Is there a trend....to make offers based on what Seller's paid for their home? I have several friends who

Asked by Wanderer, 48073 Sat Jun 28, 2008

have owned their home 10 years and are in good condition, but the offers are coming in at what they paid to buy the home. It seems this is a trend to see if people will take what they paid years ago...even tho the house can appraise easily for sales price...

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7
J R, , New York, NY
Sun Jun 29, 2008
I've worked with a couple of buyers who have made extreme lowball offers. The result is that they don't get the house. But they are more obsessed with getting a deal than actually buying a house. They get neither.
1 vote
Maureen Fran…, Agent, Birmingham, MI
Sun Jun 29, 2008
I have not had any of the people I am working with making an offer based on what the seller paid. They usually make it based on the comps. In the case of most sellers in Metro Detroit who bought recently, their house is worth less than what they paid. I have seen more than one home transact for a 10 year old purchase price, but that is based on comps, not on the sellers purchase price.

Purchase appraisals are also getting MUCH tighter in Metro Detroit and there are many stories of homes not appraising for the purchase price.
Web Reference:  http://miOaklandCounty.com
1 vote
Scott Sowles, Agent, Troy, MI
Sun Jun 29, 2008
Wanderer,

Buyers always seem to look for a formula to use when making an offer on a property. The best formula is to have a buyers agent assist you in determining the value of the property and guiding you through the negotiations on the purchase.

That being said I often equate our current real estate market to the WalMart commercials where they talk about "Rolling Back Prices". The same thing has happened in the real estate business. In my market the prices have "rolled back" to 1996-1998 levels. Making an offer based on that criteria alone would not be a wise method for a whole list of reasons too numerous to mention here. Contact me directly if you'd like additional information.
0 votes
smith3gary, Agent, White Lake, MI
Sun Jun 29, 2008
Wanderer,

I've seen many "methods" tossed about but this is a new one on me. There are cities where home values have decreased back to when the home seller purchased, even 10 years ago. But most are in the 1999 range in western Oakland County. Your area might be different.

Two suggestions. First, assuming your friends are listing their homes through a real estate professional. They could request an updated CMA from their agent. Perhaps they could also request to review all homes that have sold since the day they listed. I had a home in Dearborn Hgts that was vinyl sided without a basement. Every home that sold, was brick exterior with a basement. This may be the case with some of your friends. If so, they will have to either change their home to what is selling, or discount their price to make their home more attractive. My seller still has his home for sale. It appraised at 118,000 when he listed for 120,000. 2 agents later and a continuous declining market, the home is at 90,000. With a quick look, there are many homes in Royal Oak with large differences in their original asking price and sold price during the past 90 days.

Alternately, your friends should contact a local appraiser and request a not for refinance appraisal of their home. The cost will be around 300.00 but during negotiations, their home will already be listed "below the appraised value".

The good thing about owning a home for 10 years, if they didn't refinance several times, is that there should be enough equity to allow your friends to still come away with money after the sale.
Web Reference:  http://www.mi-living.com
0 votes
Keith Sorem, Agent, Glendale, CA
Sun Jun 29, 2008
Wanderer
Home values fluctuate, just like the stock market. In most cases buyers make offers based on what they think the market value of the property is at the time. Market value is what similar homes are selling for in that area. I do not see a trend of buyers offering prices based on a previous selling price ONLY. However, in my market, a property that sold in 2005 will probably not sell for that same price today. Home values have dropped to 2005 levels, so it is not that the fact buyers are offering three year old prices, it is simply that home values have declined.
0 votes
Jeanne Feeni…, Agent, Basking Ridge, NJ
Sun Jun 29, 2008
Hi Wanderer, buyers are looking at everything these days to negotiate a "best deal" if/when they are ready to put pen to paper, including what the owner paid. But the value of a property in any market is not based on what they current owner paid, but rather on what a ready, willing and able buyer will pay. A sound pricing analysis is the best place to start whether setting a listing price or a bidding price on a home. The buyer that thoughtfully reflects on that analysis & puts pen to paper is the one that is the winner in today's market. The hyper obsessed, overly clever buyer generally walks away with nothing.

It is a great time to buy - if you are in the position to do so, you will look back at a fair market price in today's market as a very savvy buy!

Good luck to you!
Best,
Jeannie Feenick
Weichert Realtors - New Jersey
Search and connect at http://www.feenick.com
Web Reference:  http://www.feenick.com
0 votes
Paula Swayne, , Sacramento, CA
Sat Jun 28, 2008
There is a misconception that sellers, in this market, should be willing to "break even" and feel lucky that they were able to do so. This would especially be true in REO properties. A property is actually worth what a buyer pays for it.
0 votes
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