I’m sorry to stir the pot yet again, but the fact is that it has become clear to me that something must be done about real estate brokers hiking up prices on homes, completely shutting out hundreds of families from the ability to buy a home.
I have studied this for well over a year now, and it’s quite obvious what is happening. Firstly, yes, it is true that home prices are organically high; this is true not just in Lakewood, but across the United States. In Lakewood and its surroundings, in particular, there are not enough homes to satisfy the demand from families. Naturally, this will cause prices to rise. However, this isn’t why the prices are so mind-boggling.
Rather, here’s what’s happening: Five families all want one house. Real estate brokers tell each couple that if they want the house they will need to pay above the asking price because there will be a bidding war. Fine, there’s no issue with that. But the next step is the problem. When there is another house in the area, the real estate agents list it at the price point that the first house sold for, which is already above market value!
For example, if a home was listed at $450,000, it will likely sell for $475,000 or higher because of the bidding war. But the next home in the area – similar in size and value – will be listed at $475,000 because that’s what the last home sold for. Then, agents tell prospective buyers that they also have to pay more than asking because there will again be a bidding war. So the second home will sell for $500,000 or more. And then the process repeats itself, again and again, until most families simply cannot afford to keep up with the ever-rising prices.
The only way to fix the problem (though it might be too late by now) is for real estate agents to stop raising the price of homes every time that a house in the area sells for above the asking price. The second house should be listed at the same listing price point as the first one, not at the sale price of the first home.
Unfortunately, there are simply too many agents right now who care only about their bottom line. They know they can list homes for very high prices and it will still sell for above asking because people are simply so desperate to get out of their apartments.
It should be noted that this is not true for every agent. There is a nice amount of agents who really do their best to keep prices reasonable while also getting their clients a home. However, they are fighting against a tsunami of other agents who just want homes to sell for the highest price possible so that their commission is higher.
So, if you are one of the agents doing this, please, for the good of everyone, knock it off.