Help with Offer Price (Springfield: for sale, real estate, how much)

[dsp2]

Greetings. I'm not sure if this is best in this forum or in the Real Estate forum.

We're thinking of making an offer on a house we found and like in Springfield, NJ.

The house originally listed for about $500k, and has been reduced by about $25k.

I looked on trulia.com and a couple of other sources. Trulia claims that houses in Springfield are selling for about 16% less than the listing price. Also, that "similar houses" are selling for about 14% less than the listing price.

Also, I saw charts showing that house prices for this area are at, about, 2004 levels.

Further, the best comp our realtor sent us showed a house with similar characteristics in the same neighborhood recently selling for 9% less than list price.

HOWEVER, the realtor told us that houses in the area are selling for about 3% less than list price. Also, that he might suggest we bid about 5% less for this one to start.

I am confused. Of course, the higher the sale price, the more the realtor will make. However, I'd think that if he wanted to nudge us higher, he'd do so more subtly.

Can anyone suggest why there is such a huge difference between what sites like trulia tell me (houses selling for 16% below asking in this area) and what the realtor is telling me (start at 5% below asking price)?

Am I missing something big? Is the realtor being dishonest?

Finally, if anyone has any advice on what they think might be a good starting price, I'm all ears.

Many, many thanks for any advice. I need it!

[DodgeViper01]

I never believed the whole percentage approach because it just does not make sense. It gives you a general idea of how overpriced homes are but that is not a basis for making an offer because often this formula just does not work.

For example, I am looking to sell my home. I look up the comps and there were two homes next to me which were the same exact floor plan and had the same options. They both went for $525,000. If I list my home for $525,000 then the 16% off listing would not work here.

Basically what I am saying is that looking at percentages to make an offer is not a good way to create an offer price. I tell people, look at the closest comps and determine a fair offer price. I always present comps to my clients, so if your realtor has not presented these to you, ask for them.

Also just for your reference, if you end up signing a contract that is significantly over the comps, you probably won't appraise which can end up causing lots of problems with the bank.

Good luck with your situation and let us know how it turns out.

[wileynj]

Originally Posted by dsp2

Greetings. I'm not sure if this is best in this forum or in the Real Estate forum.

We're thinking of making an offer on a house we found and like in Springfield, NJ.

The house originally listed for about $500k, and has been reduced by about $25k.

I looked on trulia.com and a couple of other sources. Trulia claims that houses in Springfield are selling for about 16% less than the listing price. Also, that "similar houses" are selling for about 14% less than the listing price.

Also, I saw charts showing that house prices for this area are at, about, 2004 levels.

Further, the best comp our realtor sent us showed a house with similar characteristics in the same neighborhood recently selling for 9% less than list price.

HOWEVER, the realtor told us that houses in the area are selling for about 3% less than list price. Also, that he might suggest we bid about 5% less for this one to start.

I am confused. Of course, the higher the sale price, the more the realtor will make. However, I'd think that if he wanted to nudge us higher, he'd do so more subtly.

Can anyone suggest why there is such a huge difference between what sites like trulia tell me (houses selling for 16% below asking in this area) and what the realtor is telling me (start at 5% below asking price)?

Am I missing something big? Is the realtor being dishonest?

Finally, if anyone has any advice on what they think might be a good starting price, I'm all ears.

Many, many thanks for any advice. I need it!

offer 90% and expect to pay 95% ($450K and expect a counter offer of $475)

[NatasNJ]

Yeah. LIST price is meaningless. Offer a tad below the most recent comps. Don't pay more than recent comps unless this house offers something special over them.

[HalfFull]

Statistics are interesting, but don't be a slave to them. The house you're looking at could be listed too high/low or just right; so 20% off might not be enough sometimes, and 2% off could be a great deal other times. Try to get as much info as you can on comps. Visit other houses for sale (even if you're not interested in them) to get a better idea of hou "your" house compares in the market.

[tahiti]

agree with others about percentages. i could list my home for $1M, does that mean I should receive an offer of $970k when it's worth about half that? Go by comps but remember prices are dropping.

[CaptainNJ]

i wonder how much lower you can offer when a seller has just dropped their asking price by a large amount. how much additional negotiating room did they leave after they just knocked down the price by 5%. im sure it varies by the owner. comps are hard to come by for my place because nothing has sold for over a year. i cant begin to tell you how excited i am though whenever i see them drop their asking prices.

[Lusitan]

Originally Posted by dsp2

Can anyone suggest why there is such a huge difference between what sites like trulia tell me (houses selling for 16% below asking in this area) and what the realtor is telling me (start at 5% below asking price)?

Am I missing something big? Is the realtor being dishonest?

While you have noted the incentive for your real estate agent to try to get you to make a higher offer to increase her commission, this is a relatively minor dollar amount for the realtor when all is said and done. It's true that right of the bat this puts your realtor's motivation at odds with yours, but it's relatively minor.

The bigger issue is that your real estate agent's biggest motivation is to just make the sale happen -- otherwise, she gets no commission. When you know what one party (the buyers) are asking for (i.e. the list price), and when you want the deal to happen so you get your commission, it's elemental that you try to push the other party (the buyers) as close as possible to the list price just to increase the odds that the buyers will accept. Realtors do this not because they think the listing price is fair, or because they're looking out for your best interests, they simply to it to make a sale. Realtors earn money when people buy and sell, and they want to make a quick sale and move on to the next person.

Basically, you should completely ignore whatever your real estate agent is telling you, and go with your own gut and your own research. Your realtor may be a nice person, can be helpful in sharing her views about different town/neighborhoods, and can be a pleasant person to work with in terms of accessing properties to view etc. But don't give much weight to their valuations or advice when it comes time to your offer price. They're not looking out for your financial best interest.

[dsp2]

Thank you. This is all extremely helpful.

I wish there was a magic way to arrive at a price which is fair for both buyer and seller. Or that there was no negotiating possible so that I could just see a price then decide if I want it.

Why can't we just cut out the negotiating and have the appraiser the bank uses...or some other impartial one....give us a price?

I'm sort of joking since I know that ain't happening, but it would make this much more pleasant.

But I digress. Thank you again. I'll take a closer look at comps. I know they dropped their price relatively recently, and I understand not to be a slave to percentages, but if we started at 5% off, we'd probably settle on 2 or 3% off. And that's REALLY far from 16%. I want this market to turn around as much as everyone....especially since I'll be buying soon....but I don't want to be the only person in NJ overpaying for a house this year

[goonsquad]

Originally Posted by dsp2

Why can't we just cut out the negotiating and have the appraiser the bank uses...or some other impartial one....give us a price?

The corrupt appraisal process helped get us into this mess. Only the appraisers who gave values in line with the offer price were used. Now that things have changed, we have the real estate captains of industry led by larry yun complaining about unrealistically low appraisals. He wants to see the corruption go back to the way it was.