Walk.

Other advice below is OK, but don't jump through hoops for the seller. So you pay for a new appraisal: What makes you think the seller will believe it? Look: If the property's been on the market for over a year, the seller already knows it's priced too high. He's waiting for someone to come along willing to pay an inflated price. All the sweet talk in the world, all the rational logic from a good agent representing you, all the other things you can muster won't change the picture.

Besides: One thing I didn't see suggested below is that maybe the seller has to sell for the inflated price. Why'd he get an appraisal a year or so ago? That's most often done when someone's getting a HELOC. Most owners don't just decide one day to spend $400 on an appraisal. My guess is that the seller got some sort of HELOC based on an inflated value, borrowed against it, and now has very little equity in the property. He can't afford to sell for what it's really worth; he HAS to sell for what he owes.

So, maybe he doesn't have the flexibility to lower the price. Maybe he's just stubborn. Maybe he's ignoring reality.

You know what? It doesn't matter. If he's not willing to sell at a price you're willing to pay, then walk.

Period.

CCP,

It really doesn't matter when the seller bought the house.

What you need is a non-emotional way to get to a fair anchor value. You can use an agent -- but the agent's obligation seems to be to the buyer and so the seller would naturally be suspect of the "value" an agent assigned to the home. When we did our appraisal and got our low-ball bid, (and by low-ball I mean tens of thousands BELOW the ten-day old appraised value) -- the buyer's agent attacked the appraised value as inappropriate. This appraisal was done by a man who was recommended by two different real estate professionals in our area. Yet, the buyer's agent was highly critical of the appraised value and tried to persuade us the offer was the "fair value" for our home. Of course, I would expect that from a buyer's agent -- her role was to represent the buyer to the best of her ability. But that didn't mean I had to be stupid and believe her nonesensical arguement.

An independent appraiser will be good for you (as the buyer) and for the seller for two major reasons:

1. You will BOTH get a fair, unbiased value as a baseline. I suggested you pay for a new appraisal -- but you may want to suggest you and the seller split the cost, with you suggesting three appraisers, of which , the seller can choose one. That way, there is zero bias in the new appraisal. Getting the appraisal does not mean you HAVE to pay that price, it just gives you a much more realistic anchor for BOTH of you to negotiate around.

2. Getting to the anchor value is one thing, but you getting a bank to offer a mortgage at the value is another. One bidder for our home was highly dependent on selling his home. When his buyer did go to the bank to get the mortgage, the bank's appraiser appraised the value of our buyer's home far below the agreed to price between that buyer and our bidder. This really screwed-up the bid and complicated the sale tremendously. Thus, by getting an advanced appraisal before confirming your price, you significantly raise the chance of you also successfully getting your mortgage without a hitch. (HINT: The appraisal you and the seller get independently will NOT be used by the mortgage company -- you'll still need to pay for another independent appraisal after the deal price is struck.)

You imply in your question that your seller is NOT being reasonable. I would suggest that perhaps YOU may not be the one being reasonable. Without any further information on the price listed and your price offered, we'll never know. But that is the point -- either or both of you could be unreasonable -- getting your own appraisal takes that emotion out of the equation.

Buyers seem to think they are in the power position because it is a buyer's market. And for any seller who HAS to sell, that may be more true. But for sellers who are not desperate to sell (like us), taking a low-ball offer simply because the buyer made it makes no sense. A buyer can always move on to the next house, and a seller is best served if he/she is in a position to continue to wait six months for a more reasonable buyer. That's just the nature of the deal.

Good luck.

Update: the seller bought the property less than five years ago.

With the downturn in the market, many sellers are unwilling to accept the current market value of their property. Some pull their listings to wait until the market rebounds while others adjust their thinking and reflect a listing price that is in sync with what buyers are willing to pay. In the NJ area, appraisers are using comps for properties that have sold within the last six months. Unfortunately, often this means there are very few comps, and properties that may have sold for less than market value are now setting the bar for the value of future sales. The job of the real estate agent is more important than ever to help their clients understand this dynamic, support it with documentation and help set the expectations for the seller. Value is absolutely not determined by properties that sold in 2007, the amount of money an owner may have invested in their property or what they think is a reasonable price. Price is determined by what a buyer is willing to pay. Properties are selling -- but only the ones that are reflective of what is happening in today's market.

I would also add that buyers don't necessarily need to spend $450 on an appraisal, though basing an offer on actual sales data is the way to go. Appraisers pull their comps from the same MLS database that real estate agents do. A good agent knows how to pick accurate comps and make adjustments the exact same way an appraiser does. I would argue that often times agents do a better job at comps because they know the communities and neighborhoods better than many appraisers do. Sometimes we come across appraisals that may look to be close on a map, but in reality lie in a different subdivision where home values may be veryu different due to schools, neighborhood amenities, quality of homes, etc.

Advice #1 - Find a buyer's agent who can do a thorough price analysis for you based on relevant, comparable data from 2009.

Advice #2 - DON'T rely on some of the online home value tools and sites. They are fine for getting a relative idea, but are often off them mark by as much as 40%. When you are ready to buy, get a specific valuation based on comps.

I commented before with my opinion but I would like to comment on Brian's post. The reaction of the buyer to a current appraisal is why many times after a market begins to escalate you have some who say,"I should have...I wish I had...Do you know I could have bought... That is why many of them will still be looking and they may eventually get lucky and find what they want at the price they want but most continue to rent or stay where they are but ...pity the poor agent who keeps hauling them around. In our market at the beach, many agents have drawers full of offers that were ridiculous. They buyers didn't care about the comps; they watch TV and don't realize that our market was never into subprime loans. Even our foreclosures are no steals so don't get discouraged. If you have an attractive property in a good neighborhood and it is appropriately price, it should sell.

Very simple.

Pay for a current appraised value. It might cost you $400-$450, but it will give you and the seller a far more reasonable rate to use.

Just so you know, we did this with our buyer and even faced with a very current appraised price, they offered dramatically LESS than the appraised value.

So much so that we could not accept.

I have to agree with most of the comments here. Sellers (and sometimes their agents!) often don't have a grip on the realities of the market. Any comps in this market that are more than 6 months old really don't apply to the new world order - at all. Every seller always thinks their home in unique and they also get caught in the trappings of what they paid for it, their current mortgage and/ or what they need to purchase their next home - none of which matter a bit to the buyer. I advise my buyer clients to pay little mind to what they asking price is and rather make their decisions based on market data and what similar homes are actually selling for with reasonable adjsutments for upgrades, deficiencies and location. Bottom line is that you should never pay more than the market warrants and be sure you have a good buyer's agent helping you make good decisions. Happy to walk you though some actual comps - just email me if you are interested at WaldenJ@HPW.com. You can also get reports based on actual MLS data including not only active listings, but also sold data, number of homes, days on market and more by signing up for a Market Snapshot, which you can get on the home page of my site - once signed up, you can have it sent to you every 2-8 weeks.

Dear CCP,

Michael answered this question very well. If you do what he suggested and the sellers does not accept, look for another home to buy. There are way to many houses in the market to worry about not being able to find another one that you will love.

Best regards,

Andres

First, let me say this is strictly my opinion based upon personal experience. I have invested in properties in 4 states during up and down markets. Just before the prices went crazy at the beach, I owned a property on the waterway that I tried to sell for over two years. It was right after 9/11 so the market was flat. Finally, I was so discouraged, I dropped the price and I received an offer FSBO within a short period of time, in fact, it went into multiple offers but we took the first because it was cash and would close quickly. Within no more than 3 months, I could have easily asked another 100,000 and within another short period I could have asked another 100,000. I have regretted that decision often. In fact, I offered to buy it back at double last year. Of course, they didn't want to sell. I guess I am sticking up for sellers. If I own my house free and clear, I am not going to sell my property for less when I know that this market also will not last. I have houses on the market right now that a buyer could not build that same house for that price, but they will make very low offers, and of course, they are very disappointed when the seller will not even respond.If sellers are forced to sell due to job changes or life changes, they will be the ones to sell at current market.

I can't speak for your market, but it is not uncommon at the beach to see properties on the market for over a year. Even though I am a realtor, I wanted to respond to your question as a seller. I have been in your shoes. If you have made an offer and it was rejected, you need to find another property with a more motivated seller.

I would get yourself a buyers agent, run comps from the last 6 months, make an offer and see, sometimes sellers gain a new perspective when they actually have a written offer in hand.
Michael