property I looked it not too many summers ago, buyer-side vs. seller.
Location was Mercer Island, part of Seattle metro area. Definitely always hot property. Definitely a seller's market past few years, too, though when I was looking times were still a bit uncertain after the crash.
House I liked was the baby of the neighborhood, the neighborhood being very nice indeed on an already-nice island. Places across the street were waterfront mansions at $3M-$14M. Neighbors around the place were $750K to a mil. Yet the for-sale property was a nice place, just more-modest.
The owner would not budge from an unreasonably high price, however. My Realtor and I made an offer that was fair market. Owner told us to go fish. Realtor advised me to walk away, so I did with some level of disappointment. "The road not taken," as they say. I wasn't however going to pay a 10% premium based on some sort of spurious perceived value. So that door swings both ways, as they say. Dunno if owner ever sold: I had the impression she didn't care much one way or the other. So was she right?
Bottom line being if she'd priced that place fairly, based on comps, it literally would not have lasted 48 hrs in the hot market of (then, and now as-well in certain parts of Seattle metro). I was best of three offers on my current house, that was priced absolutely-fairly for the neighborhood, and deal was done on Monday morning after being listed prior Friday afternoon. That's a "hot" market.
The old saying in real estate is Location, Location, and after you get past those two factors if factor in Location.
The worst investment in real estate, is the highest priced home in a neighborhood. It is basically priced out of the market for the location.
Smart buyers, find the quality of home they would like to live in, often the highest priced home in the neighborhood (location). Then go up the next price level of homes in a better neighborhood, and look for the lowest priced home in the neighborhood looking for one of similar quality as the highest priced home in the first neighborhood. When you find one you like, buy it. That is the home, that will increase faster in value than the highest priced home in another neighborhood, and if you need to sell due to transfer, etc. it can easily be sold, and you can buy it at the same type of price as the first neighborhood.
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