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Asked by Laurie, King of Prussia, PA Mon Apr 28, 2008

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Answers

13
Jennetic, Home Buyer, Quakertown, PA
Wed Jun 25, 2008
BEST ANSWER
Hi Laurie,

I am not a Real Estate Pro, I am just an interested observer. That said, I think you did the right thing by not countering and deciding to wait, watch, and continue to look elsewhere.

You based your offer on recent comps, and that seems to be reasonable, yet the general response that you've received here seems to be that you are lowballing? The article that Tameka links to specifically says that the Philly area/suburbs are still 10% overpriced, that there is nearly a $40k difference between what people list for and sell for, and that especially the suburbs have a lot of overpriced listings. I think that article supports your decision to base your offer on comps. Also, an Inquirer article did recently state that Philly foreclosures are way down year over year- and then says that Philly put a temporary mortitorium on foreclosures and initiated a program that lengthens the time it takes to foreclose! Well, duh! Mark Zandi of Moody had this to say about Philly's decision to put a temporary mortorium on foreclosures: "Foreclosure moratoriums are delaying, and not forestalling, foreclosures." I put in the link to the article below.

Lastly, I find it really interesting to watch the back and forth between Realtors and buyers and Realtors and sellers on Trulia Voices. I think it is a great resource! When talking to sellers, Realtors tend to say that the seller probably has to lower the price; when talking to buyers, Realtors tend to discourgage low balling and encourage bidding higher. (This is just a generality; there are many Realtors who go against this trend, especially for buyers, you can see it in this thread).

I think this probably reflects that sellers tend to have unrealistically high ideas of what will sell, and buyers have (maybe?) unrealistic expecations of the price at which the house will sell. For what it's worth, I think the buyers definitely have the upper hand, and no one wants to catch a falling knife. I suspect that you have a lot more to gain by waiting. I am not in KOP, but in my little 'burb between Philly and Allentown, I see a whole of For Sale signs, quite a few Price Reduced signs, but very few Sold signs. This suggests that prices still have further fall or something else has to happen to reduce the inventory until some sort of equilibrium is reached.

I just wanted to be at least one person here to say, Good Job! You made a fair offer based on sold comps, and walked away when the seller wouldn't play ball. There are many houses for sale, if this one doesn't work I am sure you'll find another one you like just as much or even more. You've already seen other great homes with more space for less money, so you know that you won't be stuck if you don't overpay for this specific house. You kept the golden rule of investing (Don't get emotionally involved!) Well done!!
1 vote
Mim Heisey, , Shippensburg, PA
Tue Apr 29, 2008
Laurie,
In this market many buyers have been listening to Nat'l news that might not be applicable in your market. Remember, the seller owns the house and what they decide to sell for is totally up to them, and maybe their financial institution, just as what you are willing to pay is totally up to you-- and the bank if you are financing !!
As for question #3: What kind of a REALTOR...? The kind that thinks the property is reasonably priced and is looking out for their client, the seller. . You may have received faulty information about relocations: many companies are taking care of their best employees in a relocation and have offered a package price for the sale that is not necessarily discounted. So there is no advantage to the seller who is moving to take a low offer. In our market, where houses are still selling within 3-4% of list price, I would not necessarily encourage my client to not accept an 8% under list price offer.

ALso, remember that there is a reason that hearsay evidence (what someone tells you someone else said) doesn't count in a court of law. You are better served to look at the written offer and consider it on it's merits alone. The bottom lin for you is "Does this house work for me better than anything else that I can find?" If it does, I would go for it!.

Like Terrence has already said, you take a risk if you wait. IS it worth the risk? Don't let trying to get a 'fantastic' deal stand in the way of making a GOOD solid real estate decision that works for you-longterm.
Best wishes as you go forward..
2 votes
Tameka Golds…, Agent, West Chester, PA
Sun Jun 8, 2008
Laurie,

Did you see the article in the Philadelphia Inquirer this week? Homes in the Philly metro area are still "holding their value" even in this market, unlike many other cities across the nation. If you didn't read the article, click here --> http://www.philly.com/philly/business/20080603_Study_finds_a…

And Laurie, I, like you, am a "Bargain Betty" and like to get the best deal possible. But if you truly are buying this home to live in long-term (5+ yrs), than it's ok to get a little emotionally involved. Because if you wait too long, you'll miss out on this one, but may find another home you love, but now the interest rates have increased high enough to off-set any savings you would have gotten 6 months prior. So buying in this market is quite a gamble. Are you feeling lucky?!?

Here's another tip if you really want a "deal" ... it's important that you and you agent define a strategic approach to getting you the best deal possible, whether it's this house, or another one. And in order to do that, your agent will need to look at the history of the seller's home to determine 1) how long they have lived in the home. If less than 3 yrs, they may not have the equity to take a 8% reduction; so that's a major factor in negotiating 2) if it's a fairly new lisitng and the sellers are getting lots of traffic, your offer may be less appealing because they know their property is highly marketable. So your strategy may be to seek only those properties that have been on the market 120+ days ... as these folks might be willing to negotiate and create a win-win for both parties. 3) seller's motivation -- this will largely determine if a seller is willing to negotiate. And in your example, the seller is relocating. In my experience, the employer will offer that seller a buyout if the house doesn't sell -- and oftentimes, that employer will protect the interest of employee so the employee doesn't lose money as a result of the move. So depending on who the seller really is in this transaction (i.e., "the homeowner" or the "employer") will dramatically impact your negotiations as well.

From one bargain betty to the next ... good luck!
1 vote
Terrence Cha…, Home Owner, Allentown, PA
Tue Apr 29, 2008
Laurie,

You need to weigh the property value. You say it's high among the other comps. How does the place look against the other available properties? Has the home been kept better than the other properties? Is the location better or worse than the other properties? Does it have better curb appeal than the others? It may be justified to have a higher price. If the home needs work and the other properties did not need any, then the price may not be justified.

Beyond those questions, the bottom line is this. Do you want the property? Are you purchasing it to live there or to try and make a buck? If you are going to live there, than in the long term, the property value will go up.

If you wait, someone may purchase the property before you do. But perhaps not. That's always a risk in waiting. If you do put in another offer, you should have it contingent upon getting a loan. Unless, of course, you have the monies to cover it.

If you're getting a loan for the property, the lender will have it appraised to see if the property is worth the loan. If it isn't, you can easily back out of the deal because of the contingency or make up the difference with your own money.

But it all boils down to you and how you feel about the property.

Good Luck!
1 vote
Ken Henderson, , Philadelphia, PA
Sat Jun 28, 2008
Laurie, you are thinking about this all wrong. The process of the relocation company isn’t important. The price that they pay for the home is isn’t either. They are in real estate to make money not to give it away.

What you call a fair price is subjective. Let’s face it; you are looking for a good deal. Yes, there are some out there, but every seller is not going to jump.

When the time comes for you to sell your home you want a Realtor that will work on your behalf as diligently as the agent who is working for the relocation company. Obviously accepting your offer was not in his clients’ best interest.

Your agent should be able to find other properties owned by relocation companies, but these companies negotiate hard. A deal may be easier with a REO.
0 votes
Sharon Sapp, , Temple, PA
Sat Jun 21, 2008
Laurie,

As you gathered from the responses you have received that there is no definitive answer. I am a certified relocation specialist and I can tell you that most companies involved in relocation, pay pretty close to an average appraisal. If they are taking the time and money to move the employee, they don't want him/her homeless at the new location so they usually play fair.

What made you submit an offer at 8% lower than the asking price? Did you agent do comps for you or are you going on the national news that homes are down 8%? As stated in other responses, that's a national and local average. PA was also in the news that we have not been hit nearly as hard as the rest of the country and our prices are not down that much. Perhaps you could have countered their counter offer and come up some and try to settle on a price in-between?

With what you know from these responses, are you only looking for relo homes or a good deal? When I search for my buyers, I look for homes in a range that is maybe $5,000 to $10,000 higher than they want to go assuming there is some negotiation room in the price of upper priced homes. If your range is lower, I may stay at $5,000 above where you want to be and look for homes that have either been on the market a long time, or say "motivated seller" or some other clue that the price may be negotiable. Are you working with a buyer's agent? If so, be honest with them with what you are looking for. They are looking out for your best interest. If you are not working with one, you should get one.
0 votes
____________…, Home Buyer, Texas
Fri Jun 6, 2008
have your agent look to see if the property was withdrawn and relisted. This is a little trick that TrendMLS participants like to play. In my legal world, it is unethical, but for some reason in Philly territory for real estate agents it is not. Here's how it works. An agent withdraws a property from the market and then immediately relists it, most of the time at a lower price but sometimes not. TrendMLS will automatically assign it a new MLS number, even if it is the same agent relisting it. This resets the Days on Market to "0" and makes the home look like it is new to the market. Have your realtor run a search history of the property. She will be able to tell by doing this whether or not the home has been withdrawn and relisted. That will give you an accurate depiction of the true days on the market, rather than the superficial one provided by the current MLS number. In some MLS jurisdictions, they have a feature that calculates the "true days on market" which is the days on the market from the time the address was first entered into the MLS, regardless of whether or not the agent has pulled the property off and put it back on to reset the days on market. Let me know if my answer was not clear. (Well more of a caution than an answer I suppose.)
0 votes
Angela Gueva…, , Jenkintown, PA
Fri Jun 6, 2008
The longer the property is on the market the more willing to negotiations they will be. If the house is priced right it will sell even in today's market. So if you wait you just have to take the chance of loosing the house and starting over. Rather have your agent analyse the market and determine what is the market value and what is the absortion rate. Then offer within the market not below.
Good luck.
0 votes
Edward Carboy, , 19468
Tue May 13, 2008
Laurie, every relo company has different programs for their employees, but your research is rather accurate. Depends on your motivation, whether you want to wait it out, or not. I would have to look at the comps myself to get a better idea. Sometimes, homes are priced correctly, and just because it's a buyer's market doen't mean the seller's will take less. Remember, one thing, no Realtor turns down an offer. Seller's turn down offers. There are some deals to be had, True, when we "Realtors" search for homes and in the remarks it says corporate addendum, then you typically have either a relo or a bank owned property. I live in the Collegeville area, and while the market is down, it may not be down the 8% from what the seller was asking. Good Luck!
Web Reference:  http://www.edwardcarboy.com
0 votes
John Burns, Agent, Souderton, PA
Mon May 5, 2008
buyers are in control in todays market...but...What you need to know is that some areas in the surrounding counties are still seeing price increases..forclosures in the phila.area are down 30% from last year according to the phila inquire...You still have to negotiate with full knowedge and accept the fact that the seller(any seller) even a relo company can say no.8% of a $300,000 home is $24,000. A big hit for anyone..
0 votes
Laurie, Home Buyer, King of Prussia, PA
Tue Apr 29, 2008
Thanks again Terence,

The house is well kept, as were the comps in the area. I do want the house to live in, hope to be there long term, and have been pre-approved for the loan.
I am not looking to "make a buck". I look at this as one of the biggest investments I will ever make. Being an investment, I expect it to appreciate, but I don't want to overpay, especially in a down market.
I suppose all I can do is wait and take the risk. If someone else gets it, it wasn't meant to be. I am seeing some fantastic homes out there for less money with more bedrooms and the same amount of land etc. This one was just so close to where I work. I shall not break the #1 rule of investing - I shall not become emotionally attached :)
0 votes
Laurie, Home Buyer, King of Prussia, PA
Tue Apr 29, 2008
Thanks Terrence,
To answer, I do want the place, but the price is high when you look at the comps. I think my offer was very fair. I did expect a counter offer, but not that high.
I do realize that it is the seller who turns down the offer, but my Realtor stated that their Realtor had advised the client that something was "fishy" (my word). I just don't understand why a Realtor would give such advice. Especially after I provided all of the additional income documentation requested.
Thanks for the advice on the expired listings. I did not think of that.
What are the thoughts on resubmitting the offer? I'm pretty confident the house is not going to sell at the listed price. So should I wait 30 days? Or forget about it because they have a Realtor who has some odd ideas?
Thank You!!!
0 votes
Terrence Cha…, Home Owner, Allentown, PA
Mon Apr 28, 2008
Laurie,

1 - You are correct. Depending on the relo company, they will usually purchase the home for anywhere from 60 to 80 percent of the average of all the comps they receive.

2 - How bad do you want the place and does their asking price seem reasonable?

3 - Who said that you were "Up to something" and what in the world would that mean? Also, the agent does not decide to turn it down, the seller does.

4 - Today's market is very difficult to predict. A deal could be found during normal searchs where a home could have been on the market for 12 or more months. By that time, the home isn't getting any activity at any price because the seller started too high in the first place. Just because homes have been on the market for a very long time does not mean something is wrong with it. Any local real estate agent can look up expired listings for you. They could contact those individuals and tell them they may have a buyer for them.

Hope that helps,

Terrence Charest
0 votes
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