Asking Price vs. "Market Price" (Minneapolis, Eden Prairie: for sale, mortgages) - Minneapolis - St. Paul - Minnesota (MN) -Twin Cities - City-Data Forum

Connor Heim · 01-31-2007, 07:07 PM

I've been doing some research in preparation for my move to Minneapolis this summer. I've been very surprised at the difference between the asking price and the "market price" that the Hennepin County Tax Assessor's office lists.

There are a couple that have come in with an asking price that's actually lower than the HCTA lists. Most are about 10-15 percent higher than HCTA lists. I was also aghast to see some asking upwards of 200K MORE than HCTA lists for market price. Some of these folks bought their homes 1-2 years ago for under $400K and are trying to sell for close to $700K!

Glad it's a buyer's market! Folks, if you are buying make sure you find out how long the place has been on the market, how long they've had the place (and what they paid), if the price has been reduced once or more, and also if it's vacant. These are all aspects that allow buyers to negotiate from a position of strength.

Looking forward to getting a fab home at a great price!

Connor

Robert P Stewart · 01-31-2007, 10:10 PM

When a home is for sale, only one factor will determine its price. Only one. It is NOT some record in a county office, or what people tell you the property is worth (even a Realtor like me!), or what you paid for the property. None of it matters.

All that matters is what a buyer is willing to pay for the home. That's it. That's all there is - and that's all there ever will be.

When I price homes, I ask myself several questions. What kind of value will the area support? In which direction is the area heading? What is the maximum amount someone would pay to purchase my client's property? After asking these questions, I then do a profile of the buyer and go find that person.

The strongest data I have is what other homes in the area sold for. I hope this helps!

Robert
Robert@RobertPStewart.com

golfgal · 02-01-2007, 05:03 AM

Every county does it's property tax assessing differently and it is not a good tool for pricing homes in most communities. It could very well be that some of those homes you see listed for way more then the tax assessed value have been completly remodeled and have not had an onsite inspection since, thus the low value.

Our house had an onsite inspection shortly after we moved in and the tax assessed value is still almost $50,000 then the appraised value of the home from May. For the homeowner this is a GOOD thing because we are actually paying less taxes this way. I am not about to complain about this!

golfgal · 02-01-2007, 05:05 AM

Another thing to add is that the LAND value can significantly influence that tax rate as well-up or down. There are a couple houses not far from us that have an assessed value of around 1.8 million dollars. The houses themselves are about to fall down they are in such rotten shape but the LAND is worth a fortune.

Robert P Stewart · 02-01-2007, 08:59 AM

Golfgal: totally right.

I've got 3 homes for sale in Mendota Heights - the houses themselves are not that nice, but the little lot they each sit on is going for $500K each.

I had a hard time assigning an asking price for those. Although the lots are relatively small and the houses nothing to write home about, there is *no* end to what that area will support. If you tear down the home and build a $5 million dollar home - congrats - you've got a $5 mil home.

This is the exception, not the rule. I base asking price on a value derived from what other similar homes have sold for.

Robert
Robert@RobertPStewart.com

BryanF · 02-01-2007, 01:29 PM

Robert - I'm not really familiar with Mendota Heights at all and I don't know anything about it's neighborhoods. I have an in-law who routinely buys property and either remodels or tears down what's there, then sells for a profit. The only parts of town he can really make the numbers work is St. Louis Park, Edina, Mntka. Should he also be looking at Mendota Heights?

golfgal · 02-01-2007, 07:45 PM

Quote:

Originally Posted by BryanF

Robert - I'm not really familiar with Mendota Heights at all and I don't know anything about it's neighborhoods. I have an in-law who routinely buys property and either remodels or tears down what's there, then sells for a profit. The only parts of town he can really make the numbers work is St. Louis Park, Edina, Mntka. Should he also be looking at Mendota Heights?

Mendota Heights is a pretty popular, pretty upper class area of the cities--more 'old money' like Edina vs the 'new money' like Eden Prairie. Stillwater would be another place for him to look for remodel flips--won't be able to tear down any older homes in Stillwater.

Um, Robert, did you notice, I was right again--I keep telling you, I am always right

.

Connor Heim · 02-06-2007, 02:34 PM

Robert -- You are absolutely right about the "true" value of a home. It really is what the buyer will pay. I think sometimes buyers don't understand that they have a lot of power when it comes down to it.

My other favorite strategies for home buying:

- Start out by looking at houses that have been on the market for a long while. Those sellers are more eager to work with you on price.
-- Look for homes that have already had the asking price reduced once or more
-- Look for homes that are unoccupied. Those sellers most likely have two mortgages to pay and so are probably a bit more motivated.
-- If timing is flexible, look between Thanksgiving and March. Sellers are keeping their fingers crossed that ANY offer will come during that time frame.

I'm probably going to be looking for a crappy home in an A+ neighborhood. If I can get something $100K below my budget then spend money to make it truly fabulous, that would be perfect!

Best,
Connor

vnagarajan · 03-03-2007, 10:11 PM

I am looking at a property that backs on to 100. I was wondering what impact backing onto a highway has on a properties value. The house is great otherwise and I love to purchase it; however, the highway 100 issue worries me. In general, should someone be concerned about buying older properties in Edina (i.e., properties built in the 50s)?

Robert P Stewart · 03-04-2007, 06:57 AM

I think I know the property you're talking about. Only a few on the market directly back up to 100. Should you be concerned about its effect on property values? Yes. I've had several clients pass up these homes (they didn't even want to go see them).

Should you be concerned about a home built in the 50's? No - not for that reason. You should be concerned about how the home has been taken care of for 50 years. The construction that I've seen, particularly in some of the classic neighborhoods like Morningside, are second to none. Those people knew how to build homes back then.

My opinion - if you really like the house on 100 and you want to live there, forget about what everyone else thinks. If you're also looking for investment potential and you want to sell in a few years and make some money, stay away.

By the way, the noise walls that the DOT puts up are largely useless. If this home has one (and I think most of them do), don't count on it to reduce the noise a great deal.

Robert