Shortsale in orangevale, ca.; newer home, seller is asking 350, trulia has its value in the high 200s, eappraisal has it at 429K, might offer 325 max

Asked by george mccann, San Diego, CA Thu Feb 7, 2013

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Sarah Wilkey’s answer
Sarah Wilkey, Agent, San Diego, CA
Thu Feb 7, 2013
There are several things you need to think about when writing an offer in today's market - which has accelerated and is fueled by low inventory and low interest rates (which are climbing slowly but surely).
1. There aren't many great deals left to be had - if they are out there, they are usually snatched up by cash buyers in multiple offer situations and many are being sold by networked realtors who sell it to a their own client before it even goes on the MLS.
2. A short sale is usually already discounted by the listing agent to account for the fact that a buyer has to wait around to be approved (the discount is to keep the buyer in the deal). And, as mentioned by other agents below, some listing prices are intentionally lower to create a buying frenzy and get the home sold quickly. The kiss of death to a short sale seller is if the buyer walks away after months of waiting and they have to start all over again, the seller risks foreclosure - so the sooner it gets sold the better.
3. Make your offer as strong as possible within the fair market value of the home - this is not determined by Trulia or ZIllow or any such site - you need a realtor or appraiser to do a market analysis.
4. A seller wants to see cash or a conventional offer with 20%+ down - there's less risk of the deal falling apart - and cash means no appraisal. FHA & VA offers are less desirable because of stringent condition requirements; but I've still had success if I build rapport with the agent and make a strong offer.
5. Make sure you have a great pre-approval letter, strong earnest money, show proof of funds and work with an agent who is not afraid to call the listing agent directly and establish personal rapport . When agents are getting multiple offers it might help yours if the list agent feels your agent is professional and competent - so they won't have to do the work of two agents and have to keep checking up on your agent.
6. Remember - it is always in your best interest to work with a realtor on the buying side - it costs you nothing and you have a duty-bound agent looking out for your best interests. A great agent will let you know whether the offer you are suggesting is worthwhile or not. In the San Diego market right now, to come in at less than the listing price is simply a waste of your and your agent's time (especially if you know there are multiple offers) - unless there's something obviously wrong with the property and the comparables show it's over-priced. Again - the short sale seller has everything to lose and faces foreclosure if the home doesn't sell quickly - so in my personal experience in SD, short sales are often the best deals - as long as you can wait for up to 4 months for approval from the banks.

Wow - I went a little crazy on my response but I feel it's important to let buyers know how competitive this market is. Setting expectations is an important part of my job. In many parts of SD, prices have gone up 10% or more in just the last 3-6 months (some areas show almost 30% increases). So the home you bid $350k for today, could easily sell for $385k+ in 3-6 months (to me, that's a pretty safe investment). Right now, many buyers face being priced out of the market in up to 6-12 months if prices continue going up AND, if interest rates sneak back up .25 to .5% - it will accelerate that process because higher rates mean higher monthly payments and you may no longer qualify.

Good luck with it all!!

Sarah Wikey
Century21 Award
The Ruth Pugh Group
1 vote
John Juarez, Agent, Fremont, CA
Thu Feb 7, 2013
What are you basing you offering price on – a dart board or an Ouija board?

Seriously, you need the help of a professional. You offer has no basis in reality. You are simply throwing a number out to see what happens.

Even from Northern California I know that the San Diego real estate market is not the simplistic. Inventory is short; well priced houses are flying off the market; multiple offers are common and correct pricing involves much more that changing wildly varying e-valuation sites.

Try contacting Sarah (below) or I would be happy to refer you to a great San Diego Realtor that I know.

Get help or you will not be successful. And, by the way, I am talking about your own Realtor not the seller’s listing agent – who is already working for the seller.
0 votes
Cory La Scala, Agent, San Diego, CA
Thu Feb 7, 2013
If the seller is asking $350K, and they're working with an agent, I'd give the most weight to the offer price. Some agents list low to attract buyers though, because short sales don't always close, but not always. Inventory's very low in this market right now, so there's almost no reason to. Short sales close more now than they used to, but normally no one will be moving in 30 days. I wouldn't go with an "e"anything as far as estimating property value, or any real estate web site. Value depends on so many variables that have to be seen with an actual human eye, because not all of that shows up as data. In real etate transactions, neither agents nor appraisers would use a web site to get property values. The $150K difference in value should tell you that, and who falls in the middle? The agent.
0 votes
Chad Basinger, Agent, San Diego, CA
Thu Feb 7, 2013
Hi Geodude57,

I'm not exactly sure what your question is, but I suspect you want to know, given those various prices, what is an appropriate offer. There are many factors that go into what price you should offer. I'd encourage you to run the comps of homes in the area (appraisers generally look at sales within the past 90 days of properties within 1 mile from the subject property and those homes that have similar characteristics.) This will be one of the main factors, but at the end of the day, you need to ask yourself what that home is worth to you.

If you'd like to know a professional's opinion, it would be best to reach out to a REALTOR, have them run you an analysis and make sure they are able to answer any questions about how they came up with their conclusions.

Best of luck!

Chad Basinger, REALTOR®, CPA, CFP®
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0 votes
Ron Thomas, Agent, Fresno, CA
Thu Feb 7, 2013
You are very thurough in your research;
Why don't you take one more step and have a Realtor do a CMA?
It is important?
0 votes
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