Home Buying in 90069>Question Details

Ray, Home Buyer in Los Angeles, CA

Help me determine if the seller's asking price is reasonable

Asked by Ray, Los Angeles, CA Thu Jul 24, 2008

I am interested in a 2-bedroom condo that was purchased 3 years ago by the seller for $620,000, which was even $10,000 more than the asking price at that time. That amount looks reasonable as the condo next to it sold for almost $600,000 a few months before that. They are asking $719,000 today & no improvements have been done to the property. My feeling is that there is no way in a down market that the property could be worth more today than it was 3 years ago when prices were at their highest, and that actually, an offer in the mid-$500,000s would be appropriate given the market decline. Similar comps for West Hollywood do seem to show selling prices today in the mid $600,000s. The seller's agent is trying to tell me comps are the only way to appraise a property's current value, but I can't get over the thought that the seller should not be expecting to charge more in the current market compared to what they paid at its height. Can I get some advice on which reasoning is more correct?

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Answers

26
Truth is, a fair price is one a seller is willing to accept and the buyer is willing to pay.

if you feel the home is overpriced and the seller is not willing to come down on the asking price, you should move on to another property.

Do not get too hung up on any one property, because you may make a decision based on emotion rather than sound business sense.

Sometimes if a home sits on the market long enough, a seller who is priced too high may come down to earth.

Best of Luck to You.

Kawain Payne, REaltor
1 vote Thank Flag Link Tue May 22, 2012
Please feel free to send me the address direct and I can give you valid comps and a true opinion. The market has gone up quite a bit and due to the lack of inventory sellers have been getting top dollar. Comps are very important and shouldn't be ignored. Even if you accept the price, you might have appraisal problems, which may or may not work to your advantage.

Best,


Julie Kryukova
310.402.8181
http://www.juliekproperties.com
jkryukova@gmail.com
0 votes Thank Flag Link Wed Aug 20, 2014
This question posted July 2008.

A LOT has happened since then.
0 votes Thank Flag Link Tue Aug 19, 2014
That is the unfortunate part of this market upturn the past 3 1/2 years. As a real estate agent for 19 years and owning numerous condos over the years, my opinion is that approx. $700K way too high considering the prop taxes of this area pluis possible exhorbitant monthly dues. I'd MUCH rather buy a 2bd/2ba home in the southeast part of the San Fernando valley and look hard and negotiate like a BEEYATCH to $600K tops.

By the way, I'd hope this condo for this high price was beyond stellar, updated, upgraded, gold laden and a personal butler...etc...if it needed any work such as tile, flooring, nice new double pane, central air and granite and stainless stell, then hell to the no, hon.

Century 21 - Real Estate Sr. Agent
Associate Professor of Real Estate 101-201 -Boyle Heights Career College
SILVERLAKE, CA.
0 votes Thank Flag Link Sun Aug 10, 2014
We're more than happy to answer any questions you have!

Courtney + Kurt
Nourmand & Assoc
(323) 899-8509
courtney@courtney-smith.com
0 votes Thank Flag Link Mon Aug 5, 2013
The market will determine the price of the property. If there are other buyers out there willing to pay what the seller is asking, that will determine price. Appraisals are almost 100% driven off comparable sales. If the comps support the price it will appraise.
0 votes Thank Flag Link Mon Aug 5, 2013
Engage a local Broker Realtor for help, don't delay as you will not find a suitable property without one. http://www.NaplesRealEstateGuys.com
0 votes Thank Flag Link Mon Aug 5, 2013
I am more than happy to answer any questions you might have!


Victoria Massengale
(323) 640-2924
victoria@victoriam.net
0 votes Thank Flag Link Mon Aug 5, 2013
Agents, this was a question posted in 2008!
No need to keep going with this.
0 votes Thank Flag Link Fri Aug 2, 2013
Hi Ray,

A great strategy to determine if the asking price is reasonable is to do a comparable study. This is how an appraiser would assess the property down the line if you plan to finance the property. Appraisers are notoriously conservative these day so it is important to make sure you aren't over paying.

A comparable property study will involve reviewing several sold properties within a half mile radius of the property. Comps should have the same bed/bath count and be in reasonably similar condition. Most realtors will provide you with a CMA (comparative market analysis) that will help you understand the price. If you don't have a realtor, I'd be happy to jump in!

Good luck!
Annie
0 votes Thank Flag Link Wed Jul 31, 2013
Hi Ray,

What is important in determining the price is what a buyer is willing to pay for it as well as recent comparables in the area. I've been selling and buying condos in Weho for sometime and the last 6 months have seen at minimal a 15% increase in prices. It's one of the fastest growing markets in LA. Without knowing the address or specifics on the property in question I wouldn't be able to say if it's overpriced. Call me if you want to discuss!

Dax
KW Beverly Hills
310.465.7076
0 votes Thank Flag Link Mon Jun 24, 2013
Buyer's Agent representing you should be able to give you sold comps in area within last 6 months.
If available it would be best to have comps within last 3 months because the home values are increasing. The average on those sales will give you the average price per square foot. If there are enough sales you can compare original condition properties to updated/renovated values. In my opinion, I do not judge what seller paid for property. I judge what values are today.

Gail Mercedes Cole
EXP Realty
310.853.9933
0 votes Thank Flag Link Sat Jun 8, 2013
It's the location. Some areas in LA have sated in a bubble because of the economic situation of that particular area. Even though improvements haven't been done and if the property is in good shape, I have no doubt that the comparable sales are close to asking price. Ask to see the comps from your agent who can run a current title profile for this condo.

Good luck
0 votes Thank Flag Link Fri Sep 7, 2012
Ultimately the value is in the sold comps within the last 90 days in the building and in the immediate area.
You should not have to ask the listing agent...you definitely want an agent looking after your interests in this or any other transaction. If you have any more specific questions, please feel free to call me and I would be happy to discuss this with you.

Best,
Verna Helbling
Prudential Beverly Hills
http://www.vernahelbling.com
310 849 2485
0 votes Thank Flag Link Thu Oct 14, 2010
Many are trying to recoup their mistakes from the sub prime crisis. Many didn't see the bursting real estate bubble. I can tell you more of the values of that particular area. What property is listed for and what they sell for are two different things. If you would like for me to do an analysis of that unit, please email me:

RPerry@RogerPerry.com

or Call me: (310) 600-1553

I can tell you what it should REALLY sell for. Lets make an offer and get it for you.

Roger Perry
Realtor/Broker
Rodeo Realty Beverly Hills
(310) 600-1553
0 votes Thank Flag Link Wed Jul 7, 2010
Hi Ray-
I am an agent with Prudential California Realty in the Beverly Hills office. I specialize in the West Hollywood area. If you are not working with an agent at this time, and have not found a home yet, I would be happy to assist you. And who knows, perhaps the property you were talking about is still available.
Please fell free to contact me directly: 310.777.2877
0 votes Thank Flag Link Wed Nov 11, 2009
Hi Ray,

I would say if you look at http://www.city-data.com, you will see a area drop of about X%. Apply that X% to the house you are buying in your area, that serves as a reference point. Other pointers include location, renovations and perhaps city ordinance changes etc.

Engel and Voelkers Hollywood Hills is also available to provide you free professional service as a buying broker.

http://www.engelvoelkers.com/hollywoodhills
0 votes Thank Flag Link Tue Jul 21, 2009
Dear Ray,
Given our current market conditions, comps must be no older then three (3) months to be of any value. Please take my advice and retain a good buyer agent. A buyer agent will help you determine the right amount to offer for that property.
0 votes Thank Flag Link Fri Jul 25, 2008
Hi Ray
In today's market even the appraised value and comps may not be a valid sales price in the eyes of the selected lender. Be aware that Lender's are cutting the sales price to what they feel may be a fair selling price based on their risk. So, that means that even though you may be willing to pay $719,000, the lender you select may cut the appraisal to a lower value and be willing to finance the property below your anticipated loan amount (assuming you make a 20% down payment = 143,800 for a loan amount of $575,200) meaning they may finance only $503,000 instead of $575,200. Just be aware. It's happening a lot--that's why many deals are falling out. As the year progresses, foreclosures are growing and lenders are becoming extremely uneasy about their risk taking ventures. Good luck.
0 votes Thank Flag Link Fri Jul 25, 2008
send me the address and I will let you know what I believe is the current value. I am a State licensed appraiser also and can assist you.

Krecker and Associates Appraisal Services
Office: 562-690-6987
Fax: 562-690-7337
Email: dave@centuryside.com


We provide real estate appraisals for:

Primary and secondary mortgages
Mortgage refinancing
Employee relocation
Private mortgage insurance removal
Estate planning
Divorce settlement
BPO and REO
Expert Witness
Web Reference: http://www.centuryside.com
0 votes Thank Flag Link Fri Jul 25, 2008
You really need to know what the comps were. Real estate conditions are local. I don't know your area, but one agent who's commented says that condo prices haven't gone down in your area. So, even though I can point to some condos in my area (Northern Virginia) that are down 40%-50%, that doesn't have any bearing on what your market's done.

You say, "My feeling is that there is no way in a down market that the property could be worth more today than it was 3 years ago." Two problems there: First, with all due respect, your feelings (or beliefs, or hunches) have nothing to do with prices. Comps are comps. Prices are prices. Second problem: You refer to a "down market." Granted, in many areas of the country, property values are down. I mentioned the condo price drop of 40%-50%. I can show you townhouses and single family homes with 30% drops and more. But that's in specific neighborhoods 2,800 miles from you.

Even you acknowledge that "Similar comps for West Hollywood do seem to show selling prices today in the mid $600,000s." Assuming those are good comps, that'd suggest that property values have risen by about 5% (from $620,000 to $650,000) in the past 3 years. That's not a down market; that might only mean that the condo priced at $719,000 might be overpriced. But then we get to: Are those comps valid? Condos in one building may be worth more than in another just because of the building they're in. What floor they're on also has an effect. The condo fees in the building can affect the price of the condos. And so on.

And why are you talking to the seller's agent? (I do agree with the seller's agent that comps are by far the best way to determine a property's current value.) What does your agent say? (Ummm...you do have an agent, don't you?)

Hope that helps.
0 votes Thank Flag Link Fri Jul 25, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
why would a seller sell lower than he bought unless it is a fire sale?
0 votes Thank Flag Link Fri Jul 25, 2008
Hi Ray,
I am assuming you will need to mortgage your new purchase for some amount. The lender's appraisal will use current comp sales to determine value.
Good luck, Walter
Web Reference: http://ocnorth.com
0 votes Thank Flag Link Fri Jul 25, 2008
Hey Ray,

Condo prices are higher then they were in 2005 in WEHO. They haven't declined to the levels they were before that. Without any improvements I'd say the price is about what they paid or a hair more. I wouldn't trust the agent's appraisal. What really counts are the comps. I'd be happy to run them for you if you would like. But they shouldn't be older than 4 months. People still are moving to WEHO and it's one of the few strong condo areas in LA. With that being said there are also a lot of short sales bringing values down slightly but there are many micro climates and it depends on the building and it's location in town.

Best,

Monique
Web Reference: http://www.thereavis.com
0 votes Thank Flag Link Thu Jul 24, 2008
Your best bet is to have the property professionally appraised in order to determine the true value. Yes, it will probably cost you about $400 to $500 but that amount is worth the expense if you learn the real value. Maybe the best way to handle this if you are willing to pay in the mid- $600's (if the real value is there) would be to make an offer on the property "contingent on appraisal being at or above the appraised value." That way you have locked up the purchase of the property before you spend money for an appraisal. Assuming that you apply for a mortgage, you will need an appraisal anyway. Be sure that the appraiser knows you are not seeking an appraisal necessarily at the contract price but only a true value appraisal, which they should honestly do anyway, especially for a bank loan mortgage appraisal.

Remember that all real estate is local first and foremost. You are correct that overall trends would predict the value has dropped up to 30% over the past 3 years, this area of Los Angeles could have held value above the national or regional average. Therefore, the Realtor is more correct that very recent sales, adjusted for differences, establish the value along with replacement value minus depreciation and so forth. That is how the unbiased 3 party - a licensed appraiser of your choice- would evaluate the property.

Another approach would be to look for other properties. You might want to look for a good buyers agent to represent you. We suggest an agent with a CRS designation (top 5% Realtors nationally) and an ABR (Accredited Buyer Agent) as well. Be sure to establish how commission would be paid. It is typical that the seller would be paying the commission. Go to some open houses and compare for yourself what else is available.
0 votes Thank Flag Link Thu Jul 24, 2008
Hi Ray,

First of all, what the sellers paid 3 years ago has nothing to do with the value today! Maybe they underpaid then. Analyzing the comps is your best method of determining value. If truly comarable condos in the area are going for the mid 600,000s, you should offer in the low to mid 600,000s.

Do you have your own agent? If not, find someone right away who can advise you properly. If the sellers of this property won't budge, find another condo. There are plenty on the market today.

Good luck,

Karen Miller
(562)756-4144
0 votes Thank Flag Link Thu Jul 24, 2008
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