Hi Colin,
No, there is no such thing as an insulting offer, as long as there is a sincere intentioin to purchase the home. All people are different, however, and it's impossible to predict how they will react to a low offer. How they choose to behave should not be a concern of yours. There is only one way to find out; put it in writing and see what they say.

Take care,
Roland

Here is my email: colin.grant@live.com

thanks,

Colin

Thanks again Roland!

One more question. We keep hearing about "insulting offers". What exactly does it mean, and how does it translate to a house like 1391 Medallion. Is 900k insulting?

Thanks again for all your comments, very valuable.

Colin

Hi Colin,
Since you and I seem to be the only two contributing to this thread, it might be better if you email me directly at rbarcos@apr.com. This is getting so specific that I doubt many others find this as useful and interesting as you and I do.
To answer your question about 1391 Medallion, your are correct that it is lavishly remodeled. I have viewed this home on more than one occasion and have been impressed. The problems this seller has are three-fold, two of which are entirely out his control. First of all, he came on the market at the worst possible time, in Sept. '08, just as the entire world financial system was on the brink of collapse. In the past six months sales have been stagnant and prices have plummeted. This also puts him in the unenvialble position of being over 6 months on the market. Secondly, there are 4 other homes for sale on his street and all are going for bargain prices. One is an REO, two are short sales, and one is a probate sale. It is difficult for any traditional seller to compete with that. Finally, it is always difficult to realize full value for the best home on the block. I don't think it is overbuilt for the neighborhood, but he has certainly invested more in this home than most of his neighbors. It's doubtful that he will entirely recoup that investment.
As for Montalban, I don't know the reason for the low price, but it appears to be a fantastic bargain at $699K. The two most recent comparable sales are Guadalahara (list $799K) and Puerto Vallarta (list $875K).
As always, the only true question is what do buyers think these homes are worth? Certainly, the Medallion list price has not been validated, but I would not be at all surprised if there are multiple offers on Montalban and in ends up selling for over list price. What do you think the prices ought to be?

Regards,
Roland

Redfin, Mercury news, etc..

Let's take for instance 1391 Medallion Dr at $472/sqft v.s Montalban at 35$/sqft. Lot is obviously better than Montalban and house has been lavishly remodeled.

Medallion school is Pioneer (Cambrian). Montalban is similar SD. What is the reasoning for $325,000 difference?

thanks,

Hi Colin,
It's impossible for me to comment on the $370/sf vs. $470/sf comparison without knowing the actual homes involved. First of all, where does the $370 price come from, what area is involved, and how was it calculated? As I noted in my last post, there can be a wide variance, from $364 to $509 and the data that I have shows the median around $400/sf. As for the 30% difference, I look at homes for a living and saw another dozen this morning and don't find this spread unusual based on the various characteristics, features and conditions of the homes. Whether a list price is realistic or not is based on other factors than a simple $/sf calculation.
You mention the power lines at Montalban, so I assume you have already seen it. Utility poles carrying PG&E and AT&T lines along the back property line are common in the older sections of Almaden. I'm not exactly sure when the switch was made, but the "newer" (less than around 35 years) sections of Almaden usually have underground utilities. Other than that, how does the home appeal to you and how do you feel about the price? Does the different school district matter to you or not? If you want information on this, or any other property, let me know and I'll get it for you.

Take care,
Roland

My reasoning is that price per sqft should be somewhat close to the median price of immediate neighboorhood. If it is not, it is either overpriced, or overimproved, or both. Almaden Meadow median is ~370$ per sqft, so isn't a house priced at $470/sqft overpriced ? This is close to 30% over the median.

I asked one realtor to justify their listing price, and she sent me a list of comps which were mistakenly all with Leland HS.

I agree with your comment of lower $/sqft for houses which were not maintained properly. Montalban is actually not that bad except for power lines.

Thanks!

Hi Colin,
To answer your question on price per square foot, the range in that neighborhood over the last few months has been from $364/sf to $509/sf, with the median around $400/sf.
I have to ask, though, why you are focusing on $/sf? This is really not a valid indicator of actual value. For instance, it doesn't take into consideration the condition of the house. Most of the homes in Almaden were built 30-40 years ago. Some have never been updated and show a lot of deferred maintenance, while others have been remodeled with the latest surfaces, fixtures and amenities. The best way to determine value is the Comparative Market Analysis. This takes into consideration all of the things that materially affect value, such as condition and desirability, in direct comparison to similar nearby properties that have actually sold recently.
If you want to see one of the best bargains in Almaden right now, visit my open house at 1495 Montalban Dr. on Saturday, from 1:30 to 4:30. This is located in a small corner of Almaden that has yet another set of schools: Guadalupe Elementary, Dartmouth Middle, and a choice of Leigh or Branham High Schools.
Take care,
Roland

Here's one recently closed escrow on 3/13/09: 6272 Desert Flame, Castillero/Pioneer, 4 bedrooms/2baths, 1840 sq.ft., 7936 Lot. Sold for $790k. Price per sq.ft. = $429.00. Kitchen pictures look a little outdated, white tile counters w/brown grout, other than that, home looks well maintained. They were listed for $799k and had a buyer after only 17 days on the market.

Right now there are over 10 homes in the Almaden Valley that feed to Pioneer H.S. and are priced at $800k or less. Email me if you want me to send you the list so you can take a look.

We tried that...

What is the highest $/sqft you think a seller can get today for an Almaden house for a 4 bedroom, >2000 sqft, >7500 lot, with Castilero AND Pioneer HS (not Leland)?

Thanks!

Colin,
If you really like an apparently overpriced house just go ahead and make an offer based on your assesment of it's true value. It costs nothing to make an offer and how will you feel it it eventually sells for a price you would have given?
Bill

Thanks for all your answers! We will have to wait until some sellers get real and actually compare their house to their immediate neighborhood..

Regards,

Hi Colin,
You have been given good advice from the other agents, I would like to just add a couple of points, ALL Real Estate is priced on supple versus demand, if the demand is high and it is priced accordingly then the property sells quickly and usually has multiple offers. The price of a property needs to reflect the demand for the property and area. If the property is over priced then it just sits on the market as the seller is unrealistic in what he/she thinks there home is worth. ( In a declining market few sellers are realistic about prices they see that the home down the street sold for 1.1 million last year and they want the same price or a little less) Another thing to look at is ALL sellers want the HIGHEST price they can get, they usually don't believe there Realtor or the comps or they are trying to avoid having a short sale because they owe more on the property than what it is currently worth.
I would either wait for the price to drop or do what Andrea suggested and make an offer based on your comfort zone and recent comps.
I hope this helps, feel free to contact me with any other questions you might have.

Regards,
Allyson
408-705-6578
allyson@homesbyallyson.com

Just make an offer based on the price you want to pay, or feel that it's worth. Even if your offer is lower than the owner's listed price. Your offer price should be based on your comfort zone and most recent (2-3 months) sold-closed escrow properties in the immediate neighborhood.

Hi Colin - In answer to your second question, it's impossible to know exactly why any one home is priced the way it is. You are talking about dozens of individuals with a variety of priorities and motives. Even as a listing agent, it is sometimes difficult to understand why a seller chooses a price that is clearly not in line with market data. In general, it is safe to say that those who aren't selling under duress seem willing to wait for that one buyer to come along that appreciates their home as much as they do and is willing and able to pay for it.
It is also true that all buyers have different needs and goals. So, what is it that you have been looking for these past few months that you haven't been able to find?

Roland

Hi Colin - You are absolutely correct in your assessment of the affect of schools on home values in Almaden. All other things being equal, homes feeding into Bret Harte/Leland will command a higher price than Castillero/Pioneer. This is simply because many buyers who you are competing with place a premium on the higher API scores at Bret Harte/Leland. Castillero/Pioneer are also fine schools and actually superior for creative students, as they are Arts Magnet schools within SJUSD.
While there might be some homes that seem overpriced to you in this area, it's difficult to explain why one home doesn't seem to fit the overall market. In general, there haven't been more choices and better bargains available in years. Basically, you are shopping at 2004 prices with interest rates at an all time low. There are a dozen homes listed below $800K and another half dozen between $800 and 900K. If you don't already have an agent working on your behalf, I can help you, as I live and work in Almaden and know this market very well.

Good luck,
Roland

I get that. My question is why some houses in Almaden which are not with Leyland, but with Pioneer school, i.e. above Redmond on Western Almaden , are priced so high above the median sale price in same area. Montalban and Montellegre are priced at $400 or below. Some houses on Medallion are priced above $470/sq ft? A new pool can not justify 300k of price difference.

Thanks,

Colin,
You can't really think of these as like kind. Pioneer is in the Cambrian area while Leyland is Almaden Valley. As a result the homes and neighborhoods are very different in average size, age, and price. A house in Almaden valley will usually be more expensive than a similar one in Cambrian.
Get your agent to provide you with current market data to help understand the comparative values in both areas.
Regarding making offers. Again you need local market statistics for any property you might consider. Once you have accurate data it's easy to figure out the real value of the properties under consideration.
My golden rule for offers in our current market is as follows. "The purpose of the offer is to obtain a Counter Offer". This means you do not insult the Seller with a ridiculous offer. Rather you tempt them with something less than they would like and start a negotiating process.
Good luck,
Bill