We noticed a disturbing trend recently while researching home sale prices in St. Mary’s County.
A short while ago, a string of townhomes were put up for sale in Lexington Park. Here is what we observed from those transactions after the properties had sold concerning the sales price for the homes that were marked in the tax records as “Principal Residence – NO,” versus the sales prices of the homes that were marked as “Principal Residence – YES.”
The research is quite interesting because it shows that every property marked as being sold for what appears to be as an investment sold at $140,000 and every property that sold as what appears to be a principal residence sold for around $163,000. All properties are listed as being the exact same square footage.
There was only one exception in the eleven sales, and if you look at the owner’s name and compare it to the names on some of the investment properties, we think that will explain the discrepiency.
The obvious questions these sale raise are:
What forces are at work here to explain this incredible price difference phenomenon between the two types of buyers?
Do the Princicpal Residence buyers just have poor negotiating skills? Are the real estate agents to blame?
Are they pitching different prices to different types of customers?
Are the downpayment gift granters at work here? (This is where the seller jacks up the price of the home and gives the money to the buyer as a downpayment to make them look like they can afford a home. This type of deal also routinely has a real estate agent or mortgage company with an insider knowledge of the transaction playing along or even creating the means to make the sale happen for a cut of the profit).