Home Buying in Fort Wayne>Question Details

Ryan Kohnen, Home Seller in Fort Wayne, IN

Offering on a home that is priced over market value

Asked by Ryan Kohnen, Fort Wayne, IN Tue Feb 26, 2013

When making an offer on a home you believe is listed above market pricing, how do you go about offering? Do you offer the number that would take you to the market price if you met in the middle with the seller's asking price, or do you offer the market value?

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18
Yanoska Diaz’s answer
I will never forget my first lesson in Real Estate, the Professor asked the class: Who determines the value of a property? The most popular answer in the classroom was: A property Appraiser. Professor replied: Incorrect, the Buyer and the Seller.

While a Real Estate professional can offer you a comparative market analysis to help you determine through recent comparable sales an estimated value of a home it is ultimately up to you the Buyer to decide on an offer and to the Seller to accept it or reject it.
2 votes Thank Flag Link Tue Feb 26, 2013
Why do you think it's listed above the market?

I ask this because one test of self-determining market value is to ask yourself: have I seen better properties sell for less?

Generally speaking, I prefer to pursue properties that are priced correctly that we have a reasonable chance of actually closing on. But sometimes you come across a property that gives you pause, and you start figuring out how you can make it work.

So first, determine how this property compares with others that you have passed up and have closed. Then, if you still think the seller is wildly ambitious, how you negotiate is up to you and your agent.

All the best,
2 votes Thank Flag Link Tue Feb 26, 2013
I myself would offer market value. The real question that nobody can answer is what will the sellers do or how will they respond
1 vote Thank Flag Link Mon Mar 4, 2013
DO NOTT ASSUME that the Seller put a good-logical-reasonable price on the house:
Big mistake!
You and your Agent should do your own homework, starting with the CMA.
Then do a walk-thru with your agent and a yellow-pad.
Try to find things that would affect the Market Value, but do not nit-pick.

Work with your Agent; that is why you have him!
1 vote Thank Flag Link Tue Feb 26, 2013
Ryan... I would run a market analysis on the listing to determine what the market indicates the price actually should be. Next I would go through the home with you so we could closely check out the condition of the property, structure, and amenities of the home. If the home is something you are truly interested in, we would then devise a pricing strategy that meets your economics and make an offer to get you into the right home for the right price that will meet your needs for years to come, whether it is this one or another one.

Good luck Ryan... I would be happy to assist you with your search. You can email, text, or call me at 260-413-7029.

Thanks
1 vote Thank Flag Link Tue Feb 26, 2013
Ryan, like the other 2 stated, as a buyer's agent, I would run a market analysis that not only includes what similar houses sold for, but also take into consideration what the prices are of the competition that is for sale right now. Are similar houses listed higher or lower than the particular house you are looking at, how do they compare, have you gone through them? Those are all questions that I would answer with my buyer. I use an appraiser's value sheet that shows how much one item is valued over another when comparing home prices.

Once we have an idea of what the market range is (notice I said "range") then you ask yourself one thing: is this "the one", are you willing to lose it to another buyer? By market range, I mean yes, we can come up with an exact number for market value, but realistically it's a range. Obviously a buyer wants it at the lowest part of the range (or below the range) and the seller wants it sold at the higher end of the range or above the range. If you are looking to buy this as a "home" and not an "investment property", as long as you buy within the range (or below), you come out a winner. I firmly believe you will know the house when you walk in, and it's my job to educate you on the pros and cons of the home, area, market value, and then negotiate the best possible price for you without you losing the home.

Home prices are going up, so that's great news as you look to sell your home, but that also means you may end up competing against other buyers on your next home purchase. I do work full-time, and have been helping buyers and sellers for 15 years. Feel free to call, text, or email me with any questions! 418-7117, jennifercamperman@realtor.com
1 vote Thank Flag Link Tue Feb 26, 2013
Hi Ryan,

Have your Realtor do a Comparative Market Analysis (CMA) on the property using SOLD comps within a 1 mile radius of the property (the closer, the better) that have SOLD within the last 3-6 months. This will give you current market value and this is what you should base your offer on. Once you have current market value (not market pricing), you should offer what you feel comfortable offering - and what you can afford.

Good luck.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
1 vote Thank Flag Link Tue Feb 26, 2013
Ryan,
There are a lot of variables. Is the home a distressed sale? (foreclosure, short sale or bankrupcy) How long have the owners been there? They may owe more on the house than the current market value. Does the seller really want to sell? Occasionally we will run into sellers who list their home for what they feel it's worth and will NOT negotiate (personally i don't list with those sellers).
Market Value is also subjective. It is really what you, the buyer, are willing to pay for the home. If you are getting a mortgage on the home, there are some checks and balances to make sure your opinon of "market value" is in-line with an appraisers opinion.
Personally, when I buy a home or work with buyers, I like to make an offer that I feel is appropriate for the home and then anticipate what the seller will counter. Then I like to counter systematically back to the seller. If I reach my max I am willing to pay for the house, I walk and go find another home. If I have not found something in a few weeks, I am go back to house #1 and see if they are ready to work with what I am willing to pay.
I would like to earn the opportunty to help you in your real estate transactions. Please feel free to call or email me if I can be of assistance. Joe 260-704-6253 Joe@JoeRealEstateFW.com
1 vote Thank Flag Link Tue Feb 26, 2013
Your First offer should be lower than what you intend to pay to allow for some room for negotiation.This is because the seller will make a counter offer.
Your offer however should not be so low as to offend the seller and turn them off, especially if there is likely to be numerous offers on the home.
To get a good estimate of the home's value it would be prudent to get a Realtor to assist you.

Below is a link with some tips that can help you fine tune your negotiation skills.

All the best.
0 votes Thank Flag Link Tue Mar 5, 2013
Most homes are listed above market price, that's why Sellers negotiate down.

You need to be working with an experienced buyer broker who can counsel you. Their job is to clearly show you the data and to determine actual market value fo the home. This establishes the maximum price that most buyers would pay for the property in the market today. You would typically offer less than this to begin with and work your way up as needed.

Your agent should be prepared if the initial offer is going to come across as low to share the data that was considered and to gently explain that there was no intent to insult anyone, but that the market data clearly indicates the home isn't priced correctly and that if the Seller or listing agent has any other data they would like you to consider to please send it over, that you're reasonable and wish to negotiate in good faith in an effort to arrive at terms that everyone can live with. For experienced agents this is routine and if they've done their job properly there is no other data to be considered. If the seller wants to seel they'll realize this and the negotiation will proceed, if thier irrational and not really looking to sell, but rather hoping to get some number that they essentially made up then they won't and you the buyer simply move on.

I've attached a link below to one of my most popular blogs on how to find a great buyer broker regardless of where you live. I hope it proves helpful to you.
0 votes Thank Flag Link Mon Mar 4, 2013
Please visit my free informative website:

http://www.kenrichardsonrealty.com
0 votes Thank Flag Link Sun Mar 3, 2013
Ryan,

I detect some disconnect between you and your agent.

Did your agent advise you in a manner that caused you to question the advice? You should have full trust and confidence in your agent before allowing him/her to assist you with such an important financial life decision.

If you are working with a competent professional, one of the worst, and most disrespectful, things you can do for your business relationship is to bring the advice of other agents into the picture. No agent simply responding to a blog will have the intimate knowledge, of your situation, that your existing agent possesses.

If, on the other hand, if you have reason to question the knowledge, loyalty, or sincerity of your current agent it is probably wise for you to find a new one.
0 votes Thank Flag Link Tue Feb 26, 2013
Thank you all for your input. I will be working with my realtor after we look a 2nd time to make sure we want to offer on the home. Thanks again.
0 votes Thank Flag Link Tue Feb 26, 2013
Your agent should be able to put together a list of comparable sales data. Your opinion that the property is overpriced is probably based on this kind of information. Your agent can present this "evidence" along with your reasonable offer. That way you don't go about offending the seller.
Patrick Gillan 260 420-5730 PatrickGillan@ReMax.net
0 votes Thank Flag Link Tue Feb 26, 2013
You need a Buyer's Agent to represent you in this transaction. The first thing you need is a CMA (Comparative Market Analysis) to provide you with a potential value of a home. Market Value is not determined until the home has been sold in an arm's length transaction. The Buyer's Agent will prepare your offer in a Purchase Agreement and negotiate the transaction.
0 votes Thank Flag Link Tue Feb 26, 2013
Well, Ryan you got yourself many answers here. Now I have a question for you: Since you obviously value the advice of a real estate professional (enough to ask our strategies on this forum), why not select a good Realtor and put them to work for you? In almost all transactions THE SELLER PAYS US TO HELP YOU so you get a seasoned negotiator to work for you at no cost to you.

Giving you a quick answer is one thing but it doesn't replace my 26 years of local real estate experience. Each property and each transaction are unique and have different factors that affect value and risk. There may be much more financial consideration for you than your initial price offer.

Which would you rather have: a quick answer to a costly purchase or the benefit of a skilled and dedicated professional to guide you through the process? (I guess that's a 2nd question isn't it?)

Call or e-mail me if I may be of assistance:

Ken Richardson
Ken Richardson Realty Company
Office: (260) 422-1888
Cell: (260) 413-6058
E-mail: ken@kenrichardsonrealty.com
0 votes Thank Flag Link Tue Feb 26, 2013
Work with a qualified and knowledgeable realtor who will be able to provide solid comparable market data and good negotiating experience. Good luck Ryan.
0 votes Thank Flag Link Tue Feb 26, 2013
Hey Ryan. I would have your Realtor run comparables and get dialed in on market value, days on market, etc. Any good agent is going to know property values in their area. If you aren't currently working with an agent, my wife Amanda and I would love the opportunity to talk with you and possible help. No pressure, just thought I'd throw it out there. 260.704.0843. Hope to hear from you soon!
0 votes Thank Flag Link Tue Feb 26, 2013
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