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And, it's relevant to real life! Just today I got news from my realtor that the seller's giving up appealing the appraisal, but they're going to leave the sale price where it is and cover the $3900 themselves. [More on this in an upcoming post on Personal Lives...] Which left me wondering -- why? Why not just drop the sale price -- wouldn't that have the same effect?
Except, Prof. Charles Eppes explained in an episode we recently watched how property values are like buoys on a line in a pool. If you put a weight on one, it not only drags that one buoy underwater, but it pulls it neighbors down as well -- but at the same time its neighbors keep it from going as far underwater as it would on its own! Property values are the same way -- when one goes down, it pulls down its neighbors, which in turn help prevent it from dropping as much as it might if it were truly independent.
In other words, the seller is protecting the value of their other properties they have yet to sell by keeping our sale price up where it was originally, even though [private] and I are actually paying $3900 less than that.
Math: Just like SCIENCE!!! but without all the nifty explosions!