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We're looking to buy a home that had been on the market last summer/fall with a realtor pricing it at $155,000. The house did not sell so now the owners are selling it as a FSBO for now. When we called about it and later looked at it, the owner stated that they would come down from that 155K approx $9000 since they wouldn't be paying an agent. Since the housing market has slumped though, how can we be sure we are not offering too much? The house is located in a small town about 30 miles from us. The one agent in that town has a few homes listed and the prices seem to not be dropping, nor are the houses selling. Do we just make a lower offer, making it contingent on our lenders' appraisal and go from there? Anyone have any suggestions? These are nice people we don't want to offend and one of them is dealing with a medical issue, but we don't want to spend more than the house is worth in today's market. Thanks to all who respond!
Bon in NW Ohio
You wont know for sure until you look at other homes in the neighborhood and compare the asking prices of those properties, and until an appraisal was completed.
Their medical issues, nor the fact that they are nice people, should have nothing to do with your offer.
We're looking to buy a home that had been on the market last summer/fall with a realtor pricing it at $155,000. The house did not sell so now the owners are selling it as a FSBO for now. When we called about it and later looked at it, the owner stated that they would come down from that 155K approx $9000 since they wouldn't be paying an agent. Since the housing market has slumped though, how can we be sure we are not offering too much? The house is located in a small town about 30 miles from us. The one agent in that town has a few homes listed and the prices seem to not be dropping, nor are the houses selling. Do we just make a lower offer, making it contingent on our lenders' appraisal and go from there? Anyone have any suggestions? These are nice people we don't want to offend and one of them is dealing with a medical issue, but we don't want to spend more than the house is worth in today's market. Thanks to all who respond!
Bon in NW Ohio
What is the value on the property appraisers website? (tax value)
Bentlebee - the tax appraised value really has very little to do with anything in terms of what the house is "worth" in the market. In many states (like Oregon), they are capped at how quickly they can rise, and are not tied at all to the realilties of the market.
As a buyer, you need to do your research on comparables (SOLD and currently Active) pricing to determine whether or not it is a "good buy." Much of the information is public record once the sale is recorded, and can be found on the Internet.
(1) Be careful not to assume that the asking price and the SOLD price are the same;
(2) You may even question the SOLD price as to whether any seller concessions (closing costs, etc...) were included at that price.
(3) Make sure that you have an idea of how the comparables actually compare. Big ticket items like air conditioning, decks/concrete patios, kitchen updates, etc...can have a big impact on ultimate pricing.
Also remember that an Appraisal is a reflection of SOLD comparables and not market value. The appraisal's primary tool is primarily to protect the lender from taking on too much risk. You DEFINATELY SHOULD include an appraisal contingency...otherwise, if the appraised value is below your offer price, you are stuck. If you are not using a "standard" real estate contract for your area you need to be careful to make sure that you are not exposing yourself to risk...
As a Realtor, I do a "Buyer's Market Analysis" in a similar manner as I would do for the Seller to give the buyer an idea. In today's market, you generally have the luxury of time to do that, and weigh your decision. In a faster paced market, it's much more difficult - another reason why Buyer's Markets offer less risk for the buyer. If you aren't working with an agent, you'll have to do it yourself.
Just a casual observation here, not knowing your local r.e. market, but my guess is that the house is overpriced. The reason I say that is because it was priced at $155k when it was listed with an agent and was marketed via the MLS and Realtor.com and possibly in print ads and open houses, too. If it didn't sell back then, it was probably because it was priced too high. If you're in a softening market then it's even more overpriced now.
I agree with the other posts that you need to educate yourself on the current market. You may even want to ask a local realtor to show you some houses in your price range. Won't cost you anything, and it may end up saving you a lot of money. You may even find something you like even better and at a better price.
I always want to know what the tax value is and I use it aswell as comps. Maybe others don't, that is their business. I'm not a realtor but have bought and sold many houses and know only the Tampa market. (never had a mortgage and are still making good money and I'm for sure not one of the people who is walking away or is asking to be bailed out!) I know in our market most sales prices are below or at tax value prices. I just looked on the property appraisers website and only 2 out of 10 were ('08) over tax value, so realtors can tell me whatever they want, in my area you sure can look at it and use it next to all other info.
Also remember that an Appraisal is a reflection of SOLD comparables and not market value. The appraisal's primary tool is primarily to protect the lender from taking on too much risk. .
Where do you GET this stuff??
1. The definition of an appraisal is an opinion of value which is derived from thre market.
2. This opinion of market value is based on SALES of comparable properties.
3. The purpose of the appraisal (which is what I assume you were trying to say) is to determine the market value of the property.
An appraiser is a dis-interested 3rd party. We do NOT represent the buyer, seller, lender etc.
An appraisal is an objective analysis of the property and the data of the market place. It is a tool which the lender uses to determine whether or not ot fits their guidelines and whether or not they are willing to lend their money on it.
I was told by an appraiser that they take the 3 latest closed deals, 3 listing prices and if possible 3 pending sales. All ofcause within the nearest area and comparable.
I was told by an appraiser that they take the 3 latest closed deals, 3 listing prices and if possible 3 pending sales. All ofcause within the nearest area and comparable.
Yes, provided those sales are indeed comparable. If the Subject is a 2,000 sf, 2 bath house that was built 5 years ago and the three most recent sales are 1200 sf, 1 bath and 30 years old, these are not the most suitable.
As an appraiser I put very little value in active listings because a list price is frequently unrealistic. And pending sales cannot be relied on here in OK, a non-disclosure state, because you can't find out what the actual sales price is until the sale has closed.
It isn't that simple.
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