[bankheadbaby]

House was built in 1942 in a relatively small Alabama town and was put on the market after the original owner passed away a couple of years ago. All brick with lovely unique architectural features, two car garage and a big back yard with flower gardens, with the new addition of the adjoining lot, expanding the back yard. It has been updated by exposing the hardwoods, totally redone kitchen, expanded small rooms by removing walls, new wiring, piping and probably a new roof. It's a great house. The problem is, they want $245,000 for the house, and I happen to know they only paid $100,000 or less for the house. The neighborhood is declining, and it's on a noisy and busy street. Sitting somewhere else, like Homewood or Mountain Brook, it would be worth it. A similar house down the street is listed for $150,000. Probably not as updated, but that sounds more reasonable. I also know they need to sell quickly for personal reasons. They offered that the price is negotiable. I have read so many things about sellers getting insulted and refusing to respond to low-ballers. With the new lot and updating, I am thinking I would reasonably pay about $180,000-200,000 for it, but I don't know where to start. My family said go lower, but a real estate agent offering to help said go down $15,000. Any advice from anyone familiar with the state of AL real estate?

[Southlander]

ALWAYS low-ball. You can always offer more.
Also, check the other recent sales in the neighborhood on comparable houses. And look in the attic and crawl under the house!
The house may also have to sit on the market for a while before the owner figures out they've overpriced it. There's an article in our local newspaper today about flippers who put granite countertops in a house in an area that is mostly rental property and kitchens are lucky to have Formica...most still have the old linoleum.
Don't EVER pay too much!

[southernraised]

What town is it in? That has a lot to do with how low you can go.

[harry chickpea]

Best advice you'll get - Hire an independent appraiser for a couple hundred bucks and get an opinion that you can bank on. You could easily overpay by not understanding how comps work. If I'm interested in buying something over $100K, then $200 is chump change.

[her2001]

Try Zillow.com

I use to invest in properties. When I sold and got a low ball, I just cut off communication, but then again I didn't get crazy on the pricing.

What he paid means nothing. Here in Florida things have doubled in the last 5 years.

Good luck

[VMH2507]

It sounds like to me that a lot of work has been done on the house as well as the additional lot. I don't think you can judge just by how much you think was paid for the house. The owner may have gotten a good deal on the house because of the estate situation and if a lot of work needed to be done to the house. The key is comps in the neighborhood. If the house passes inspection and work was well done AND you seem to like it, then the comps should guide you, not what you think the owner paid for it. After all, they are entitled to be paid for their work.

[Threestep2]

How badly do you want a great house in a run down neighorhood? If you finance everything will come back to the appraisal. As said before - get one done and take it from there.

[bankheadbaby]

thanks for the advice and imput. No, the real estate is not booming around here like Florida, and for good reason--it's not Florida!
A great house was up for 380,000 but that was over priced for the area. They finally sold it for a little over 200,000. So I think the comps will be between 140,000-200,000. People are just nuts in that town. And not surprisingly, their properties are not getting sold.
They did get a good deal and did everything that needed to be done to update it. It's beautiful. I think Southlander touched on a delicate point, that maybe, in this neighborhood and market, they shouldn't have put so much money into it to turn around and sell. I think they deserve to be paid for their work, but I think they are shooting a little too high for this town.
Buyers market people say "negotiate hard, this is your time to shine, all you buyers that can actually get a mortgage these days!" People on the sellers' side say they get insulted from low offers, so don't even try.
I just want to find the happy medium between not shooting myself in the foot and not looking like a jerk.

[VMH2507]

It all depends on what part of Alabama you are talking about. Here in Huntsville I don't think it is a buyer's market. Actually most RE people say that it is balanced - neither sellers or buyers market. Most of the resales are selling fairly quickly and there does not appear to be a alot of houses on the market. Also not many foreclosures as in other parts of the country. In fact there was a piece in Sunday's paper about how the subprime problems were not being seen in this area. Actually I understand that Florida is seeing a lot of the problems above - lots of foreclosures, long days on market, oversupply of houses on the market.

Another thing to consider is how long the house has been on the market. If it just came on and you go offer $180K, the sellers are not going to take it as well as if it has been on the market for a while.

[dbkeel1]

You should see the comparables (comps) for the area first. Get a local realtor to provide that and be sure they include everything sold in the neighborhood this year (or in a 1/2 mile radius), then together you can weed out the ones that are not as comparable to the property due to # bedrooms, baths, whether they are a similar one o two story home - in Huntsville ranch homes get a bit more $$/sf than 2 story homes - and so on. This should give you a clearer picture of what the market is willing to pay for any home in that area as of today. They you can better calculate where your offer should be, lowball or not.