Question Details

CM1225, Home Buyer in 10541

What percentage below asking price would you offer on a house that's been on the market for 225 days?

Asked by CM1225, 10541 Tue Apr 29, 2008

We've found a house we think we're going to pursue. The house has been on the market over 225 days, and its original asking price was $400K. Price was reduced $5000 after 119 DOM, with another $3000 reduction just last week. I can't imagine the sellers are willing to come down TOO much, because they only reduced the price twice for a total of $8000 in 7 months, only 2%, overall. I've seen 10-20% price reductions on other homes in the area.

We don't expect to "steal" the house, but given the current market trends, we feel it may be slightly overpriced (as evidenced by 225 DOM). We don't want to insult the owners; we want our offer to be taken seriously enough to get a counter-offer, but we'd like to get it at a "buyer's market" price. Once again, asking price is $392K

I know this is not an exact science, and it depends on lots of factors, but just seeking some opinions.

Thanks

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Answers

4
Chris, The town's assessment is not relevant to the property's current market value. In regards to determining current value, do what banks do--hire a professional appraiser. An appraiser will use a few different methods for determing the property's value, including calculating the replacement costs of the house and the value of the acreage. (BTW: Your Realtor can get you the average building cost per sq ft and the cost of land per acre for the area. Multiply those numbers by the sq footage and acreage of the property and that'll give you one indicator of the property's value.)

Aside from better understanding the market value there's the question of the seller's motivation--as well as yours. Just because someone puts their prperty on the market doesn't mean that they're motivated to sell. A motivated seller wants to sell their w/in a reasonable period of time and at a fair current market price. An unmotivated seller doesn't.

Q: Are you working w/a buyer's agent? Your questions suggest that you're not. Why not? A buyer's agent can help you w/real help in regards to valuation, pricing strategy and negotation.

GerryV (vazquezgerry@yahoo.com)
0 votes Thank Flag Link Fri May 2, 2008
How recent was the town's assessment? As a Realtor, I too often find that sellers start out by pricing their home too high and "chase" the market after that for months or even years. By reducing only 2% does not show motivation. I would certainly offer 10-20% below asking price, but have your Realtor present the offer in person to lessen the blow. By presenting an offer in person, it becomes more personal and therefore more manageable for the sellers. Make sure to include a letter from you, the buyer, and some comps. If the seller is working with a good Realtor, he/she will show them how valuable your offer is to them and how important it is to negotiate with you. Good luck!!
0 votes Thank Flag Link Fri May 2, 2008
Thanks for your reply, Gerry.

How exactly would one *accurately* determine current market value? Our agent sent me some comps, but honestly, reading the comps confused me more than anything else because none were truly comparable. It's very hard to get a relevant comp for this unique property which contains a house that is fairly small for the asking price (less than 1500sqft), but has a large, private, wooded lot that overlooks a lake and a nature preserve across the street, and also includes a separate lakefront parcel of about 1/10 of an acre.

I guess I'm trying to determine how much the desirable property adds to the value of the whole package. The house, itself, on a "normal" lot would probably sell for no more than $340-350K. As a matter of fact, the town's assessment in 2007 was $358,800. How relevant is a town's assessment to the actual current market value and/or potential sales price?

Any further insight would be greatly appreciated. Thanks!
0 votes Thank Flag Link Fri May 2, 2008
CM1225, The house hasn't sold because it's been overpriced, and dropping the price 2% probably doesn't bring it into market range. You're dilemma might be solved by finding out the current market value of the house. Then the conversation becomes less about "feeling" and more about fair value. GerryV (vazquezgerry@yahoo.com)
0 votes Thank Flag Link Tue Apr 29, 2008
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