Home Buying in Roswell>Question Details

Andy, Home Buyer in Roswell, GA

Good opening offer for $600K home in North Atlanta?

Asked by Andy, Roswell, GA Tue Oct 9, 2007

1st time buyer. Found nice newer subdivision property, swim tennis community, ~ 3500 sf on acre lot with nicely finished basement. On a $$/sf basis this home seems overpriced at ~ $180/sf, but it's hard to account for nbhd and basement. It's been on the market (vacant) for almost 6 months now. Price already reduced. Owner bought new for about 500K.

Is 510K an acceptable opening offer? Is it reasonable to expect at least a 10% discount from asking price, especially for this type of property (long time on market, vacant, finished basement and landscaping are big contributors to asking price)?

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Hi Andy,
The other agents have all provided you with excellent advice. As a top team, helping over 40 families with their real estate needs in this market area this year alone, let me chime in with mine.
Our local MLS shows there are currently 101 active listings in Roswell in just the 500-600k price range. It also shows that in the last 60 days there are 11 recorded sales. The sales indicate 18.3 months of inventory average for the last 60 days. There are currently 5 properties under contract. Two of those went under contract in the last 30 days. The 2 pending sales in the last 30 days would indicate over 50 months (4.1 years) of current inventory in that price range and area and that the market is continuing to slow. Yet the properties that have sold are showing an average of 96% SP/LP ratio. Only 4% off the list price.
The most recent MLS statistics from August for our entire market area continue to show a decrease in total sales, and increases in time on market, total inventory on market, number of listings that expire without selling and number of listings that were withdrawn from the market before selling. All that being said, we are still experiencing a very solid 95% to 96% SP/LP average in our market area. This would indicate that the homes that are actually selling are priced in a marketable range.
I have handled quite a few transactions this past year where an original offer was at or below 10% of the current list price. In handling the Buyer side we normally ended up settling around 3-7% below list price. On a couple we did succeed in buying the home at 8-10% off the listing price. This was almost always because the current list price was farther out of line with the current sales prices and we were able to support our offer with recent comps.
Again, as the other agents have stated, it is hard to give an opinion without all the facts. Your proposed beginning offer of $510,000 is 15% below the current list price. It is more likely that that will be rejected outright or create a less than optimal negotiating environment. This could end in you paying more for the home if and when an agreement is finally reached.
Using an experienced, Accredited Buyer’s Agent is probably your best course of action in this shifting market. Make sure they have recent sales activity in the area and know the current market conditions well. Their market knowledge, transaction management and negotiating skills will often save you more time and money than the fees they charge. And these fees are generally paid by the Seller anyway.
Andy, I hope you found this information useful and good luck in your first home investment. If there is ever anything our team can do to help just let us know. You can always find us at http://www.keyhomefinder.com .
Regards,
Deryk
2 votes Thank Flag Link Wed Oct 10, 2007
wow! this sounds like an interesting property - I live in North Fulton myself
Have you been able to look at any comparable properties that have sold recently? Is your Realtor suggesting a price/negotiating strategy for you? I think it's more about looking at your end price - and the homes value (via comps) that determine where you should start - going in too low can have them reject your offer altogether - If you can send a preapproval letter showing you are qualified to purchase, it may send the signal that you are qualified, but feel the home's value is closer to offering price.
I hesitate to give you a direct answer without more information - I would suggest that your Realtor should look at ALL the information available and discuss a strategy with you
Web Reference: http://www.leeadkins.net
2 votes Thank Flag Link Tue Oct 9, 2007
Andy, a Buyer's Agent will provide you with statistics, reports and comparisons that will help you evaluate the market for that particular area and specific neighborhood. The fact that the home is vacant implies a motivated seller--the more information your Realtor provides will help you make a favorable offer--one that doesn't antagonize or alienate the seller, but also will serve your purposes in finding a good value. The price the seller purchased the home for is of interest, but doesn't relate to what the market value is at this current time. If the seller is motivated, has another property already purchased or under a contingency, if the property needs some repair or cosmetics, then starting the process at a 90% SP/LP offer may be acknowledged...although most probably will be countered. So I think that $510K is probably too low and will be rejected out of hand.

If you are not using an ABR (Accredited Buyers Representative), and if you have not signed a Buyers Agency Agreement with your Realtor, then your interests are not protected by law in Georgia. For more information on Buyers Agency please take a look at my "For Buyers" page on my website at http://www.jane-oconnor.com. Feel free to contact me if you have any other questions or wish to follow up. Good Luck!
Web Reference: http://www.jane-oconnor.com
1 vote Thank Flag Link Wed Oct 10, 2007
Lee is right, it all depends on the neighborhood and the trends in the area. Depending on a market analysis an offer of $510 could be giving the owner TOO MUCH or it could be a slap in the face. It doesn't matter what they paid for it, although it's nice to know, it doesn't reflect current market condition.

It's worth noting that not ALL areas of Metro Atlanta are depressed. In my experience, homes in the higher price ranges in Metro Atlanta are actually thriving, as the typical buyer in this price range is not affected by the mortgage meltdown.

10% as a general rule is a very high number to assume ANYWHERE in metro Atlanta. The actual numbers are closer to 3% to 5% for most of Metro Atlanta.

Remember, you don't hire a Realtor to find you a home, that's just a bonus if they do. You hire them to get the best deal on the home and to navigate and manage all the details leading up to the closing.
Web Reference: http://www.jrjarvis.com
1 vote Thank Flag Link Wed Oct 10, 2007
Joshua Jarvis, Real Estate Pro in Duluth, GA
MVP'08
Contact
Maybe yes, maybe no...it depends on more variables than what you have provided. Most importantly, what have similar homes in the neighborhood sold for in the last six months. What is the condition of the home, how long ago did the seller buy it for $500K. What school district/subdivision are you talking about? How solid is your financing, how quickly can you close, are you also looking for closing costs as well as other concessions? All of these things make a difference in putting together an offer. If you are working with an agent, they should be able to review all of these things with you. If you or not, feel free to contact me and I am happy to consult you further. Initially, it sounds like it could be overpriced if it has been on the market that long, but your offer of $510K also sounds too aggressive to me, but I can't really assess without knowing the other information. Although the Atlanta Market is down as are other markets in the country, it is nowhere near what is being experienced in other market so you cannot assume you can come in that aggressively. You can reach me at 770.300.0023 or Brenda@RKiHomes.com. Our website is http://www.RKiHomes.com
Web Reference: http://www.rkihomes.com
0 votes Thank Flag Link Thu Oct 11, 2007
What is the price that you are willing to pay that if you get the house you won't be disappointed that you might have gotten it for less and if you didn't get the house that you would be disappointed that you didn't offer more?

Once you have figured this out now you know what price you are willing to pay for it. Next (this is where an agent can help by doing a market analysis) determine what you feel the home is worth based on comps and offer that price or a bit below the price.

My first take (remember, without doing any kind of market analysis) is that would not be a good first offer. In Atlanta most homes close at 97% of the list price.

I suppose to really answer your question depends on whether or not the house is priced right to begin with.

Contact our team for more info: carl@rkihomes.com
Web Reference: http://www.rkihomes.com
0 votes Thank Flag Link Thu Oct 11, 2007
Andy,

I have got to say you have gotten all your answers below which are all very accurate. For one thing the Atlanta Market has not been hit as bad as people think, sometimes the media blows things out of proportion. If you do not have an agent currently, please get one. They are there to protect you the buyer, to represent, negotiate and get you to closing. Your agent will pull comps for that specific neighborhood for you and advise you of what the beginning offer should be, of course the final decision is always yours but again as noted already putting in an unreasonably low offer will most likely get a rejection. I would also agree that 10% is way too much even in this market, 3% - 5% is more realistic but again this is not the same for all areas of Atlanta and that is why you need the expertise of an agent. You do realize that you do not pay for buyer representation under most circumstances, it is normal for the seller to pay the commission unless working with a For Sale By Owner, then it is negotiated.

If you need anything else please feel free to email me and you can also visit my website for more information

Good Luck!
0 votes Thank Flag Link Wed Oct 10, 2007
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