Home Buying in Los Angeles>Question Details

Mj, Home Buyer in Los Angeles, CA

What tricks do people use to make it appear there property sold for more than it did.?

Asked by Mj, Los Angeles, CA Tue Feb 22, 2011

I found this quote in the Trulia q&a.

There are tricks that Seller's and Buyers use that work around what appear to be the sold prices for units in the building that in essence create an "artificial" value for units in the building.

What tricks do they use?

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Answers

11
Hi MJ:

Sometimes, the MLS closed on the property when agent forget to change the status on the MLS and it would close on the price that was the last anticipated purchase price. As a result, the property may close on a higher price than actual.

Another one is it might include the price of the furniture or personal items, so the sold price is not the actual price of the property only but includes the personal items, which creates the higher closing price than actual.

Alisha Chen
Cornerstone Real Estate International
alisha.chen@cs-rei.com
0 votes Thank Flag Link Tue Feb 22, 2011
In a condo building for instance, I have found that the developer has input sales prices on units into the mls that were not actual sales prices... therefore, anyone running comps on that building through the mls was getting a higher value than what was really sold... to avoid that, hire a realtor that will check public records and see what sale price was recorded...
0 votes Thank Flag Link Tue Feb 22, 2011
Credits and/ or increase tax stamps at closing. Depends on which State, for example, Texas is non disclosure State, so sale prices are not public at all.
0 votes Thank Flag Link Tue Feb 22, 2011
Seller credits are usually capped out at 3% by most banks so that is the most the price could be inflated...
--
Scott Walker, Realtor

310-893-0101 Office I 310-709-6807 Cell I 310-482-2201 Fax I scottmwalker@gmail.com
Keller Williams Realty I 2701 Ocean Park Blvd., Suite 140 I Santa Monica, CA 90405
DRE License #01428946
0 votes Thank Flag Link Tue Feb 22, 2011
Jerry, you are incorrect.
0 votes Thank Flag Link Tue Feb 22, 2011
Emily describes it best--seller subsidy or closing cost credits. As she notes, an appraiser or Realtor can determine the "real" price. But someone just looking at the tax record would see the higher price and be unaware of the amount of seller subsidy.

Other than that . . .

Perhaps selling the property furnished and charging a few thousand or more for the furnishings.

It's also possible--particularly in something like a condo--for the seller to include several months of condo fees in the price. ("Buy my unit and pay no condo fees for 6 months!") The seller would simply raise the price of the condo by the value of the condo fees, and then pre-pay the condo fees.

But there are limits to all that. If the unit doesn't appraise for the higher amount, the financing won't go through. So if there are 3 sold units in the building--say for $100,000, 103,000, and $105,000--a seller would be on thin ice offering the condo at $110,000--even with seller concessions and other items. It might well not appraise for that higher amount. And the buyer's agent very likely would inform the buyer of the other comps in any case, as well as the danger to overpaying.

Hope that helps.
0 votes Thank Flag Link Tue Feb 22, 2011
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
There aren't many tricks since the sale is recorded but the seller can offer credits for closing costs or repairs. Sometimes this is used to inflate the selling price but more often the goal is for the buyer to essentially finance this extra amount.
0 votes Thank Flag Link Tue Feb 22, 2011
I have been trying to get the So Cal MLS to make it a requirement for all agents to put in how much closing costs were contributed by the seller to the buyer at closing for their loan or even for repairs. Even though the consumer would probably not be able to see this amount, appraisers would, and that's what counts.

So, for any given property a sold MLS sheet would clearly state 'Sold Price $500,000, Closing Cost Credit $10,000" so any appraiser comping out the neighborhood would give the house a $490,000 Net Sale Price.

Agents not putting what the closing cost credit may have been is not a "trick" to boost up value though, I just think it should be mandatory to include on Sold listing sheets.

As for your question, ultimately The Sold price is the Sold price, whatever is coming up on our tax record sheets is what an appraiser is going to look at to determine value of sold homes. The answer you found here on Trulia, doesn't really make sense to me.

EmilyKnell1@yahoo.com
562-430-3053 cell
Realtor Since 1996
0 votes Thank Flag Link Tue Feb 22, 2011
MJ,

Many sellers, especially developers of new projects are naturally concerned about posted selling price because it will set the bar for good or for bad for other buyers. We recently had a client who paid asking price for the unit, but got a ton of money back in the form of parking, storage, upgrades and credits for closing costs. This is a common practice and the best way to hide actual selling price.

Best Regards,

Lance King/Owner-Managing Broker
lance@fixedrateproperties.com
415.722.5549
DRE# 01384425
0 votes Thank Flag Link Tue Feb 22, 2011
Fraud...Kickbacks to the buyer.
0 votes Thank Flag Link Tue Feb 22, 2011
The short answer is credits.
0 votes Thank Flag Link Tue Feb 22, 2011
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