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Old 04-18-2011, 04:41 AM
 
Location: Arlington, VA
147 posts, read 367,690 times
Reputation: 102

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Quote:
Originally Posted by Alltheusernamesaretaken View Post
Well, no.

People may pay a ridiculous price on a house for any number of reasons. They must buy now, they cannot fathom driving more than 20 miles to work, etc.

Just because someone buys the overpriced item doesn't mean that's what it's worth. It just means that person made the decision to overpay for whatever reason.
Quote:
Originally Posted by Dwellington View Post


No, they're definitely priced too high (again, look at the comps), however, the question is "who" is paying the high prices? What characteristics describe this unwise buyer who wants to willingly pay more for the home than the comps show—and in effect, pay more than the home is worth? And in effect, become one of—if not the—most expensive home in the neighborhood.
If one single person disagrees with you and buys a house at the price it was listed at, then that house was priced correctly. Comps? You're kidding, right? If everything went by comps, then prices would never change.

You both get an "F" in economics.
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Old 04-18-2011, 07:13 AM
 
Location: Reston
83 posts, read 172,301 times
Reputation: 38
Quote:
Originally Posted by Alltheusernamesaretaken View Post
Just because someone buys the overpriced item doesn't mean that's what it's worth. It just means that person made the decision to overpay for whatever reason.
This is starting to become a circular discussion, but what the heck...

There is no objective meaning to the term "worth." Something is only worth what someone is willing to pay for it. There is no omniscient decision-maker keeping a tally of what things are "worth."

Therefore if a widget sells for $x, to the buyer it was worth $x. That's all it means. One person might think they overpaid; another might think they underpaid. But none of that really means anything.
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Old 04-18-2011, 07:23 AM
 
5,121 posts, read 5,537,831 times
Reputation: 5800
To the OP, I asked for help with closing costs. At first, I didn't ask for them for help with closing costs, I asked for a lower price on the house (based on comps my Realtor found). My counter made the house affordable to me (it was just over my price limit). I know my ability to buy isn't necessarily the concern of the sellers... but I love the house and the neighborhood and wanted to give it a shot.

The sellers countered my offer (citing different comps). But the countered price was still just a tad too high for me to afford 20% down (which is what I wanted to do). So instead of countering on price again, I asked for help with closing costs and told my Realtor to explain to the sellers my reasons. I only had a certain amount of money for a downpayment on a 20% down loan and needed to make sure the cash I bring to the table didn't exceed that amount of money.

They agreed to pay some closing costs instead of lowering the asking price of the house. This helped both of us since it ensured them a sale and they didn't need to come down to the dollar amount of my first offer to get the sale (in other words, for the sellers, they came down another $5k as opposed to the $25k I was asking in order for me to afford their house and to make the sale... remember, for sellers, the bottom line is the same regardless of closing costs or lower asking price). For me, I was able to afford a 20% downpayment on a house I love. Win/win.

OP, I would talk to your agent and see what he or she thinks. You paying help on closing costs might be less money out of your pocket than a lower asking price. Then again, depending on sales in your neighborhood, it might be worth it to turn down help with closing costs. You'd have to crunch the numbers to be sure.
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Old 04-18-2011, 08:10 AM
 
61 posts, read 99,999 times
Reputation: 42
Quote:
Originally Posted by eyeball View Post
If one single person disagrees with you and buys a house at the price it was listed at, then that house was priced correctly. Comps? You're kidding, right? If everything went by comps, then prices would never change.

You both get an "F" in economics.
An "F" for fantastic with my finances, yes! Comps are indeed relevant, as it gives you a good guide for what is being sold for comparable homes. Also realtors and appraisers use these as well. How can you say then that comps have no bearing? Like most things that are purchased, it's only worth what you're willing to pay for it, however, comps (price guides, etc.), help a buyer to arrive at a FMV that works for them. There's absolutely no reason that someone should overpay on a home that they've deemed too expensive by evaluating resources that are used as common practice in buying/selling homes.
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Old 04-18-2011, 08:11 AM
 
708 posts, read 1,144,558 times
Reputation: 369
Quote:
Originally Posted by Carlingtonian View Post
Think about it: If they offer to pay you say 500K outright or pay you 510 with you paying 10K closing costs--those affect you the same way; you still end up being paid 500. But for the buyers it means they don't have to come up with the closing-cost cash right now; in effect, it means they're financing their closing costs. They're borrowing from the bank to pay you extra, in return for which you pay however much of their closing costs.

I only wish we'd thought of this when we bought, but we were afraid it'd spook the seller. We wanted as clean an offer as we could present so they would accept before the open house (which they did). We pretty much liquidated our savings.
Exactly. Not sure why the OP is concerned. I was a realtor for a few years and this is a very common practice. Should make no difference.

The only possible question it may raise-are they liquid enough in case something happens to close the transaction? However, it doesn't mean they don't have the money, just raises the question.

Given paying out of pocket or financing over 15 or 30 years, I think most would take the financing. You still have to come to closing with a minimum out of pocket.
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Old 04-18-2011, 10:54 AM
 
Location: Arlington, VA
147 posts, read 367,690 times
Reputation: 102
Quote:
Originally Posted by Dwellington View Post
An "F" for fantastic with my finances, yes! Comps are indeed relevant, as it gives you a good guide for what is being sold for comparable homes. Also realtors and appraisers use these as well. How can you say then that comps have no bearing? Like most things that are purchased, it's only worth what you're willing to pay for it, however, comps (price guides, etc.), help a buyer to arrive at a FMV that works for them. There's absolutely no reason that someone should overpay on a home that they've deemed too expensive by evaluating resources that are used as common practice in buying/selling homes.
If comps are the be all and end all, and the current inventory (that is being snapped up by buyers) is supposedly overpriced, then wouldn't the comps reflect the higher prices? It's not like there has been a sudden jump in prices just this month. If a realtor showed you comps from last year, just how accurate would you think they'd be?

Using the original example of my own street, the most recent comp (which appraised at sale price, btw) would show that the second supposedly overpriced house is priced just right. Which would lead back to the fact that they're selling at fair market value, and someone who doesn't think they're worth what they're selling for is completely free to stay out of the market and hope for a correction that may never come.

And to get back to the original topic of this thread, no, those sellers aren't covering a dime of closing costs, because they didn't have to provide that incentive to get their houses to sell.
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Old 04-18-2011, 11:28 AM
 
262 posts, read 758,379 times
Reputation: 68
Quote:
The relatively low inventory continues to wreak havoc with buyers under contract. Scott Sabey, a Redfin agent in Falls Church, is experiencing the ripple effect: “The low inventory caused multiple offer situations in my area,” says Scott. “Some of the deals that did get ratified are now coming back with low appraisals, which are a big problem–especially with FHA loans.”
Quote:
Although we are seeing clear signs of life in the market, we’re not seeing the robust activity everywhere. In fact, it almost seems like there are two different markets at work; one which echoes the boom years of 2005 and 2006, and another that has yet to shake off the doldrums. Redfin Montgomery agent Nick Chaconas explains:

“Back in 2005 or 2006, a house would go on the market early in the week, we’d have an open house on the weekend, and by Monday afternoon we’d have 3-5 offers in hand. I’m seeing that same situation today. Some of my buyers are writing as-is contracts with little to no contingencies and still paying well over asking price. Just this past weekend, I had a client lose a house that was listed for $310,000, even though he had escalated his bid to $325,000.”

But Nick is also experiencing that other, more anemic market: “The other side of the market is a carry-over from last year, which includes all the picked-thru inventory. Buyers are being far more aggressive on properties that have been on the market for 30+ days. These properties are getting offers below asking price, with requests for sellers to cover closing costs, as well as other terms that favor buyers.”
Redfin Sweet Digs Washington, DC & Baltimore: Washington, DC & Baltimore real estate blog focusing on hot properties and current market trends.
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Old 04-18-2011, 12:21 PM
 
61 posts, read 99,999 times
Reputation: 42
Quote:
Originally Posted by eyeball View Post
If comps are the be all and end all, and the current inventory (that is being snapped up by buyers) is supposedly overpriced, then wouldn't the comps reflect the higher prices?
Comps aren't the end-all-be-all, but they are a great guide. Some homes are priced well, and fall within the comps, which is great. Those aren't the overpriced ones, it's the ones being listed way above the highest comp.

Quote:
Originally Posted by eyeball View Post
It's not like there has been a sudden jump in prices just this month. If a realtor showed you comps from last year, just how accurate would you think they'd be?
Accurate comps are present back to 3 mos. A good realtor and informed buyer knows this and wouldn't be looking at old info.
*
Quote:
Originally Posted by eyeball View Post
Using the original example of my own street, the most recent comp (which appraised at sale price, btw) would show that the second supposedly overpriced house is priced just right. Which would lead back to the fact that they're selling
If the comp/s are showing that the home is indeed priced at FMV, then that's great.
*
Quote:
Originally Posted by eyeball View Post
those sellers aren't covering a dime of closing costs, because they didn't have to provide that incentive to get their houses to sell.
In that case, great, but it's not going to change the fact that buyers will continue asking for closing help. In the end, a seller can either work with that or not.
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Old 04-18-2011, 12:36 PM
 
5,071 posts, read 8,622,267 times
Reputation: 2722
Quote:
Originally Posted by Dwellington View Post
In that case, great, but it's not going to change the fact that buyers will continue asking for closing help. In the end, a seller can either work with that or not.
There are some sub-markets where clearly not all buyers will not ask to have their closing costs paid. In other situations, they may ask to have their closing costs covered, and this may or may not place their offer at a disadvantage compared to competing bids.
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Old 04-18-2011, 12:36 PM
 
2,879 posts, read 6,824,414 times
Reputation: 1166
Quote:
Originally Posted by saganista View Post
Reminder: Prices are set by what willing and informed buyers and sellers are able to agree upon. This is the very definition of fair market value. There is no independent yardstick anywhere to say anything otherwise.
The appraisers might say otherwise. Your statement would be accurate if everyone paid cash.
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