I was recently talking to a home owner about why his home had not sold.  I told him he was having some major competition from a bank foreclosure home three doors down from him with about the same size, age and view as his home.  He said that did not matter because it was a bank foreclosure.

It amazes that someone who has enough money to own a house in a development like this would not understand the basic principles of supply and demand.  For example, if a service station had gas priced at $2.99/gallon and the service station right next door had gas priced at $2.49/gallon, guess who is going to sell the most gas.  Assuming the gas is of similar quality, I would guess that the station offering gas at $2.49/gallon is going to sell much more than the station at a higher price. 

This individual did not understand that the market does affect the price of his home.  It has nothing to do with what he paid for the home, what his appraiser said it was worth, what his banker thought it was worth, or what his friends thought it was worth – it only has to do with what the market says it is worth.

It is very obvious to me that nobody is going to pay $1 million for a home when the home two doors down the street is very similar in age, condition, size and view and is priced at $800,000. 

His “so what” was just another way of saying that he did not understand the principles of economics and value.  He did not think that counted because it was a bank foreclosure.  He might like to say that does not count, but unfortunately, it does.