Home Sellers and Scalpers

Peter Coy

Rafi Mohammed, a pricing expert, makes this interesting analogy between home sellers and scalpers on his blog:

The panic that could occur in the housing market is akin to what I experience in buying tickets from scalpers at a rock concert. A few minutes before the show starts, even professional scalpers lose their cool – vigorously competing against others, they drop their prices in an attempt to monetize the rapidly declining value of their tickets. This results in drastic price drops. What does rock concert ticket scalping have to do with the housing market you may be wondering…one concern is that much like ticket scalpers, sellers will aggressively discount their homes (to lock in profits or minimize losses) before they further decline in value. This will lead to even more supply and lower prices.

Read the whole thing here.