what is likely to be the market value for homes in this area in a year in a time?

Asked by sf2383, Fair Lawn, NJ Wed May 16, 2012

It appears that most of the house posted are listed for prices above what current market value is for them, which would mean the buyer could be losing money from the moment they buy it. Also what does that ratio of "possession' mean?

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Don Tepper, Agent, Burke, VA
Wed May 16, 2012
No one can predict with any certainty what the market value for homes will be in a year. In any geographic area.

The best way to gauge whether homes listed for sale are overpriced is to look at "days on market." Now, the norm will vary geographically. But let's say the average (for a specific type of home--single family, townhouse, etc.) in a certain general price range is 60 days. Homes that have been on the market significantly longer (let's say 90+ days) may likely be overpriced. There could be other issues, of course, but price is the first thing to look at.

It's possible, but unlikely, that "most of the houses posted" are priced higher than market value. There are always some people who really want to sell, and will price their homes competitively. And lots of people who want more than the market will bear simply hold off on listing their homes. It's a hassle to go through the selling process, and most people won't subject themselves to that. Instead, they'll just wait until prices rise to where they want.

One other point: If a house really is overpriced, then the odds are the buyer won't be able to buy because the house won't appraise for the higher value. Let's say the house is worth $500,000. But it's on the market for $575,000 and someone actually makes an offer, accepted, for $560,000. If the buyer's paying all cash, then the buyer can pay whatever he wants. But if the buyer's financing the property, the lender will do an appraisal. And the appraisal will come in closer to $500,000 than $560,000. So the bank will lend less than the buyer was expecting. Thus, the buyer will have to come up with roughly $60,000 additional in cash if he wants to buy. If he goes through all that, he's well aware of the real price of the house and that he's overpaying. If he didn't know the real value of the house, then the low appraisal is the obvious red light.

Hope that helps.
1 vote
James Lockard, Agent, Saddle River, NJ
Thu May 17, 2012
Your contract will most likely have a mortgage contingency. The mortgage will not go through unless the house is appraised for what you are paying or at least financing. At that point, the seller can lower the price so you can get your mortgage or you can back out of the contract.

James Lockard
RE/MAX Properties
Office : 201-825-6600
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sf2383, Home Buyer, Fair Lawn, NJ
Wed May 16, 2012
Thank you for answering. I wonder though if the house is appraised for less can the buyer then get out of the agreement. I mean if they were selling the house for 500000 but it's only worth 420,000 what happens then. Can the buyer walk away at that point or are they already in a contract regardless of the appraisal?
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