Sounds crazy and yes it is! When real estate listing goes way beyond its actual price, it is called aspirational pricing, and there is a big disconnect when it comes to selling of real estate properties. It was believed to have started with the sale of a former apartment of Sandy Weil, located at Central Park West. It was said that three years ago, he was able to see a house for an astronomical price amounting to $88 million.
The bad side is that since then, many people thought they can just do the same, yet it caused disconnection between the market value of the property versus its actual seller price.
Industry expert Jonathan Miller as quoted in Mansion Global said that when the Weil apartment was listed in 2001 for a price of $13,000 per square foot, many jaws have dropped and he stated that, "That became a benchmark to aspire to, it ended up affecting people who maybe had a $5 million-dollar unit who said, 'I might get $8 million for it."
According to some sources, though the apartment sold quickly for the price, it was believed to be out in the market once again soon.
According to Miller, some sellers of luxury homes are skewing the market by pricing the house they are selling more than its market value, and it distorts the inventories. He even believes that it's not a listing when someone say, that he could get $10 million for a house that sells for only $8 million. There are buyers who are also smart enough to note some of this, and those who are knowledgeable enough to research while trying to window shop for a home wouldn't even bid on a house which they think may cost less.
It pays to be price sensitive and so it pays to do some due diligence when it comes to shopping for and trying to sell real estate.