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My husband and I are first-time homebuyers. We have found a great potential house and we submitted an offer for $515K. The selling price is $640K. It was rejected.
However, the most applicable comp sold just 2 months ago (and is a few houses down--same model, square feet, number of bedrooms, same yard size), for $520. This comp's original price was $580. Keep in mind that this house just sold two months ago. It is basically identical to the house we are interested in.
So we have a dilemma. We are not sure what to do. We have a superb realtor and are meeting with him tomorrow to discuss further. We love this house and really want it, and we based our offer on this comp. But the other realtor said that it is unlikely that they will be willing to sell for anything under $600. We don't feel that the house is worth $600.
Are you willing to pay a premium because you want the house?
Did you (or your realtor) go into the comp house? Although the footprint may be the same, finishes and condition of the home may vary.
A house is always only worth what someone will pay. If you really want it enough negotiate. But if you feel that it is an accurate comp and you don't want to pay more for the home, you are going to have to be willing to walk away.
If you walk away and the home is over-priced, it will stay on the market and you might have another chance once the owners become more realistic.
But the other thing I have found is that even when walking away from a home that you love, there will always be another and sometimes one that is even better.
I don't know your market, but over-paying for a home in a higher price point is very dangerous in a declining market. Be careful!
It's possible you're the only bidder and they just may come down in price. If they don't, I would walk. Don't forget rule number one when buying a house: never fall in love with them.
I can easily pump more than $120K in value into a house "just a few doors down" if the location of the comparable house is negatively impacted by cross streets, undesirable neighbors, unattractive landscaping. Similarly if the house priced higher has new roof, windows, fresh paint, updated kitchens and baths, finished basement, nicer backyard / deck, built-in garage storage, high quality shed or playset it would not take a rocket scientist to understand why the seller believes they deserve MUCH more...
Completely aside from these material differences are the very real possibility that the comp was sold by sellers that were in distress -- a short sale or similar transaction would likely NOT be factored in to the listing price by MOST sellers and their agents, though in some cases appraisers are forced to use such a sale if no other data points exist... (and if the seller's agent is aware of OTHER comps that would support their client's asking price the time to share those would NOW)
If you do not feel the house is worth $600K and the seller's agent believe that no offer under $600K will be accepted the best solution is to find another house.
"Really want"ing the house that has a listing price is no different than "really wanting" a BMW 328i convertible. If you feel it is worth pretty close to $45K then you can own that vehicle, if not then you don't "really want" it... http://www.edmunds.com/new/2010/bmw/...37/prices.html
BTW Your offer is a WHOPPING 20% discount, something that is just darned unlikely to happen in most desirable suburbs in the region. And while I suppose there is a chance that the house you think you really want was listed by a goofball that had full knowledge that another house "basically the same" as their own would be worth 123%, that too suggests that this seller and you will NEVER come to a 'meeting of the minds'...
The comp was not a short sale, foreclosure, or distress transaction. It did sit on the market for 30 days before selling, though. Additionally, the comp house is better than the house we are interested in. The main reason is that it has a brand new, updated kitchen. The house we are interested in has an outdated kitchen that would need to be renovated. Additionally, the comp has a gorgeous new addition (modern sunroom) that the house we are interested in does not have. Everything else is the same. So it is puzzling.
The comp was not a short sale, foreclosure, or distress transaction. It did sit on the market for 30 days before selling, though. Additionally, the comp house is better than the house we are interested in. The main reason is that it has a brand new, updated kitchen. The house we are interested in has an outdated kitchen that would need to be renovated. Additionally, the comp has a gorgeous new addition (modern sunroom) that the house we are interested in does not have. Everything else is the same. So it is puzzling.
Sometimes there is just no deal to be forged.
Sellers have a right to convey property only at a price they will accept, market value be danged, appraisal or no appraisal, as long as they can tote their note.
Buyers are smart to not overpay.
Sometimes things just don't align.
You are really far apart on perceived value, so I would move on unless you want to significantly increase your offer. You can't make a seller do anything, and it sounds as if somewhere near $600k is their bottom line. I assume you showed them the comp you are using and you can ask for the comps they are using and see if they offer them...
You are really far apart on perceived value, so I would move on unless you want to significantly increase your offer. You can't make a seller do anything, and it sounds as if somewhere near $600k is their bottom line. I assume you showed them the comp you are using and you can ask for the comps they are using and see if they offer them...
Excellent points. Yes, I know it is unlikely that we will get the house and we should keep looking. But in 8 months of house hunting, it is the only house we wanted to make an offer on. That's why this situation is a real bummer.
Also if you're financing, you're going to run into problems these days at the appraisal stage if you're offering significantly over comps prices. Banks really don't want to be on the hook for more priced higher than market mortgages when they're already dealing with so many foreclosures and short sales they're losing money on right now.
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