sellers overpricing their homes (real estate, apartment, renters) - Page 2 - City-Data Forum

Samrai309 · 01-12-2008, 11:44 AM

Is it true that the comp value may be inaccurate in determining the actual sale price of the "home"? I have heard that you can role closing cost, down payment and any other extemporaneous expenses into the total cost and this inflates the comp value. To someone who got a loan for X amount, this may be possible and then wouldn't it make the comp value inaccurate? To judge comp values for comparison may not be helpful. The actual value of the home would be inflated, as reflected in this value. Unless I am just wrong with my data and assumption.

TristansMommy · 01-12-2008, 12:13 PM

Quote:

Originally Posted by Samrai309

Is it true that the comp value may be inaccurate in determining the actual sale price of the "home"? I have heard that you can role closing cost, down payment and any other extemporaneous expenses into the total cost and this inflates the comp value. To someone who got a loan for X amount, this may be possible and then wouldn't it make the comp value inaccurate? To judge comp values for comparison may not be helpful. The actual value of the home would be inflated, as reflected in this value. Unless I am just wrong with my data and assumption.

Hi.. well that may have been true doing the hot market when people were financing a high percentage and on the contract put the closing costs on top of the actual sales price to roll it into their mortgage, BUT.. in todays market this is not being done.. .for several reasons. It's just too risky, in a market that is decreasing, to inflate the price of the house because it may not appraise .

Samrai309 · 01-12-2008, 12:31 PM

Quote:

Originally Posted by TristansMommy

Hi.. well that may have been true doing the hot market when people were financing a high percentage and on the contract put the closing costs on top of the actual sales price to roll it into their mortgage, BUT.. in todays market this is not being done.. .for several reasons. It's just too risky, in a market that is decreasing, to inflate the price of the house because it may not appraise .

I agree its probably not something done too often now that lending has gotten more strict but is that not still a possible option for sellers and buyers thereby at least being a consideration in the negotiation process for a sale price agreeable to both parties....I assume some buyers can prob still qualify for loans where 20% is not a standard....Perhaps a DP of 10% cash and then the other 10% rolled into the mortgage in order to attain teh 20% and avoid PMI....I may be shooting from teh hip as I have not seriously begun to consider my future purchase....adn some of these options confuse me. My brother recently put about 10% down and is set to close this month on a house in Floral Park and he did not mention the PMI so without me being nosy, I am not sure....I guess it is prob six of one half dozen of another where you wind up paying. Thanks for the reply TristansMommy.

TomMoser · 01-12-2008, 02:31 PM

Quote:

Originally Posted by Samrai309

Is it true that the comp value may be inaccurate in determining the actual sale price of the "home"? I have heard that you can role closing cost, down payment and any other extemporaneous expenses into the total cost and this inflates the comp value. To someone who got a loan for X amount, this may be possible and then wouldn't it make the comp value inaccurate? To judge comp values for comparison may not be helpful. The actual value of the home would be inflated, as reflected in this value. Unless I am just wrong with my data and assumption.

It's true that you can get financing that covers all of those things. It would not necessarily increase the reported sales price of the home, however. The bank simply loans you more then the actual purchase price to cover these items. (By the way, this is a very risky strategy in a declining market as you start off ownership with negative equity in your home).

Another way of doing it is using what is called a "Seller's Concession". This is very similar except that the contract sales price is set above the actual purchase price. The mortgage is based upon the higher amount and the difference can be used to finance some of the closing costs. The banks usually limit this to between 3% and 6% of the sales price. Although a higher sales price would be reported, the home would have to appraise for the higher amount so it does not really skew the value of the comps that much.

nancy thereader · 01-12-2008, 03:46 PM

It really is .....location. location. location........

snforstuff · 01-12-2008, 05:08 PM

the funny thing is, there is a house down the block that is listed at 100k less than what this one is asking and they're pretty much the same house. both just came on the market. the only difference and the one reason why i am leaning towards this one is personal style and taste! i like the kitchen better and i really want a house that is totally move in condition.

also, a house across the street which has two extra bedrooms and with more square footage sold for 25k ess than the asking price last month.

my realtor even said that the reason why she didn't show us this house was because she felt it was way overpriced! we found it on our own on mlsli.

snforstuff · 01-12-2008, 05:10 PM

that is not to say that the one listed lower is not "move in" condition. it is, but i anal as i am, i would probably want to re-do the kitchen befire i move in and i really do not want to have to deal with finding a contractor, picking cabinets, etc.

Samrai309 · 01-12-2008, 05:12 PM

Quote:

Originally Posted by snforstuff

the funny thing is, there is a house down the block that is listed at 100k less than what this one is asking and they're pretty much the same house. both just came on the market. the only difference and the one reason why i am leaning towards this one is personal style and taste! i like the kitchen better and i really want a house that is totally move in condition.

I guess you have to ask yourself what your personal tastes are worth. Is a better kitchen and a house that is move in condition worth the extra 100g? What cost would it take to make the house thats 100g less up to your expectation and taste? Good luck.

snforstuff · 01-12-2008, 06:23 PM

i know... i just keep hoping that they would come to their senses and lower the price. as of now, we're still looking. i'm sure we'll come across that perfect house... i just don't know when!

watamensch · 01-12-2008, 07:43 PM

Quote:

Originally Posted by TomMoser

Many sellers are still overpricing homes. I am more then willing to walk away from a listing if I feel it is overpriced. I say go ahead and make your offer. If the agent gives you a hard time and wants you to offer more, tell her that she needs to justify that by showing you comps. One of the issues with overpricing homes, which the listing agent should have pointed out to the seller, is that even if someone were willing to pay the higher amount, they would not be able to get a mortgage if the comps don't support the sales price.

Tom... whether you are a re agent or own an office, there's no reason for you to put your money and time behind the seller's fantasy. Would you take a buyer who wanted to buy a 3 acre house on the water on LI for $200K? NO WAY, it would be a waste of your time. Same with a seller who is asking $700K when the comps say $500K. Life is too short, you should be enjoying your family or finding a GOOD LISTING instead of doing another open house for people who are not realistic.

watamensch, Lic NY Broker since 1989.