Need advice on home purchase! (investment, price, property, value)
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...This is business! Heard from another neighbor they want to sell. Not worried about the home not appraising for what I offer. We are in MD and prices have gone down but not nearly as much as other areas.
Look up the addresses you like and some nearby properties here: Online Services
I mentioned yesterday that the 1997 price paid is closer to current value than it isn't.
Sales after about 2002 are almost completely useless.
I'm serious on these points and it applies to what your parents think their house is worth too...
which btw, may cloud or be influencing your initial valuation bias
(when your Dad uses peak market memories to insist theirs is worth X when it simply just isn't)
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I am more concerned about the contract and asking the right questions to the seller.
Actually... you want to avoid "asking questions" as an approach altogether.
Have a list of questions in your head yes but just allow the seller to yammer away and by that they'll offer the information to answer MOST of the questions all on their own. AFTER this... review your notes and come back with just 2 or 3 specific Q's.
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get pre qualified for a loan (again)
find a RE attorney
CONFIRM that the owners do in fact really want to sell...
Look at the house with an experienced house person...
(maybe someone you hire like a inspector or just a friend of the family who knows enough about houses and to keep the emotions out of it)
With a seller who wants to sell...
and having done the homework to know what a reasonable price REALLY is...
if seller doesn't have an agent... then have your attorney write up the offer contract
Thank you for your helpful advice Mr Rational. I have also used the taxation site to find out what they paid (another handy site I use). Unfortunately for them they bought in 2005. Houses are still selling in this neighborhood for around $400,000. Most recent $425,000. When the houses were built in the late 90's they sold around $250,000. I feel they should be worth less then what they are selling for. Homes in this neighborhood don't last long on the market.
We know for sure they want to sell. Question is how much they want to tell for. Or how much they can afford to sell for. Since they bought in 2005 this could be an issue for them. We are waiting for a call from them to set up a day to walk through the house. I will use your advice and see where it takes me.
When the houses were built in the late 90's they sold around $250,000.
Houses are still selling in this neighborhood for around $400,000.
There are some premium areas in suburban Maryland with superlative schools that can justify higher than typical prices.
But, that calculus also applied to the (base number) price the house sold for when new in 1998 too.
At $315,000 today (a 25% increase over those 14 years)... you would have a fair central Maryland number.
At $350,000... another 15% on top of that is a fair premium for the school system in HoCo or MoCo.
More than that? Not with my money. (you make your own call)
After all, it is still a 14yo house with 14yo everything that are all coming up for replacement over the next 5 years.
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Unfortunately for them they bought in 2005.
We know for sure they want to sell.
Question is how much they want to tell for.
Or how much they can afford to sell for.
They very well may be in a short sale situation too.
Regardless... what they paid at the peak of the market is immaterial to today's reality.
Remember those questions you want the answers to?
This (short sale possibility) just became issue #1 to know:
whether these people are even the ones making the decision on what the price might be;
and if it is a short sale you probably want to just start looking for another property altogether.
Good luck.
Last edited by MrRational; 06-06-2011 at 09:18 PM..
I feel they should be worth less then what they are selling for. Homes in this neighborhood don't last long on the market.
What is your justification for the first sentence, if the second is true? Homes getting sold quickly indicate a high demand, and high demand puts UPWARD pressure on price.
If it's a short sale you may run into problems as a neighbor because it's supposed to be 'at arms length', meaning you can't sell it to someone you know for a better price.
What is your justification for the first sentence, if the second is true? Homes getting sold quickly indicate a high demand, and high demand puts UPWARD pressure on price.
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May I suggest that if you want to have an amiable negotiation on price, why don't you and the seller agree ahead of time that each of you will hire a different appraiser and agree that the purchase price is the average of the two appraisals.
What is your justification for the first sentence, if the second is true? Homes getting sold quickly indicate a high demand, and high demand puts UPWARD pressure on price.
I should have said the homes priced well don't last long in this neighborhood. But similar homes in neighborhoods in the same area (same zip code) sell for less and are on the market longer. This particular neighborhood is desirable in this zipcode. I am comparing same exact homes but just in different neighborhoods. They have same schools and are within 5 minutes of each other. I hope that makes more sense.
not sure if this relevant to this conversation, but we have a weekend house where a neighbor is selling his 'build-able' property. We said we were interested because of the way the property adjoins ours. However, it turned out that we weren't interested in returning his investment in the property at the what 'he' feels it is worth. We did the comps and feel the property is worth 90k or so in today's dollars. He bought in 2005 and made 'improvements' including a septic for 3BR and sunk the electric -- neither of which we care about. So he is ASKING 189,000. We laughed out loud. I mean - really? Double what were were thinking?
Just mentioning it b/c I think sometimes folks have an unrealistic expectation if they haven't interviewed real estate agents to find out true market value. and sometimes, they'll find a RE agent willing to blow some sunshine.... Anyway, we mentioned that we are still interested in paying 90k or so -- and if it happens in a year - so be it. We will not pay over 100k for it and if someone else is silly enough to pay the 189k then perhaps they'll build a lovely home on it too...<smile>
Just don't give up if they have a crazy price in mind and you opt to have them list it instead of paying said crazy price. They might come around when it doesn't sell.
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