Help for First Time Home Buyers

[watamensch]

I think that stories of the desperate homeowner who takes a 50% cut in price to get rid of the house is as over-hyped as the stories of the "great stock that I bought" or the great poker game. Yes, this does happen - but this is more the exception then the rule. The measure that should be used is the % difference between the FINAL asking price and the actual selling price.

Assume a house is listed for $700 when is should be $500. The seller finally realizes this and lowers the price to $500 and it sells for $470. The measure should be the difference between $470 and $500. FORGET the $700K.

A local leading Realtor publishes stats quarterly based on MLS sales. In the interest of not plugging a Realtor, I will put stats below:

Q2 2008 = 4.7% discount
Q2 2007 = 5.6% discount

The discount this year is lower than last year. This means

1. Homes priced correctly are selling, those that are overpriced remain on the market
2. Few homes are priced correctly, so there's more competition for those that are priced right.

Overall sales were down from 8,694 to 8,237, a 5.6% decrease.

[TomMoser]

Home condition should absolutely be taken into account when pricing or making an offer on a home. If it is extremely dated, by all means, you should consider that when contemplating your offer. However, do not expect every home for sale to be completely updated.

If it is helpful to you, here is "broker speak" for deciphering the condition field on MLS listings:

Excellent = Your average lived in house. Most homes get this rating.
Mint = Above average. Kitchens and baths remodelled in past 5-10 years.
Diamond = Pretty much perfect. Remodelled in last 2 years.
Good = Needs quite a bit of work.
Fair = Needs a lot of work
Poor = Enter at your own risk.

Remember, these ratings are up to the discretion of the listing agent. Some are better then others.

[modmondays]

Originally Posted by watamensch

I think that stories of the desperate homeowner who takes a 50% cut in price to get rid of the house is as over-hyped as the stories of the "great stock that I bought" or the great poker game. Yes, this does happen - but this is more the exception then the rule. The measure that should be used is the % difference between the FINAL asking price and the actual selling price.

Assume a house is listed for $700 when is should be $500. The seller finally realizes this and lowers the price to $500 and it sells for $470. The measure should be the difference between $470 and $500. FORGET the $700K.

A local leading Realtor publishes stats quarterly based on MLS sales. In the interest of not plugging a Realtor, I will put stats below:

Q2 2008 = 4.7% discount
Q2 2007 = 5.6% discount

The discount this year is lower than last year. This means

1. Homes priced correctly are selling, those that are overpriced remain on the market
2. Few homes are priced correctly, so there's more competition for those that are priced right.

Overall sales were down from 8,694 to 8,237, a 5.6% decrease.

I respectfully disagree!!!!!!

Go to PrudentialElliman's site and look at their Q1 and Q2 market reports.

Q1 Nassau North Shore Listing Discount: 13+ percent
Q2 Nassau North Shore Listing Discount: 7 + percent

AVERAGE LISTING DISCOUNT NASSAU NORTH SHORE Q1 AND Q2: 10+%

THE AVERAGE LISTING DISCOUNT VARIES BY GEO ZONE

AGAIN: BUYERS NEED TO DO THEIR RESEARCH AND TARGET IT AS SUCCINCTLY AS POSSIBLE!

[totallyfrazzled]

Originally Posted by modmondays

You NAILED it....congrats. So, are you "deducting" the fixes required (1-2 years out) from your initial offers - -or arent you? And if so, do you think this is putting you into the "unreasonable low-ball" offer category?

What we do is run the numbers of what it would cost us to do the work we feel is necessary to that particular house. Let's say we feel that House A would cost us 80K to make it what we need (another magic word that depends entirely on the person: "need" vs "want"! What we consider a Need may well be only a Want to someone else... and vice versa). We already know what our top end of the budget is, and our budget is House Price PLUS Needed Renovations... so we deduct that 80K from our top end and that's our Top Offer. Whether we present that number up front as a Firm Take It Or Leave It offer, or start with a lower number with the intention of coming up to our decided max if we have to, depends on the circumstances of that particular house: Is it new on the market and seems to be overpriced? Has it been on the market for months at no price reduction, or has it been reduced in the interim? How long have the present owners owned it, and does it look as if they have very little equity (and thus not able or likely to come down very much)? How much lower is our max offer than their current asking price and any recent comps? For instance if after factoring in the remodeling costs we find that the most we can offer for the house within our budget is 575K, and the house is newly listed for 600K we would probably make a Take It Or Leave It offer of 575K rather than bother making a 550K offer that would probably be seen as "unreasonable" ... but again it would depend on that house's condition and location. If there were 2 houses, both overpriced by the same amount (in our opinion) but one was new to the market and the other one has been listed for 9 months with no price reductions, we wouldn't even bother making an offer on the 9-monther because the seller clearly wants what he wants and isn't interested in anything less.... a waste of time for both us and our agent. At least the new seller may be more flexible, or may BECOME so after getting a plethora of "lowball" offers.

[modmondays]

Originally Posted by TomMoser

Home condition should absolutely be taken into account when pricing or making an offer on a home. If it is extremely dated, by all means, you should consider that when contemplating your offer. However, do not expect every home for sale to be completely updated.

If it is helpful to you, here is "broker speak" for deciphering the condition field on MLS listings:

Excellent = Your average lived in house. Most homes get this rating.
Mint = Above average. Kitchens and baths remodelled in past 5-10 years.
Diamond = Pretty much perfect. Remodelled in last 2 years.
Good = Needs quite a bit of work.
Fair = Needs a lot of work
Poor = Enter at your own risk.

Remember, these ratings are up to the discretion of the listing agent. Some are better then others.

Thanks! Good to know.

Also the two in question we had been looking have ratings of
"Excellent and Good" - - based on my above 25 year old comment on this thread, they should actually have ratings that are listed as:

Good and Fair

[modmondays]

Originally Posted by totallyfrazzled

What we do is run the numbers of what it would cost us to do the work we feel is necessary to that particular house. Let's say we feel that House A would cost us 80K to make it what we need (another magic word that depends entirely on the person: "need" vs "want"! What we consider a Need may well be only a Want to someone else... and vice versa). We already know what our top end of the budget is, and our budget is House Price PLUS Needed Renovations... so we deduct that 80K from our top end and that's our Top Offer. Whether we present that number up front as a Firm Take It Or Leave It offer, or start with a lower number with the intention of coming up to our decided max if we have to, depends on the circumstances of that particular house: Is it new on the market and seems to be overpriced? Has it been on the market for months at no price reduction, or has it been reduced in the interim? How long have the present owners owned it, and does it look as if they have very little equity (and thus not able or likely to come down very much)? How much lower is our max offer than their current asking price and any recent comps? For instance if after factoring in the remodeling costs we find that the most we can offer for the house within our budget is 575K, and the house is newly listed for 600K we would probably make a Take It Or Leave It offer of 575K rather than bother making a 550K offer that would probably be seen as "unreasonable" ... but again it would depend on that house's condition and location. If there were 2 houses, both overpriced by the same amount (in our opinion) but one was new to the market and the other one has been listed for 9 months with no price reductions, we wouldn't even bother making an offer on the 9-monther because the seller clearly wants what he wants and isn't interested in anything less.... a waste of time for both us and our agent. At least the new seller may be more flexible, or may BECOME so after getting a plethora of "lowball" offers.

Interesting, and I will reply to this on Thursday as we are going up to the mountains now for a quick vaca!

[totallyfrazzled]

Originally Posted by modmondays

Thanks! Good to know.

Also the two in question we had been looking have ratings of
"Excellent and Good" - - based on my above 25 year old comment on this thread, they should actually have ratings that are listed as:

Good and Fair

Tom's translation of the listing terms is absolutely dead-on. It's exactly what our buyer agent told us. The problem is, that most SELLERS don't know this (or don't want to accept it). A relative of ours has a house for sale right now and is bragging that their listing agent rates their house as "Excellent". What she doesn't know, of course, is that Excellent means Average (and believe me that house IS no more than average, on a good day!). I would take Tom's translation further and break "Mint" down to "Mint", "Mint+" and "Mint++". I honestly don't know if there is much difference between "Mint+++ and "Diamond" from a realistic point of view? Anyway, from what we've seen, "Mint+" is what most people think of when seeing the word "Excellent". And "Diamond" is probably what most people think of when seeing the word "Mint". Isn't advertising wonderful?

[watamensch]

My info is from the same source:
http://www.prudentialelliman.com/NYC...2q08locked.pdf

Numbers vary depending on which list you check. We are both correct, although the latest #s you quote should be

Regardless... use your 7% Discount - the final asking price of $600 would sell for $558K. Offering $400 just does not work in most cases. Yes, there's the occasional seller who MUST SELL, but look at the average for accuracy.

I just sold my house in Melville for FULL ASKING PRICE after hearing multiple offers... price it right and it will sell.

[alexanderdennis]

Originally Posted by modmondays

Gosh...Ive been following your posts over time and this one is really your silliest....

Lets see, for a potential buyer (as the above poster), he will walk into your "prototypical house" with 20 years worth of expensive renovations and "sweat equity" and more-than-likely be face-to-face with the following:

1) A kitchen that is 10 years outdated by todays colors, materials, hardware and use - - and we dont even want to talk about dated appliances and flooring that is likely too worn to even consider not replacing as well as countertops with grease stains impossible to remove.

2) Windows replaced 15 years ago with possible weathering issues, glass and framing that is not as weathertight as more current examples thus costing even more in energy

3) Bathrooms with the latest 1988 technology, tilework, dirty grout, not enough storage, pitted fittings and shower controls that are the equivalent of an old Howard Johnsons Motor Inn

4) Doors that have possibly warped or been painted over to the point that they dont close well anymore with aged hardware same as above conditions

5) Laminated Grey and Black built-ins from 1995 that now are like so- - 1980's!

So you see, your 20 yrs/$150k worth of home improvements you are so proud of and want to recoup its costs are likely worn, tired, dated, out of style, out of fashion - - and at the end of their life-cycle. And to any new homeowner with half a brain, likely ALL will need to be replaced (the sooner, the better!)

I think you and others are going to be waiting a long long time to sell unless you price realistically. If not, perhaps it will be you having to move to central PA - - just leave your keys at the door for your bank (or Uncle Sam) to pick up.....

I think you post is the silliest think that I ever heard and obviously there is a lock of the minimum common sense .
I bet that you never bought a house because if you did you should know that you pay interest on the mortgage , you pay closing costs, ...
And if you are complaining about the housing inflation - why you do not complain about let's say - milk , the price has doubled , or - papaer towel - it doubled too...
do not expect that someone to lower the price only to make a favor for you!!!!
People that want to buy a house .... just wake up!!!!
You are buying a house ..... not a fridge , not a carton of milk....
And i can go on with it...
Start thinking for yourself and do not repeat what all those so called economist are saying on the TV .... they have to have audience ... and this kind of crap .... keeps people like you in front of the TV...
The problem this days is the game that banks are playing ...