Why would they pay so much?

Question

I was looking at comps for a house I was checking out. The home is not located in a high income community. I saw one comp similar to that home that sold for over $1 million. Why would a buyer even it is a corporate buyer pay that much money for a home that is no where near worth that much money?

Jerry W. · Answer

@Jim Goebel Wyoming does not disclose sale price. it is private. As to the mindset that is much more difficult to explain. In many parts of Wyoming, (we really don't consider Jackson Hole as part of Wyoming, they are too weird), we value individual freedom above most things. A man's house is his castle and each man believes he is king of his own domain. So lets say you have an old junk car in your yard. If it is not filled with explosives ready to blow up the neighborhood so what? Why should a another person get to tell you how to keep stuff you own in your own yard? You are equally free to succeed wildly or fail just as well. The government who governs least governs best in our opinion. We agree we need paved roads and pay for them. Don't try to sell us on building a new 25 million dollar town hall when you use a steel prefab building for a third of that price. The circuit courthouse in Riverton along with the Sheriff's Office and County Attorney's office is literally a steel prefab building along side the fairgrounds. We are not big on paying out welfare and we REALLY look down on it if you are able bodied and able to work. It is your job to take care of things not the governments. On the other hand if a neighbor gets cancer or in a car wreck it is not unusual to raise $15K to $25K or more to help him out in a spaghetti supper and cookie jar auction. We really really like guns, I think we have the most per capita of any state. People don't like being pushed around, and when folks have lots of guns it is a bad idea. Being told what to do is like being pushed around.

I don't know if that helps you any, but it might give you a little insight.

Zachary Smith · Answer

Wy is a non disclosure state so you will see a lot of sales in the MLS posted for $1 because the buyer and seller agreed not to disclose the sales price.

Brian Pulaski · Answer

@Tony Marcelle where did you see the $1mil sale price? If you are using Zillow, they are notorious for being incorrect sometimes. I sold a house for $250,000. Zillow says I sold it for $143,000. Some arbitrary number they made up. I have seen other examples of incorrect sold prices.

Jerry W. · Answer

@Jim Goebel, sorry you are not seeing houses selling for $1 in Jackson Hole.  What you are seeing is houses selling for $1 or $10 and other good and valuable consideration.  That is a method of showing consideration has exchanged hands but not listing the price on the deed.  I have probably drafted thousands of them.  In Wyoming there is a separate forms called a statement of consideration where you must list the real price of the sale, it is a crime to not report it correctly.  Absolutely no one in their right mind would sale a house for $1, not even to a friend.  First that makes their basis only $1 so whe they sale their capital gains would be massive.  The IRS has the ability to consider the extra value over $1 to be a gift and thus can bring your inheritance taxes into play.  If you own a home in Jackson you live in dread of the IRS and inheritance taxes.

Jim Goebel · Answer

@Tony Marcelle

Hey Tony:

Let me tell you the story of the man on the corner selling the NCAA ticket (hot ticket) to the big basketball game.  There are laws dictating that the ticket price can't be marked up.  Well, the man can always include a hat or button that commands 'premium' money and do a package deal.

I'm not defending this, as I think if the money can be followed, (I'm not 100% certain) it may be illegal.

The benefits are mostly from a tax perspective and it does happen.

I see tons of houses selling for $1 out in the Jackson Hole Wyoming area.  Kind of strange, huh?

I'm not sure what justifies the higher sale price but I suspect it has something to do with tax effects, or incentives.  Maybe someone else can weigh in.

Wayne Brooks · Answer

When someone buys multiple properties in a single closing, often the sales price for the whole package gets reflected as the the purchase price for each individual parcel..in any event, no one paid $1M for a $200k home.

Jim Goebel · Answer

@Jerry W.

Thanks for the info Jerry.  I stand corrected.  It did look goofy to me to see that on zillow and I came up with my theory to explain it!  Not the first or last time I'm wrong.

All that said, what's the justification for this method - is the sale price public record?  Seems that the IRS needs to have some way to verify the cost basis?  I've never heard the debate on which records are most appropriate in the public domain - but it seems to me that without a good reason otherwise, transparency is a good thing.

I love your area of the country for its natural beauty.  All that said, my intuition tells me that the political inclination produces some of the NIMBY thinking that justifies some areas looking like a third world country.  Do you know what I'm talking about?  Armies of rusted junk in acres and acres of people's front yards, right off the highway.  I get the Don't Thread on Me bent, but isn't there a point when residents are like - hey there's a better way?

Just trying to get a feel for what causes what I perceive as an outsider to be extreme goofiness.  I shouldn't assume anything but am hoping you can speak to some of this.

Tony Marcelle · Answer

@Jim Goebel Are you serious? One dollar??  I can only wish it was that simple. I looked at that house and have no idea what exactly the incentive is that made it worth buying for that much money. I am curious what  those tax effects are.

Why would they pay so much?

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