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Home Buying in Sobieski : Real Estate Advice

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Mon Feb 20, 2012
Don Tepper answered:
Yes.

The formula is: Pay no more than the CMA. Probably offer less.

How much less? Your Realtor can advise you.

Notice that what you offer has absolutely nothing to do with the asking price. Any formula that's based on asking price is fatally flawed.

Why?

Because the asking price may be more than, equal to, or less than the actual value of the home. Quick example: A seller is informed by his agent that his house is worth about $200,000, based on a CMA. The seller--maybe being greedy, maybe wanting to leave some room for negotiating--adds 10% to the CMA valuation and prices it at $220,000. Then you come along and--having read some advice somewhere--think that you should offer 5% less. So you offer $209,000. The seller accepts.

What's happened? You've overpaid by $11,000. The house may or may not appraise for $209,000. You'd be in better shape if it didn't appraise for that amount.

Another example: The CMA says the house is worth about $240,000. But the sellers want a quick sale, so they price it at $220,000. You make an offer of $209,000. Someone else comes along and makes an offer of $220,000. You lose out and the winning offer--even though it's full price--got a real bargain.

So: Pay no attention to the list price. Look at the CMA. Pay no more than the CMA. Probably offer a bit less.

Hope that helps.
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