The Nantucket real estate market acts like any unrestricted market – there are buyers and sellers and the market sets the price for the good. There are arbitrage opportunities because real estate is illiquid, but for the most part, the market is efficient. However, almost all of the arbitrage opportunities are on the buy side – for some reason a property is undervalued (the zoning is about to change, the property is a key piece in a development, the broker underpriced it, etc.), so a buyer takes advantage of the opportunity and creates instant equity. Arbitrage opportunities rarely happen on the sell side because buyers are savvy and even if a buyer unknowingly agrees to overpay, the deal will more than likely blow up because the property will not appraise at the agreed upon price. So, it is much harder for a seller to sell for over market than a buyer to buy for under market.
There will always be sellers that think they can outsmart the market, that think their property is worth more because they love it, but the market’s IQ will more than likely prove to be higher. Can’t trick the system…
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