Rinh, Home Buyer in Denver, CO

Holding out for more

Asked by Rinh, Denver, CO Tue Sep 18, 2007

Hello,

I currently have my house listed in GVR. I personally believe (along with my neighbors) that my house is in far better condition than many of the houses on the market here. Is it fair for me to ask/holdout for more than the average sold in this region? Every contract I receive mentions the average for this region but many are affected because of foreclosures. Thanks for your time

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22
Rinh’s answer
Thanks for all the input. I didn't hold out for more. I accepted the second offer and left. Hindsight, I'm glad I did since the comps for my home declined $20,000 since. Now I get to a buyer. It's been fun since my target areas are also going through corrections now. I'm happily waiting to see how much further prices will drop in these areas.
0 votes Thank Flag Link Thu Apr 24, 2008
Hi,
There is an interesting thread on whether or not a seller should take the first offer. Much of what I wrote on that thread, I would repeat here. Offers made early during the listing period generally come in stronger and higher than offers which surface later in the lisitng period. Since you indicated that you have received offers, I thought you might be interested in that thread.

There are several other good points made on that thread that may be helpful for you, so rather than rewriting much of the same text here as my response, I am including the link.
http://www.trulia.com/voices/Home_Selling/should_you_sell_to…
3 votes Thank Flag Link Tue Sep 25, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
Holding out for a better price may or may not work, depending on how much more you are holding out for. The reality is you must sell the house TWICE. Once to a buyer and a second (much harder time) to the appraiser. IF you home's value cannot be justified by an appraiser you are wasting your time.

A market is determined by what a willing buyer is prepared to spend and what a willing seller is prepared to accept. If you are not finding a willing buyer, the market is telling you something. You need to reconsider your strategy. Take your home off the market and wait for values to rise.

You could also look at the sale of your home in a different light. Sell it at what you consider to be a loss and go find a replacement home another home owner considers to be selling at a lost. Chances are you will be getting ahead!

Facing reality is difficult. Fighting a down trend in the market just doesn't work. I've lived through the ups and downs of the real estate market and can tell you from experience, this too shall pass.

Good luck!
3 votes Thank Flag Link Tue Sep 25, 2007
A seller can absolutely hold out for whatever price they want. Assuming you are being hit by 'averages' which include foreclosures, I agree with you, foreclosures aren't good comparables to your home. A rule of thumb, although not always is applicable, is that your first two offers tend to be your best. So I advise you to look at market statistics for your area and decide why you've heard this more than once.

It might be buyers are trying to take advantage because they know it is a buyer's market and looking for a steal. A good thorough analysis of the local market will help better determine if your gut feeling is right. Be aware of the market around you and watch it closely and/or have your broker advise you weekly with updated statistics.

My only concern is when you do get your asking price will it appraise? As a listing broker I have set square footage records for neighborhoods but the appraiser held my feet to the fire and made me work for it by proving why the house was worth more than similar properties. With all the lending problems we're seeing appraisals are being scutinized far more than they already were.

Best of luck!
3 votes Thank Flag Link Tue Sep 18, 2007
Rinh wrote:
Hello, I currently have my house listed in GVR. I personally believe (along with my neighbors) that my house is in far better condition than many of the houses on the market here.
~~~~~~~~~~~~~~~~~

Spoken like a true seller!
2 votes Thank Flag Link Wed Oct 10, 2007
Rinh:
May I suggest that your difficulty may be the result of poor negotiating skills. If you have received more than one offer, you are being told that your house is in better condition.

Let's say you think your home is worth $400,000. Let's hope the average list to sell ratio in your area is about 95% (find out for sure). You should therefore have listed you home for about $425,000. If you were correct, your first offer might be $375,000. You would then negotiate to reach a final price of $400,000.

But lets say your offers are coming in at $350,000 because that is the average. You are insulted and refuse to negotiate. Yet, if you do negotiate, you might end up with a final price of $375,000 which would be $25,000 HIGHER than the average. Again, they are telling you that your home is worth more.

It is fair for you to hold out for more than the average but it is not reasonable to hold out for more than current market conditions.
Ruth
2 votes Thank Flag Link Tue Sep 25, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
That is a great answer Mr. and Mrs. Walker. In addition, it may be prudent especially this last two months to weigh changes that have taken place. Even in our up market here in Grand Junction there is beginning evidence of a slump. You may want to look at getting on top and possibly reducing your price or re-listing at a lower price. It may provide for minimal loss instead of holding without concession. Your house may be well worth a price in your eyes but it all has to do with if the market could sustain your price. Have you had showings, offers, feedback? Are buyers looking and leaving? Is your property priced within the sales listing ratios of other properties that have sold? The perils of pricing to high are many. The asking price should be within range of comparable properties in the area regardless if you over-built or over-improved which should be determined by an unbiased person namely "Your Realtor" Selling is always a matter of value... and that value is determined by the market. No market than no sale.
2 votes Thank Flag Link Tue Sep 18, 2007
hi Rinh,

Wihout knowing what your motivation is, it's a hard question to answer. The press has convinced buyers to hold off for better deals. This constant message has buyers thinking they can do better the longer they wait. If this continues you will need to lower your price to get your home sold. So I would carefully consider offers based on your short and long term plans.

I've been advising my sellers that are also buying that they will likely settle on something at a good price. So things may balance out.

Good Luck

George Antonopoulos
Coldwell Banker Madison, Connecticut
800-759-6936
Web Reference: http://www.shorelinere.com
1 vote Thank Flag Link Sat Sep 29, 2007
Hi Rinh:

Unfortunately, no matter how beautiful your home may be, if it is among a sea of less-than-average homes, those homes do have an effect on the general property values of an area. And while it can be to your advantage to have your home be the one that stands out (i.e., you've apparently received multiple offers), the bottom line is that your home is still located where it is located, and that cannot be changed.

To illustrate, an antecdote for you: A friend of mine (she was not my client) lived in an area of Chicago that boasts mostly older, in-need-of-update homes. It is not an area not generally known for excellent schools or particularly great amenities. In short: The area was o.k, but certainly not a highly desired area of Chicagoland.

She was relocating to another state and put her home on the market with an area Realtor. The year prior to putting her home on the market, she and her husband had undertaken a HUGE remodeling project of their home, pouring almost $100K into serious upgrades. Her home was gorgeous!

But, it was still in the same area.

And when it came time to sell her home, it certainly stood out as "one of the best".

But nobody wanted to pay the price she was asking. Why would they when, well, it was in this area?

She did receive what I thought was a very strong offer within a couple of weeks on the market, but she rejected it (she did counter, but the buyer knew the market and walked away). She KNEW she could do better. After all, look at that kitchen! And those bathrooms! And that brand new deck!

The home ended up on the market for over a year.

She ended up selling for way way WAY less than she had hoped for.

The first offer had been only $25,000 under ask.

So, moral to my story? Be sure you are being realistic about the value of your home and how it compares to the **overall total** value of your neighborhood. And be willing to negotiate!

Best of luck to you (and sorry this got so long)!
1 vote Thank Flag Link Tue Sep 25, 2007
Patti Pereyra, Real Estate Pro in Chicago, IL
MVP'08
Contact
Buyers have been culturally immersed in the popular myth that foreclosed properties are bargains. Facts and logic will not dissuade them. Buyers who hold this belief will see a foreclosed property that is competing with yours that is priced $10,000 less because of its inferior condition. The buyer will under-estimate the amount and cost of work that it will entail to bring the property up to a decent level. The buyer will choose the "cheaper" property that is $10,000 less but needs $20,000 of remedial work.

It is fair for you to hold for more, but the buyers are not thinking logically.
1 vote Thank Flag Link Tue Sep 18, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
Contact
I am still getting used to the site, and I definitely need to pay more attention to the dates. Thanks!
0 votes Thank Flag Link Tue Apr 22, 2008
original post Tue Sep 18 2007.......?
0 votes Thank Flag Link Tue Apr 22, 2008
You have got to answer that question your self within the frame work of how much more is it worth to lose a sale. Not sure about your market, but I sold my own home a year ago in a terrible market. I too was positive that my home was better than the neighbors; although how do you know since when I am working with customers showing property everyone always has nice things to say until they get out side and then wow they really let loose with the comments! Anyway, I sold at the mid point and there hasn't been a sale since. Really depressing. So as for your situation, is your home really that much nicer, does your kitchen and bathrooms all have granite / quartz (or to a lesser extent corian) countertops and updated hardwood cabinets, newer appliances and or newer fixtures? Are all of the major systems like air conditioning / heating systems, roofs, floor coverings, pools and such at the begining of their life cycles or somewhere else. Are all of the walls painted in neutral colors, no wall paper, are all of the doors and moldings in good repair and painted? Are all of your windows energy efficeint and wind or hurricane proof if need be? If every or most every aspect is above average than yeah, I might recommend that you hold out for more. But by the same token, if everything is just average, nice, clean, well-maintained, but average, then take the best price close to average that you can get and go!!! Good Luck
0 votes Thank Flag Link Tue Apr 22, 2008
Holding out for more money can mean differing things to some. If your home is in better condition than the other homes in your area, then pricing accordingly isn't really holding out for more. It's offering a better product for a higher price. But many times, people personally involved ( as the seller or friends of the seller ) see things that the buyers won't see ~ or ~ may not see things ( issues ) the buyers will. If your home has real upgrades, then it can be priced higher. Remember, maintenance is not an upgrade. A new roof, new siding, or other repairs are not an upgrade ... it's normal up keep. Your buyers ( in the area ) will set the bar for you ... on what you can truly get for your home. Think of this ... how old are you now and how old do you want to be when your home sells? Pricing low will sell fast ~ Price too high and no one will ever come in to see how nice everything truly is. Listen to your local Realtors and keep in mind, they are the professionals facing buyers in your area every day. I'm sure they have seen most of the homes you're competing against.
0 votes Thank Flag Link Tue Apr 22, 2008
I am a Realtor who has to sell his own home. I am a bit sick as I am absolutely certain my house is the best in the neighborhood. Unfortunately, down markets work the same way as up markets - a house is worth what it a ready, willing and able buyer is willing to pay - not what it cost to build or remodel. My countertops may have cost me a fortune but in this market those countertops are just that - countertops - not dollar bills.
I hate to tell you but you and I are in the same boat. It doesn't matter that we have the best house on the block. We may tweak a bit above the average but we are not going to sell for much more than the average in this market. Holding out for more will hurt more in the long run. You either are paying monthly mortgage payments or you have that money in savings - either way - it is costing you more money to hang on to that house than letting it go and use the money you get to invest in something else.
0 votes Thank Flag Link Tue Apr 22, 2008
If you are unhappy with the recent offers there is nothing wrong with holding out for more. The only thing you have to remember is how much longer, and how much will it cost you to continue holding on to the property. Also, are property values currently decreasing? I know in my area we have seen a reduction of about 20% in the past year and it is uncertain when we will hit the bottom.

It is a risk that you have to weigh and is a personal decision.

Vici Miranda
Broker Associate
Century 21
Red Bluff, CA
0 votes Thank Flag Link Tue Apr 22, 2008
Dear Rinh,

The problem with holding out for a price above the average is that the averages can still go down. The best bet is to accept the most acceptable offer you receive and RUN. This neighborhood is sure to have more foreclosures/HUDS/short sales.

If you have any questions please don't hesitate to ask!

Leslie Heldenbrand
http://www.LeslieHeldenbrand.com
720-283-5978
Coldwell Banker
0 votes Thank Flag Link Tue Apr 22, 2008
Its really difficult to be the nicest or largest home in a neighborhood. The other homes pull you down. For example, when I bought my home, I went to the best neighborhood I could afford and bought the SMALLEST HOUSE. I didn't need that much house. The result is that the house is probably one of the most valuable 2 BR homes around. I wasn't an agent at the time, it was something I remembered my parents telling me...and it holds true no matter where you are. Also, Denver appears to be a city that is under downward pressure. If I am right, and prices are going down - holding out could be a BIG mistake.

For your own sake - don't FIGHT a downward moving market - you will lose.
0 votes Thank Flag Link Wed Oct 10, 2007
Take what you can get. The first wave of foreclosures have started. Prepare for the tsunami next. Get out of the market and stay out until we've hit rock bottom absolutely no earlier than mid 2008. Then get back in and win.
0 votes Thank Flag Link Wed Oct 10, 2007
If you are receiving offers on your home ...Yee Haa... Ohh Ha... Horahh... You are doing something nobody else is!

TAKE IT! Take Something!

Move on and take advantage of the absolute buys that are available out there right now.

Don't let another offer pass you by. Do you know how fortunate you are?

Who cares about the average.?!? Get your home sold and MOVE ON!
0 votes Thank Flag Link Sat Sep 29, 2007
You are getting offers and holding out for more? You've got a common malady amongst many sellers today: Chasing the market syndrome! Of course your house is nicer than your neighbors and sure there are other sales in the area which are driving down your homes price and maybe you can get the sun to not rise tomorrow and autumn to not come this year!! While you are fighting the inevitable the market is slipping away from you. In a month's time when the buyers have dwindled down and you still need to sell you'll be dropping your price to catch up to the market which has left you behind. I'm amazed at clients who tell me since homes are selling for 95% of list price then the sales price should be at THIS price so THEY can net THEIR price!!! Many of our MLS systems don't have a true Sale to List price as some don't consider the original price but the sale to list at the time of the sale. Also, they could have been listed with another company at a ridiculous price prior. I'd get off the "average" sales prices and take a hard look at the competition. If your home is in "far better condition" than your neighbors does this mean more square feet? Bigger lot/more acreage, or just new paint and roof? Most buyers expect these "systems" to be in good working order. Once you get into contract you may not be asked for any big credits for deferred maintenance as your neighbors. If you bought the biggest, nicest house in the neighborhood of course you will get MORE but don't expect to get the big numbers you could get if ALL your neighbors where just like you! You'll get dragged down; it's classic text book appraisal principles. If you’re in an area of frequent foreclosures then get ready for more!! We've got $50billion being recast in December and $140Billion in March/April. I'd got back and consider those offers. Get some cash and then go shopping in about 6 months. You'll come out a winner.
0 votes Thank Flag Link Sat Sep 29, 2007
Do not hold out. Sell while you can if the offer works.
Web Reference: http://kennaandco.com
0 votes Thank Flag Link Sat Sep 29, 2007
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