Home Selling in 90024>Question Details

Joshua, Home Buyer in Los Angeles County, CA

My agent wants me to buy a house that appears to me as overpriced. The house is a standard sale and it has been totally redone. It is most

Asked by Joshua, Los Angeles County, CA Thu Jul 15, 2010

expensive house in neighborhood. My agent says i should not look at the houses that recently sold near this house because they are not fixed up, and are properties that need work or updating. Is she right? What makes a sales comparable? If the subject is a fixed up home then does the comps have to be a fixed up home?
Thanks

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As the buyer you need to decide most importantly whether or not you like the home or not. Sure, your agent wants you to buy this house, but your agent should want you to buy a house that you absolutely love. If you like this home enough to want to buy it, then your agent can help you find comparable properties to help you judge the value. Ultimately though, you need to decide on an offer price and also need to decide on the highest amount you are willing to pay for the home based on the available data.

The value of a home is the highest amount that all willing and able buyers are willing to pay for a home at a particular point in time. Some of the factors that impact value of a home are location and condition of the home, the amount of inventory available in an area (supply of homes for sale), the amount of demand (buyers) have for similar homes in the same area, economic factors, the availability of financing, etc. As a buyer, you can't control the market, but you can control which home you want to buy, you can control the timing of when you want to buy, and you can control how much you are willing to pay for the home.

If this home has been recently remodeled, I don't think it is really fair to compare it to homes that are in need of a great deal of repair, although the selling prices of those homes are still a data point for you.

I think that it is a good idea to have the worst house on the best street in the best area possible that you can afford as opposed to the best house in a not as desirable location. Location is very important in real estate. I would rather have a below average home on an low traffic dead end side street in a great town with good schools compared to the large remodeled home surrounded by homes in disrepair in a less desirable area.

My advice, is to first make sure you like the house, second look at the recently sold data for homes in the area with around the same number of bedrooms and living area to get a value range, and also compare the asking price with other similar homes currently on the market in the same location. Come up with a figure that you can live with paying and don't pay more than that. If the home is overpriced based on your personal view of the available data, then try to negotiate the price down with the seller or find another home to buy.

Good luck with your home search!
Web Reference: http://teamlefebvre.net
2 votes Thank Flag Link Thu Jul 15, 2010
Joshua
Chris has some real nuggets in his answer.

Look at the link below.

242 homes for sale, 219 homes recently sold.

There is no inventory in your area.

Like most areas suffering from low inventory, the market is actually beginning to go UP. That means offers at asking price for entry level homes will not make it.

I have an entry level home in Tujunga, listed at market price, we had six offers and we will be 5% - 10%R over asking price by the time we are done.

Listen to your Realtor.
1 vote Thank Flag Link Thu Jul 15, 2010
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
You are the client and I is not what the Realtor wants but what you the buyer wants. Realtor should supply all similar sold homes in area within last 6 months. These comparables should be within 0.50 miles from home but no more that 1 mile from subject. Hopefully, there will be a range of homes(fixers, original condition, updated). Make a realistic decision based on stats not emotion or hear-say.

Gail Mercedes Cole
EXP Realty
310.853.9933
0 votes Thank Flag Link Sat Jun 22, 2013
When you compare homes you make an allowance for the upgrades and work done but not pay 100% of what it cost the seller. The seller may not be able to recoup the expenses.If you think you can buy a home and fix it up your self and it will cost you less then you should consider homes that need to be fixer uppers. An agent cannot force you to buy a home. They usually make suggestions based on experience and knowledge of the market. You should have an appraisal contingency. The price offered is determined by you and it is up to seller whether to accept it or not.
Web Reference: http://www.gitabantwal.com
0 votes Thank Flag Link Thu Aug 12, 2010
Dear Joshua,
The decision to purchase property must be yours to make. You can listen to advice, but the final decision has to be yours.
If you believe it is overpriced, you should take a good look at a CMA of the area. A CMA should show all listed property, all sold property, and all expired property. A CMA is based upon similar homes (bathroom/bedroom/square footage/age/amenities) to the subject property. In this type of market, you cannot look at more then 6 months prior. Listed property will show you asking price, Sold property will show you Market Price and expireds will show you OverPriced listings.
Once you see the statistics, it will be very clear whether or not that particular home is over priced or not.
0 votes Thank Flag Link Sat Jul 17, 2010
You have to adjust comparisons for the work put into the remodeled home. But, you should definitely always look at neighborhood comparisons before purchasing!
0 votes Thank Flag Link Fri Jul 16, 2010
I just can't get over your first sentence "My agent wants me to buy a house that appears to me as overpriced."

I can certainly express my opinion regarding a house, state why I think it is a fair (or not) price(based on recent sold comparables), whether it is in an area that is more likely to appreciate(or not), find out the age of the house systems and whether or not it is going to be in need of repair (or not), determine if the house has been updated (or not), but I can never imagine stating to any of my buyers that I want them to buy a particular house.

As an agent, I am the bearer of information. What you chose to do with that information and whether or not you decide you want to buy a house based on that information is a decision that is totally yours to make.
0 votes Thank Flag Link Fri Jul 16, 2010
Joshua, when you asked, "Is she right (your agent)?" You obviously have trust concerns about what she is telling you. Have you been serviced well to this point? (Showings in person, provided with comps, etc..) By all means see other homes or put in an offer at what you feel is fair. Just be open to learning that your agent may know the area and conditions pretty well (after all, it's what she does for a living). And if not, get another agent--it should be obvious from Trulia that there are plenty more.
0 votes Thank Flag Link Fri Jul 16, 2010
The comps you should be using are recently sold homes. Then factor in the cost of bringing those homes up to par with the one you are interested in. If the recently sold home (with improvements) will compare you are OK. Rememeber, any home you purchase should have an appraisal performed, this appraisal will give you a better feel for the value.

Trying to compare unsold homes is confusing because you don't know what they will ultimately sell for or how much it will cost to bring them up to par with a upgraded home.

No one wants to over pay for a home, but sometimes it makes sense to buy a better home. Sometime a bargain is not a bargain if you have to spend a lot after the fact. I have had clients that had intetions to "fix up" their home and 10 years later they still haven't gotten around to it.
0 votes Thank Flag Link Thu Jul 15, 2010
A smart realtor always says do NOT buy the most expensive house in the neighborhood.

I would take that as smart advice and look for more reasonably prices properties.

You might find that updating another house yourself would be much cheaper than buying this one that someone updated and hopes for a big profit from.
0 votes Thank Flag Link Thu Jul 15, 2010
We don't know if the house is over priced and we don't know anything else about the house. When you say totally redone, that is not clear.
If you feel that you want to write an offer to purchase, write the offer for what you want. The seller will either accept it, turn it down or counter your offer at which point you will be able to negotiate and possible come to an agreement on price. Your agent should show you comps of what has sold then you and your agent should do what Mark pointed out. Compare the property and adjust the price.

Good luck
Pam Bava, Realtor
0 votes Thank Flag Link Thu Jul 15, 2010
Those homes can still be comparables, however you have to adjust the price just like you would if the subject house had extra bedrooms or more square footage. That's why it's called a comparable you compare your subject home to similar homes in the neighborhood and then adjust for differences to come up with an asking price.
0 votes Thank Flag Link Thu Jul 15, 2010
We have no idea whether the house is overpriced.

Based on recent performance, some short sales that start in July will not close in 2010; there is a premium to be paid for certainty.

I think that if you want to see these houses, then, you should.

It isn't so much about being a "comparable," as it is that fixers have problems that need to be fixed, and should sell for less than a similar home in move-in condition.

I hope this helps,
0 votes Thank Flag Link Thu Jul 15, 2010
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