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I'd like to hear from FSBOs and Realtors on this phenomenon. I've made an offer on an FSBO. I looked at all the comps in that neighborhood over the last 90 days and averaged out an offer price. The owner has scoffed at my offer, stands by her price, and insists that comps are not the only factor in determining what the house should sell for. So you would think there is something extra special about her house? Well, no. Actually, her house is the cruddiest, smallest, least desirable house in the neighborhood, and needs work/renovation. Yet she insists that it should sell for MORE than the comps, which have been bigger houses with big amenities and extensive remodeling, etc.
Is this just an FSBO syndrome? What explains this psychosis? I am about to move on to the next property and not even deal with a counteroffer, etc.
Again, another seller who must not be that interested in selling.........
Yeah, I don't know what it is about FSBO's. The ones I've seen for sale haven't had remotely competitive prices.
You'd think that the home market would be similar to the automobile market, where the owner is often willing and able to sell for lower than the dealer. You take on a little extra risk buying private party, and you make it up in the price.
They don't always overprice. Sometimes they underprice it. Sometimes it's priced right. The majority of the time they do overprice it. Cohdane has a good point. Sometimes they simply don't understand how to price it or adjust to comps. It's the neighbor Bob sold his his for X a year ago and mine is better so I'll ask Y for mine. (Bob's house may have been worth more, or Bob may have lied about how much he got, the market may have got worse.)
In my area I've seen both cases, reasonable and unreasonable FSBO prices, with unreasonable being more often the case. By "reasonable" I mean that the selling price is in line with comparable properties nearby.
Personally I think the #1 underlying factor is getting too emotional or personal about the home. It makes them lose objectivity. If they've been in the home a while, they are likely to view it as their "home" and therefore have an inflated opinion of it's supposed worth.
I say the #2 reason is the seller basing the selling price on the wrong set of financial guidelines. This would be those who base the selling price on things like (a) what they paid, (b) what they spent putting into the home, and/or (c) what they "need" to sell it for in order to afford X (typically, another house).
I also agree that they don't always overprice. Some get it just right. Most don't understand that appraisers only adjust so much for certain things. In this market a house has to appraise. No one is going to pay for than appraised value. Some don't understand that they won't get 100% of their remodeling dollars back. Some don't understand that maintenance is not the same as upgrading a home.
FSBO's don't realize that more goes into pricing their house then saying..."well Judy up the street got 200,000 for her's, that's what we will list for".
Judy's house was probably 1,000 sq.ft. bigger and had hardwood, mature landscaping and clean....
The bottom line is this....if you get close on a house that you really like that is a FSBO, then do the following things:
1. Make them agree to a home inspection where you each split the cost.
2. Make them agree to a $ figure for repairs on the home inspection. Shoot for $2,000.00. This will allow you to make any repairs necessary that could be severe as you move in.
3. Make them agree to an offer with the following contingency "Seller agrees to sale the house at (contract price). In the event that the house does not appraise for the contract price, the seller agrees to sale the property at the current appraisal price".
The #3 option, forces the seller to realize that they may be making a mistake in overpricing their home. A home is only worth what the appraiser feels like the home is worth, in this market, the appraiser and only the appraiser determine the final price.
Most, not all, FSBOs ( including limited service/flat fee listings) in my area ( adjacent to the River Denial) seriously over price. But then again, so do most listings with traditional full service agencies.
Those who have to sell, eventually list with a full service agency, come to terms with the market and do what has to be done. It is not unusual to see 35% differences between the original ask and the sale price and this has far more to do with owner fantasies than the overall market.
The rest are the stale donuts. Cheaper by the dozen?
So is the FSBO correct in saying that comps don't matter???? If comps don't matter, then price per square foot in the area matters? But if you weigh price per square foot, her property is still SERIOUSLY overpriced also.
I found out today that I think the problem here is that she overpaid in early 2008 and doesn't wanna come to the closing with a check. But she is in denial, because A, the market has tanked since early 2008, and B, she's already bought something else and is now carrying two mortgages and needs to sell.
Comps do matter but in many cases the FSBO seller does not have access to current comps.
I know some areas where it could be months for the sale to be uploaded to the appraisers website.
The seller also may not know that a home that they think is similar had some extras to make it sell for $40,000 more than thiers should be priced at.
They just see the price it sold for and think the house is near them and close in size so that is their listing price they will use.
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