How to Lose $300K in a Day

Posted on November 27, 2013 | by Denny Oh

I rarely complain (in public) about other agents, but I recently witnessed something so incredibly frustrating, that I have to share it.  I’m so tired of the lack of knowledge, professionalism and morals in real estate and it kills me to see agents “represent” their clients so poorly.  I don’t claim to be the best agent, but I do know what I’m good at and I won’t represent a client if I think I won’t be able to properly assist them.

Two weeks ago, condo #2003 came on the market at The Legend for $920K.  The Legend is a high-end building that was built by Bosa Development and is located next to Petco Park.  Unit 2003 went pending the same day it was listed.  Prior to it going pending on the MLS however, I spoke to the agent and was told that the seller had accepted an offer close to the list price and would only entertain backup offers.

Now here’s the problem…the list price was $300K too low.  A similar unit (#2204 – which had worse views) had sold earlier this year for $1.1M – that’s $180K less than what 2003 was listed for, or 16% less.  Unit 2003 is 1483 sqft with 2br/2ba and is on the south east corner of The Legend.  It looks directly into Petco Park and has a substantial (protected) view of the bay and Coronado – simply put, it has great views.  Unit 2004 on the other hand, is on the north west corner of The Legend and in my opinion, has lesser views.  It faces the city, has distant bay views and is not as valuable as any of the comparable units on the SW or SE corners.

So if a similar condo with a worse view just sold for $1.1M, why would you ever list an almost identical unit with a better view for $920K?  And to make matters worse, why would you accept a less than full price offer in a matter of hours when you had tons of interest?  When I asked the listing agent this same question, I was told it was because “[the sellers] are buying another property.”  Now I realize most of you who read this aren’t realtors, but I bet you would have enough common sense to be able to look at the recent sale(s) and determine that based on 2204 selling for $1.1M (it actually sold prior to even being on the MLS), that 2003 (with a better view) would be worth closer to $1.1M and not $920K.  Right?  Take a look at the CMA below and you decide how hard it would be to come up with a price for #2003 (click on the image to enlarge it).

Legend CMA

After learning that the seller had accepted a low offer, I assumed that the listing agent was double ending (representing both the seller and buyer) the deal and encouraged the seller to accept a lower offer quickly so that they could make more money.  However, I soon learned that this was not the case and that the agent just had no clue what they were doing.  I also found out that an offer of $1.2M was made (which wasn’t verified by the listing agent, but I believe it to be true), but since the seller had already accepted an offer for $300K less (30% less than what they could have received), they couldn’t back out.

To me, this isn’t just a simple case of misreading the market/comps.  The agent didn’t miss the price by $10K, or even $50K…they were off by $300K!  Ok, so maybe this $1.2M offer didn’t exist – I still think the seller could have sold it the same day for at least $1.1M.  To be this far off the mark is inexcusable and seems criminal in my mind.

As an agent, I obviously understand that we don’t have a crystal ball, nor can we predict exactly what’s going to happen.  But to be this far off is insane and should never happen.  After seeing this debacle, I looked up the agent’s sales history to see if they were a new agent, or if they had any experience selling…anything.  I quickly learned that this agent had very little experience selling downtown.  In the last 12 months, they had sold one property downtown (represented a buyer on new construction) and a total of 3 sales since 2008 – none of which they were the listing agent.  And while the agent was experienced, the majority of transactions were done in La Jolla or the South Bay – not downtown.

I’ve seen similar instances where out of area agents poorly represented their clients, or the seller hired their friend (to save 1% in commission), but clearly it’s not always a good idea.  I realize that I don’t know what the seller of Legend 2003 told their agent to do when they discussed the list price, but I’m pretty sure they wouldn’t have complained if they pocketed another $200-300K.  As I mentioned before the real estate industry is littered with people of all levels of experience, ethics and knowledge.  As a buyer or seller, you need to do some research before you commit to an agent.  If you have any questions about real estate in San Diego, please let me know.  If I can’t help you, I’ll refer you to someone who can.

Denny Oh 858-243-2092 [email protected]

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2 Comments

  1. John M. says:

    Wow, Denny. If I were this agent you defamed in this rant (yeah), I’d sue you (and your broker) for libel.

    Anyone (especially other agents) can find out who repped the seller in this transaction, so just because you don’t mention the agent’s name, you have given way too much information about this deal for it to be ambiguous.

    Your holier-than-thou attitude is bothersome as well. I enjoyed using your website, but will NOT be using you as our agent when we sell our Pinnacle condo.

    A bit of advice: be humble as well as professional. It goes a lot further than arrogance to future sellers. This rant says a lot about your ego and we will steer clear.

  2. Denny Oh says:

    Hi John – I’m sorry this offended you. However, I’m not sorry for what I said. This industry is full of agents who are both good and bad. My blog is intended to provide people (who choose to read it) with my opinions. Real estate sales are public records and for those who care to look things up are welcome to. As far as agents are concerned, trust me – they all know how terrible this deal was already.

    My frustration comes from seeing agents do a terrible disservice to their clients – how you interpret my frustration (and another agent’s poor job) is your choice, as it’s my choice to express my opinions. I’m sorry I’ve offended you, but have no regrets in shedding light on a sale that was either A) some sort of scam to avoid taxes, or B) a terrible job by an agent who screwed their client.

    I’m failing to see where any of my ego is shown in this post, but do apologize for offending you.