Home Buying in 30064>Question Details

Twinboysmom, Home Buyer in 30127

From a realtor's perspective, how do you advice your client on a home that is significantly overpriced? Where do negotiations start with the?

Asked by Twinboysmom, 30127 Sun Mar 13, 2011

seller?

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15
If a seller leads with "I need" "I want" or "I heard" then I know my discussion may not end well. Bottom line is that a home will sell for what others like it have sold for - not listed for - sold for. That includes distressed homes if they are legitimately comparable as they do influence the market. Any home listed in this market better be presented the best it can be - it's a total beauty contest and the three factors of PRICE-EXPOSURE-APPEAL will seperate winners and losers. Many sellers have played by the rules, have been responsible and have been caught in this economy - but unfortunatly at the end of the day they are likely to take the same bullet some skeeve that used the house as an ATM will.

For buyers interested in a clearly overpriced home, they need to rely on their agent to properly ascertain a true market value range. The agent should also know if a deal at market value is possible - it may not be. If the home is destined for the foreclosure pool, most times it's better left alone as despite all of the short sale "experts", few actually get done and fewer still at a price that justifies the garbage you put up with. Find a home you like, establish market value by careful and comprehensive research, make a bid and stick to the data.

Buyers need to be all business - all numbers. Emotion plays a role, but a secondary one for if you screw up the buy side in this economy - which isn't getting better anytime soon - you may end up circling the drain when you become a seller.

Sounds harsh and to a large extent it is - but my clients tend to appreciate the lack of nonsense and reliance on the data - since that's all that really matters.

Hank
Web Reference: http://www.hrmiller.com
2 votes Thank Flag Link Sun Mar 13, 2011
Negotiations start with the seller's asking price, don't they?

62% of all listings never sell.

88% of all listings are overpriced.

So what's the big deal about this one overpriced house in March 2011?

What does significant mean?

Where do you find value in this particular house?

What is the seller missing that you so seem to readily get?

What does it matter if this house never sells and what if you never even attempt to buy it?

What if the seller lays crestfallen and weeping at their doorstep right now, wallowing in their own ignorance, swooning in their broken dream-state...just waiting for your one offer...their redemption...their saving grace???

That's how I "advice" my clients, then I say "make an offer - quit your analysis paralysis."
1 vote Thank Flag Link Sun Mar 13, 2011
In a nutshell, I advise my clients the same way whether the price is a little high or a lot high. I show them the comparable properties, inform them of the consequences if they are financing the purchase, and let them decide.

Negotiations start with the buyer's offer.
0 votes Thank Flag Link Mon Mar 19, 2012
Thumbs up on Lee Taylor. I bet the seller does need a pick me up and only that future offer will save him/her
0 votes Thank Flag Link Sat Mar 19, 2011
Hi Twinboysmom,

Your question was duplicated on our site. Please access the link below to see additional answers to your inquiry.

Best Wishes,

Emily Erekuff
Community Moderator
0 votes Thank Flag Link Tue Mar 15, 2011
We talk immediately about not wasting too much time with someone who is likely living in another world and is unmotivated. Here's a few reasons why your scenario doesn't happen too much:

1. Overpriced homes stand out like a sore thumb when you are viewing the market. There's little reason to view them. (Most people see overpriced homes when they search unassisted by an agent)

2. Overpriced homes are typically sellers who don't have to sell and want to try the market. Our last buyer that ran into this scenario made an offer that brought the seller to a situation of aggression - he took it personally. Of course, explaining that he was living in past and need to come "back to the future" might not have been the best tactic (we're kidding!).

3. There's just too much inventory on the market to worry about homes that are even slightly overpriced let alone one that is grossly overpriced.
Web Reference: http://GaHomesDigest.com
0 votes Thank Flag Link Tue Mar 15, 2011
Joshua Jarvis, Real Estate Pro in Duluth, GA
MVP'08
Contact
Usually a buyer will narrow to 2 or 3 choices after looking. I would set a threshold based on similar sales in the area and ask the buyer what he would offer for all of his choices, with his number one choice getting the highest bid. Afterall, a property is worth what a buyer is willing to pay. This is the true gauge of a property's value, even more so than an appraisal!
0 votes Thank Flag Link Mon Mar 14, 2011
First, I help the client to determine whether this property is significantly better than homes that are actually in their price range. For example - if we've gone through all the $300,000 inventory, and they like a house that's priced at $375,000 . . . maybe it is overpriced, but maybe not by $75,000.

If it is significantly better, I take the buyers to see at what price point similar houses have been selling, because they are going to be the true comparables for this house, not the "junk" that my buyers have dismissed within their affordability range. It is from there that I help them determine market value.

Now, if they want to "try anyway," at least they will be better educated as to the market in this new price range.

Hope this helps,
0 votes Thank Flag Link Mon Mar 14, 2011
Are you represented by a Realtor? Are you asking theoretically, or are you a home buyer looking at making a purchase and stumbled upon an over priced listing. As Lee so eloquently stated, most resellers are over priced (unless they have a great agent who understands pricing is everything!). The simplest answer is to hire a knowledgeable, skilled negotiator and make an offer. Don't over analyze. If you want the home, pay a fair price based upon the data (remove emotions) and get it over with so you can enjoy your new home. If the seller is unwilling to face reality, find a new home to buy. If you are a buyer and don't have an agent, you can't go wrong with several of the agents below who have taken the time to be good at what they do and offer you solid advice. Good luck.
0 votes Thank Flag Link Mon Mar 14, 2011
These answers are all excellent. I advise clients to relax and try to release all excess emotion especially if I see they are clearly smitten by the appeal of an exceptional property - or one they percive as exceptional. I let them know that if a home is really overpriced, we are dealing with an irrational seller and we may not get the house - at least the first go round. I have had to tell unreasonable sellers "thanks for your time", only to be contacted a week or two later after they had time to rethink things - unfortunately by then we often have an offer on another property.

I will echo Mathews point about submitting CMA data or other market analysis with the offer. When my clients like any home well enough to make an offer, my goal after determining the real value, is to forward the listing agent such compelling and irrefutable data to support our offer that the listing agent often is left with little recourse but to actully sell our offer to their seller. That is particularly easy when the agent knows they took the listing at too steep a price.

In this market, as Hank mentioned price has to be realistic with recent market sold comps and even then, your home better stand out from the crowd. There are simply too many options to pay more than a home is worth - and even if you are willing to overpay, the home still has to appraise.

In closing, I would like to ask - how did you determine that the property in question "is significantly overpriced"?



Robert A. Whitfield
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0 votes Thank Flag Link Sun Mar 13, 2011
I really can't say it better than Hank did.

The fact of the matter is that there will always be sellers who will insist on pricing against all logic. Its easy enough to show sold comps, explain the reality of the appraisal process and try to get sellers to understand the reality of the market.
However some sellers will insist that their house is worth more, that if they wait long enough there will be a cash buyer who is willing to pay a ridiculous price, that the listing agent isn't marketing enough and the most often heard line these days: we're not going to GIVE our house away!

Experience can be a tough teacher and unfortunately for sellers, times are especially tough. The market is brutal, has utterly no concern for sellers needs or wants and it will force overpriced sellers to reconsider selling or to lower the price.

I am getting the impression that you have a particular house in mind. If that is the case, patience is the key because as I said, the seller will ultimately learn from reality of the market what they didn't learn from the agent.
0 votes Thank Flag Link Sun Mar 13, 2011
As a buyer's agent, my clients and I take a couple of different approaches. First of all the market analysis must support the price. Second, if there is a lot of deferred maintenance or deferred updating, those projected amounts will be deducted from the offer as well. Other things that my clients and I take into consideration are location and how that affects the saleability of a property in the future. Every house is different and has its own pros and cons. As the seller, I would suggest that you sit down with your realtor and discuss these and come up with a realistic asking price. With the uncertainty in the market right now, you want to make sure that you attract that buyer and keep them. Remember even if someone offers you what you want for your property, it still has to appraise. That is why you want to make sure that you are pricing it right from the beginning.
0 votes Thank Flag Link Sun Mar 13, 2011
Quite simply. My buyer's offer will always be based on what the home is really worth - regardless of what the asking price is. That said, on some homes that correct number will be significantly below asking price. In others (particularly on some foreclosures) it could even be above asking price. If a home is truly overpriced and I can collect data to illustrate it, I prepare my client's offers and submit the offer with a CMA showing why we believe it is a fair offer. I leave it up to them to produce data that justifies their price (they almost always can't). I also make sure to point out that the home must appraise for the contract price or higher or the deal will not go through. If the seller has equity and the home has been on the market for a while then this approach typically works.
0 votes Thank Flag Link Sun Mar 13, 2011
The best advice for a seller in this market is to be realistic. If you HAVE to sell, price it 5% lower than the competition. Make it look better than anything else out there by hiring a stager or improve the curb appeal as much as possible. Take professional photographs for the listings. Be ready to have it shown at the drop of a hat, and believe me, some agents will drop the hat in your driveway with no notice. To advise a buyer on how to offer on a home that is clearly too high, remember to do your homework so when you make the lower offer, you can back it up statistically and if they don't like it, be prepared to move on to the next one. Good Luck!

Michael Hammond
SellsRealty@gmail.com
404-538-5499

http://www.SellsRealty.org
0 votes Thank Flag Link Sun Mar 13, 2011
Hey Twin Boys Mom! Hats off to you! I have 1 beautiful daughter who is a handful! How do you do it?? :)

If you can provide me with more info on the house, I could help you out better. I need to know the comps, how much the seller owes, etc...

Chat soon.
Web Reference: http://www.TeamBrittain.com
0 votes Thank Flag Link Sun Mar 13, 2011
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