Home Buying in 61802>Question Details

Tim Chilton, Home Buyer in Urbana, IL

65 year old house 1,900 sq ft needs alot of Updating asking price is 159,900 what would be a fair offer.

Asked by Tim Chilton, Urbana, IL Wed Jun 13, 2012

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Jennifer Mclennand’s answer
Tim,
Do you have a Realtor representing you in Buyer Agency? If so, that Realtor can and should advise you on statistical information for comparable sales on the property you are interested in. They can advise you on subjective attributes about the home and the values associated or not associated with the property. Your question seems like a "fair" question, but there are too many variables involved to give an accurate answer on it without knowing all the details about this property. Square footage & age, alone, do not determine the value of a home; it is the combination of a host of variables that determines the value. In the end, the true value is in the "eye of the beholder". Hope this helps!

Jennifer McLennand, Broker, GRI, Keller Williams
jmclennand@gmail.com
0 votes Thank Flag Link Mon Jun 18, 2012
First, forget fair. Fairness has nothing to do with the transaction.

What would be a reasonable purchase? That's the question you should be asking.

Second, forget the asking price. The asking price has nothing to do with what a reasonable purchase price would be.

Here's how you calculate it: What would the house be worth with the updating it needs and you want? (A Realtor can do a CMA for you to narrow that number down. Or maybe you already know.) Then: How much will the updating cost? Increase that number by at least 30%. Subtract the revised updating number from the after-repair value. That's the most you should pay for the house. You probably would want to offer less.

Example: The house would be worth $200,000 after updating. You get estimates from contractors, and determine that updating will cost $40,000. You increase that $40,000 to $52,000 to account for cost overruns, unexpected problems, etc. Subtract $52,000 from $200,000. You come up with a figure of $148,000. That's the most you should pay. In this scenario, you'd offer $148,000 or less. Let's say $141,000. That'd give you some room to negotiate up to (but not above) $148,000.

Again, that's just an example. You need to know: (1) its after repair value, and (2) the updating costs.

Hope that helps.
0 votes Thank Flag Link Thu Jun 14, 2012
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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