Home Buying in Morristown>Question Details

Abe1979, Home Buyer in Middlesex, NJ

Do house prices drop in the winter time? Also, what % would be a good starting offer off a house?

Asked by Abe1979, Middlesex, NJ Sat Oct 24, 2009

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Asking price is alot less relevant than comps from the last few months compared to the home you are buying and its overall condition and location. Also important is timing, in that if there are no others like it on market it may do better than if it is one of six in a subdivsion of like homes. This is why I go to about 12 open houses every week. You can't just look at list vs. sell. You need to know what's inside and how it compares both location and upgrade wise to its peers.

Best example, true story, all around the same time in Basking Ridge in The Hamiltons in the Hills.

A beautiful townhome came on at 524k and sold first day full asking. It was priced below others. There were about 5 that were the identical model, but only it and two others in a nice location. Another was on for 549 and got 535. Very close to the first one maybe kitchen a little nicer. At third sold for 515, and was also listed at 549. It had original kitchen, less hardwood, and not as many upgrades. One is still listed, just reduced, and is beautiful inside -- however, the location does not offer any privacy, and that is holding it back.

In reviewing the sale to list, the 524 at full price was actually the best deal for the buyer. The others, with steeper discounts over list, were not the "killing" that the first was. These sales are the poster child for comps, location, and value vs asking price. Asking price was quite irrelevant, and I know that some saw the 524 home and tried todiscount it based upon not paying full price, and lost out. All occurred around the same month, late August / early September. The one in the infrerior location with every bell and whistle is still on the market.

When choosing an offer price, make sure you have comps from the last few months, you know apples to apples how they compare, and any problems with location -- you can always upgrade, but you can't move a busy road or cell tower. If the seller is motivated and one comes on that is perfect but lower than the others, grab it. If there are several on market and they are all alike, make some judgements based upon days on market and recent comps, and offer accordingly.

Good luck. If you need a realtor, just give me a call. I will refer you to someone in Morristown, and be able to help you in the Basking Ridge area. For me it is key that you are with a realtor who knows the inventory, which is why I'd rather refer you in Morristown than do it myself as I cover that area, but do not know the inventory as intimately as you should have in your best interests.

PS - re winter: between Thanksgiving and New Years demand is sluggish, so you may get a better deal, but at the same time, the inventory is slow, so unless it's the perfect home, wait until spring. I have a feeling we are going to see quite a bit come on this spring as inventory is showing that people are holding back.

SO SORRY about the way the first post from iphone came out with the spell fixer.
Web Reference: http://www.marieyoung.net
1 vote Thank Flag Link Sun Oct 25, 2009
HI again Abe ...............(I responded to another question you posted)

I wouldn't say house prices drop off in winter, per se, but there may be fewer listings once the holiday season begins. Many people who are thinking of selling their home prefer to wait until after the New Year, if they haven't already listed once mid November comes around. But, keep in mind, we sell houses all year long - so you never know when a buyer or a great new listing will pop up.

If your question is whether you will find a better bargain in the winter...I'd say there are bargains out there right now...and we have been seeing good deals all year long.

As to your other question..............
There is no set % below asking when it comes to making an offer. It really varies from home to home. A well priced home can still sell at full asking price, or even over asking if it is priced well...and today "priced well" means priced at, or slightly below market value.
Generally I am seeing homes sell within 3-5% of their listed price (after any reductions have taken place).

When you find a home you want to make an offer on, I recommend looking to your agent for advice......if there are multiple offers, your strategy will be somewhat different then if you are the only person making an offer. If a home is preceived to be overpriced, then you may go ahead and lop off a certain %, and give it a try........but also keep in mind, an overpriced home indicates a seller who either isn't motivated or doesn't want to be realistic in regard to the market.

Hope this has helped!

Best wishes.....
Debbie Rose
Prudential NJ Properties

please feel free to email me with any other question.....
email: Debbie.Rose@prudnetialNewjersey.com

Web Reference: http://www.DebbieRoseSells.com
1 vote Thank Flag Link Sat Oct 24, 2009
We have 2,500,000 foreclosures in the pipeline right now. We have 7,000,000 more to come in the next few years. We have unemployment getting worse. Credit is still tight, make that hard to get outside of government loans. FHA is having financial troubles. Their financial reserves are about 2% while their non paying loans are about 8%. Doing the math FHA will have to either ask congress for many more billion$$$ or cut back on loan availability, maybe both.

When you look at people without jobs, those with jobs wondering how much longer they will have one, and tight credit prices should drop. Then add in the foreclosure crisis and they should drop even more.

http://www.dailyfinance.com/2009/10/21/housing-prices-foreca…

http://www.businessinsider.com/wait-actually-existing-home-s… It says--> ( and more) The tax credit effectively extended the purchase season which is why sales were even this strong. But when you consider the hundreds of billions spent to prop up the housing market, which only resulted in 34k additional sales over last September (one of the worst years on record for housing) and fewer sales YoY in CA, sales were really not that great. When organic sales go away suddenly for the season, which will happen in the near-term whether the tax credit is extended or not, it sets sales and prices up for the largest swings lower we have seen since all this began two years ago.

This is a unique time for housing prices. It is not about the economy. It is not about prices being stable or not. It is ALL about the government bribing people to buy a house. Now that the $8k bribe is dead prices will have to drop. Add in all the other factors like unemployment and lack of financing and prices only seem to be headed one way. DOWN. It is not about the weak months of the year a it could ahve been in the past. This time it is about all of the other factors kicking in and taking months or more likely years for the complete effect to be felt.
0 votes Thank Flag Link Sun Oct 25, 2009
Hi Abe, Jeannie back again to comment on your second question - a well thought out pricing analysis will guide the bidding process. I use something called a Price Trend Analysis which uses comparable sales from 12 months ago, 6 months ago, and properties under contract to extrapolate the trend in the market. It then applies that trend to the active comparables, and the result is a recommended market price range. It is a terrific tool to guide the bidding process - and it will immediately flush out overpricing AND also identify real bargains....and there are some out there. A strategy that is % based no matter the asking price is common but not valid. You may very well miss a well priced home. When a home is priced right, it sells within a 1-5% band of that price. I can demonstrate this to you - regardless of community and price point, it holds true with amazing accuracy.

When you look at market data and see a home that sells quickly, ie, within the first 30 days close or on its asking price, it is proof that the home was priced right. These sales are particularly valuable in assessing pricing.

Sellers that hit their strike price after many price reductions learn the harsh truth - had they price right at the beginning they would have fetched more, not less, for their home. I see this play out time and again, and yet, it can be a very tough pill for a seller to swallow when it comes time to price their home.

Best,
Jeannie Feenick
"Unwavering Commitment to Service"
Search the MLS at http://www.feenick.com
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Sun Oct 25, 2009
Hi there Abe, the months of November and December are traditionally the slowest months in the 12 month selling cycle - during this holiday time, people's focus shifts away from real estate but returns strongly for the Spring market which begins in January and builds through the early Spring months. I've heard agents advise their own family to buy in this Thanksgiving through end December time period to get a bargain. During this time, the lower demand due to fewer buyers in the market affects prices. The sellers who are very motivated to sell will remain on the market, but many will take a break during this period.

So you have two things going on - reduced demand and reduced supply. Generally, I tell sellers that the buyers that are in the market during this winter period are real and should be taken seriously.

When the Spring market comes, increased demand tends to buoy prices. The Spring market is the most robust time in the 12 month cycle - it runs from Jan through May, and begins to wind down as school lets out and attention shifts to vacation plans. With Spring, you tend to see more inventory and more buyers, and prices tend to strengthen.

Best,
Jeannie Feenick
"Unwavering Commitment to Service"
Search the MLS at http://www.feenick.com
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Sun Oct 25, 2009
Sorry. Using iPhone with self correct. Comment says IRSthat should be the word its. And slot should be alot
0 votes Thank Flag Link Sun Oct 25, 2009
Asking price is slot less relevant than comps from the last few months compared to the home you are buying and IRS condition. Best example last month in basking ridge in one of the hamiltons. Beautiful townhomes came on at 524k and sold first day full asking. It was priced below. others. Another was on for 549 and got 535. Very close to the first one maybe kitchen a little nicer. At third sold for 515 on at 549. It had original kitchen, less hardwood, and not as many upgrades. Your realtor must know inventory first hand and provide you with compa and be able to tell you the differences. That is the only way you can make a good decision

Exact same end unit and nice location for all three. The 524 at full price was the best dea for the buyer. The others with steeper discounts were win wins. These sales are the poster child for comps and value vs asking price. All occurred in same month.
0 votes Thank Flag Link Sun Oct 25, 2009
I just want to add to Debbie's comments. A seller who has an overpriced home could also be misinformed or have un realistic expectations of the market. Last week, I presented an offer soon on a home priced at $345,000. Another home with one more more full bath and a one more bedroom on the same street sold in September for $295,000. Some sellers preceive that they need room to negotiate and in some towns and in some markets, this overpricing strategy just to have room to negotiate can be problematic or both buyer and seller. Buyer and seller may never meet!

You have to ask your agent for comparable home sales. When you find that home you want to buy, ask your agent for an abridge and an unabridge lists of comparable home sales from MLS to help suggest offer price. It really isn't a precentage for as Debbie said, it varies from home to home.

So, to answer your question: house prices do not drop per se in the winter, but there could be both fewer buyers and fewer listings on the market as a result of people wanting to buy or sell after the new year. In Union, NJ, we are experiencing a mini-boom and IF the first time home buyer tax credit is extended, we will be busy right up until the Spring season.

Audeliz Angie Perez
http://www.forsalebyangieperez.com
http://www.njretoday.com
0 votes Thank Flag Link Sun Oct 25, 2009
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