There Goes the Neighborhood: When One Neighbor Undercuts Another

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File this item under ‘Stories You Never Heard Two Years Ago’: two neighbors are selling nearly identical properties... they list the properties at the same price... but both properties languish on the market for a while, and suddenly, neighbor number one cuts his price -- effectively forcing neighbor number two to do the same -- even though neighbor number two can’t afford to cut his price.

This terrific item from Manhattan Beach Confidential lays it all out in uncomfortable detail: ‘Curses are now being tossed around inside the townhome at 714 Manhattan Beach Blvd. (MBB). It’s for sale, asking $1.349m, but today the neighboring townhome at 710 MBB dropped its list price to $1.249m – undercutting 714 MBB pretty badly.’

More: ‘710 MBB has gotta sell. The new listing language explains that this is a relocation sale. A third party with some smarts is now driving the pricing. Hence the aggressive, 10% move that also, not incidentally, destroys the price of the neighboring listing.

‘Here’s where it gets worse for the sellers at 714 MBB... They bought their TH in April 2006 for $1.355m. They put it up for sale 7 months later. Now, the neighbor has guaranteed them they will lose at least $100k if they sell.’