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I wouldn't have to put myself in the buyer's shoes, because in most likelihood, the distressed sell won't be used as a true comp from my realtor or the buyer's bank. If the *buyer's* agent is using it as a comp, then there's your problem...
Your house is worth only what someone is willing to pay, regardless whether the house next door is an "official" comp. Buyers in their right minds will not ignore the sale price of the other house. They might still think your asking price is fair though.
When I put my house on the market, my next-door neighbor had just sold his for a lot less than he originally asked. I have no doubt that his sales price affected my sales price, namely his sale told me in no uncertain terms what the market would bear for his house. I priced mine accordingly.
Location: Halfway between Number 4 Privet Drive and Forks, WA
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Quote:
Originally Posted by Heiwos
Your house is worth only what someone is willing to pay, regardless whether the house next door is an "official" comp. Buyers in their right minds will not ignore the sale price of the other house. They might still think your asking price is fair though.
When I put my house on the market, my next-door neighbor had just sold his for a lot less than he originally asked. I have no doubt that his sales price affected my sales price, namely his sale told me in no uncertain terms what the market would bear for his house. I priced mine accordingly.
Understood...but this has nothing to do with the original argument of using foreclosures as comps....
If I was a buyer TODAY I would put more trust in an appraiser than my own assessment.
Everyone has to make their own mistakes, I guess. In my view, an appraiser has an agenda, and a buyer has an agenda, and these are not always the same.
I got a listing for a house (a small 1950s ranch, with no updates) this month that is priced at 375k. The seller bought it in 2006 at the height of the bubble for 275k. She has done zero improvements to the house since 2006 and in fact she bought it for investment, has never lived in it, and it's been a rental for 3 years (read: it's in even worse shape than when she bought it). The Zestimate for the house is about 315k. The house next door (nearly identical in size and condition and lot) sold in December 08 for 250k. The avg. price per sq foot in the immediate area is 179. The price per sq foot for this property is 221.
Seller's agent told me last week seller "will not take less than asking, so don't even bother with an offer for less."
Apparently this seller is not aware that prices have been going down, and NOT up, since 2006.
Another delusional seller prolonging the housing crash. Again, I must ask, if you are not really interested in selling, why put your house for sale in this market? It seems to me that even though this person is not desperate to sell, as explained by the fact that she will not sell below asking, you HAVE TO BE desperate to sell to put your house for sale in this crazy buyer's market.
Last edited by saltzman143; 02-25-2009 at 04:10 PM..
Everyone has to make their own mistakes, I guess. In my view, an appraiser has an agenda, and a buyer has an agenda, and these are not always the same.
In the bubble - yes, the appraiser had an agenda - as did everyone. An appraiser in THIS market is scared STIFF and is more of an asset to the buyer than the seller. If I were a seller, the appraiser would NOT be my friend.
tambre & bcfarmlady: Since you didn't post every detail I could be off for what I am about to say but figure I will say it anyway.
WHAT you owe or WHAT your bottom line is for selling means ZERO to a buyer. I hope you do realize that. You need to be listed at a number close to recent sold houses in your area. If you are $10k under your bottom line you may still be overpriced dramatically. (not saying you are just saying you could be) When a buyer in the markets likes your house they are going to compare it to what sold and figure out the best way to justify why your house is worth even less. Then offer less than that. So if you are not at least CLOSE to those other homes then you have very little shot to sell. And if you are listed out of line with sold properties than odds are you will not be getting any offers or if you do they will be so low you will probably find them insulting and not counter. Which helps no one. Good luck though, tough market to sell in no doubt.
I understand your thinking about comps and you make some good points. My thinking is more along the lines of cost/s.f., and specific positives and negatives regarding our specific house, property and how it relates to these comps. I look online and have seen some great deals in my town, however there are subtle differences which might not be apparent to someone who is not from the area. Here are just a few: they are in a different school district (my town is served by 3 different school districts)...or they are not in my lake community, or, the taxes are really high, or they are on a busy street, or they border high tension wires, etc. Some of the comps are brand new houses being dumped by builders...can't compete with that. Some of the comps are distress sales...can't compete with that either. We don't live in a development, so each house is different. I guess a fair standard average priced home here is the 1980s built, 2500 s.f. bilevel. That is a good comp. sales price to use. If all the comps go too low, then we will not relist our property in the spring. I know that buyers could care less about my specific situation regarding equity, sweat equity, upgrades, etc...I get that. What buyers need to know is that sellers also usually have a certain number in mind that they won't go under. They'll pull the house from the market first. Two sides of the same issue, from very different perspectives.
tambre & bcfarmlady: Since you didn't post every detail I could be off for what I am about to say but figure I will say it anyway.
WHAT you owe or WHAT your bottom line is for selling means ZERO to a buyer. I hope you do realize that. You need to be listed at a number close to recent sold houses in your area. If you are $10k under your bottom line you may still be overpriced dramatically. (not saying you are just saying you could be) When a buyer in the markets likes your house they are going to compare it to what sold and figure out the best way to justify why your house is worth even less. Then offer less than that. So if you are not at least CLOSE to those other homes then you have very little shot to sell. And if you are listed out of line with sold properties than odds are you will not be getting any offers or if you do they will be so low you will probably find them insulting and not counter. Which helps no one. Good luck though, tough market to sell in no doubt.
No I did not go into any detail, because in the past I have done just that and the response by some people has been incredibly negative and at times a bit bothersome... I went away for a while because of it. Everyone seems to think that if you are here venting about not being able to sell your house then there is something wrong with you or the house or you are an idiot. Bottom line is... we are not in distress as far as being able to pay the mortgage, we don't happen to have 10 or 20 grand stashed away to "Pay" to sell the house, we can't rent it for what the mortgages are, yes we have two, and we can't afford to pay the difference between rent and mortgage because when the house sells my husband will be quitting his job there and we will not have that income. SO, what's the alternative.... sit tight and wait. It's called financial survival and RESPONSIBILITY.
I don't know what the foreclosures are in the area but I do know that some homes are selling and there are many empty homes as well. As for comps.... well they just aren't worth looking at not only because there are a lot of foreclosures... but there are not many "comp" houses that compare with the upgrades we have done. I'm not being a "selfish" greedy person, but I know for a fact that there are amenities in my house that are not found in most of the homes in the area, including the NEW homes. People just are not willing to pay for those things these days and the appraisers don't give you any "credit" for them in appraisals like they do for patios, fireplaces etc.
We are not uneducated people that took out subprime loans nor are we "flippers". My husband has owned this home since it was built in 1989. We are both college graduates with nice jobs. We've had nice careers and raised our families. We just want to move on in our lives to a simpler time in our quiet country home. It's just been terrible timing for us... but we are survivors and someday we will be living together again. I'm an eternal optimist
So, let me get this straight, there are buyers who would look in a neighborhood where a string of 10 homes sold for say, ~$250k, and one home went into foreclosure and the bank wanted to dump it and sold it for $175k... All homes in the neighborhood are now worth $175? Really? That's news to me. Foreclosures have been going on since the dawn of time, just obviously in smaller numbers than we are seeing today. I've never heard of anyone, EVER, talking about "competing" with foreclosures as long as they were not rampant...and in many markets, they are still not the norm (I'm in Raleigh, NC), and just because your neighbor's house was foreclosed your home should not automatically drop in price. Banks have never sold homes at "market price" as they have ALways wanted/needed to dump homes quicker than the average, regular seller. Now, I understand this market is slow, slower than we have seen in a long time, but that doesn't necessarily mean that the rules of real estate are being totally rewritten.
So, let me get this straight, there are buyers who would look in a neighborhood where a string of 10 homes sold for say, ~$250k, and one home went into foreclosure and the bank wanted to dump it and sold it for $175k... All homes in the neighborhood are now worth $175? Really?
Yes, as long as the foreclosure was well advertised. If it was properly marketed, then $175K was the most that one out of many buyers was willing to pay. So why would there suddenly be buyers available to buy similar houses for a lot more?
Quote:
Banks have never sold homes at "market price" as they have ALways wanted/needed to dump homes quicker than the average, regular seller.
Not true at all from what I've seen. Banks where I live, the ones that truly want to sell, list at below-market prices to attract buyers. Then they get a bidding war going, and the house goes to the highest bidder. This process can take as little as a week. The banks use a fast process, but they don't dump the houses at below-market prices; they get the market price.
Yes, as long as the foreclosure was well advertised. If it was properly marketed, then $175K was the most that one out of many buyers was willing to pay. So why would there suddenly be buyers available to buy similar houses for a lot more?
Because foreclosures are notoriously more difficult to purchase than a standard home - banks are slow to respond and deal with, the homes are typically not as clean or in as good of shape (and I'm talking cosmetics - not the other scenarios where a home is totally trashed and damaged), they are typically sold "as is," etc.
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