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The word Boomerang is defined in two ways (1) designed to return near the thrower or (2) an act or utterance that backfires on its originator. How could this possibly apply to Pasadena home prices? I must confess that Boomeranging for lack of a better term is a label I coined myself. Simply because for all I know it has never been defined. The real estate industry uses terms such as red lining, and steering, but boomeranging?

While reviewing homes listed for sale in Pasadena last week, I noticed something odd. Many homes currently listed for sale had taken a price increase. With fewer homes being sold every month and the median price falling faster than the stock market, I wondered what could possibly be behind the recent increases in many of the properties on the market. Prices were increasing from 2 to 3%, when they had been listed and actively for sale for a period of 30 to 45 days? Looking more closely it finally dawned on me. The real estate agents were manipulating the price of the homes in an attempt to increase the short term visibility of the property. For instance, a property that was listed “for sale” on August 15 for $600,000 was reduced on September 15 to $585,000. The again a few days later the price was increased to $600,000. And there you have the first definition of boomeranging, moving the price only to have it return to the original point of inception.

The Philosophy

A property that is newly listed for sale or has a change to its status such as “pending”, “back up”, “sold”, a price increase or decrease is displayed on a special page called the Hot Sheet. These properties tend to get more viewers, and therefore more awareness if only for a brief time. Therefore moving the price up and down obtains key prominence on the “Hot Sheet”. While this practice appears to be acceptable (no bylaws prohibiting it) at least for a while, to me it borders on unethical. Manipulating a home price without the approval of the seller is a violation of the MLS and the California Department of Real Estate. The seller decides the listing price, not the broker. I saw a property that was lowered from $619,000 to $618,000 recently. I bet their phone is still ringing!

Buyer Beware

If you happen to be looking to buy a property make sure your agent does a diligent search on the pricing history of the home. Do you want to be making your offer to purchase based upon the lowest listing price or the current price? As you have just learned, they may not be the same. Then the second definition can become applicable, “an act that backfires on its originator”.

Tags: pasadena home prices, pasadena homes, Pasadena real estate, tricks of real estate agents