Home Buying in Raleigh>Question Details

Home Buyer, Home Buyer in Raleigh, NC

We are looking at a home listed at $190K. The seller paid $170K in 2005. What is a reasonable asking price?

Asked by Home Buyer, Raleigh, NC Tue Feb 3, 2009

The home is newer (less than 10 years) and in good shape in a good neighborhood. The lot is tiny. Tax value is $195 as all Wake County was recently bumped up. It doesn't appear that the seller has done much in the way of upgrading. Is it fair to offer what the seller paid? The home has been on the market for over 6 months.

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That depends to a great extent on where the property is located. Some areas and neigborhoods have experienced a higher rate of appreciation than others due to location. A listing pricefor a home is usually etablished through a cooperative effort of the REALTOR and the seller and the individual sellers specific situation is certainly a factor in that process. If you choose to work with a REALTOR, they can do the market research on the home or homes you are interested in to determine if they priced correctly and competively for the market.

Hope this helps.

Fritz Hine
Coldwell Banker HP&W
1 vote Thank Flag Link Wed Feb 4, 2009
Yes, it is fair enough to offer what the seller paid.
It may not be a realistic offer, since what the seller paid is not a determining factor in setting a price.

Tax value is not a good guide, since it is done en masse and often is highly inaccurate.
The value is mostly related to what similar, "comparable," homes have been selling for.
Good comps will consider the lot size and condition of other homes, and the value trends and recent sales prices in the neighborhood.
You should be building a value from comparables, rather than the seller's purchase price or tax value.
Web Reference: http://MikeJaquish.com
1 vote Thank Flag Link Tue Feb 3, 2009
I would be very careful accepting advice from any realtor. Remember, they have a vested interest in keeping the price up. They have been trained to get the sale and to get the best price. They work on commision after all. I am not saying they are bad people, they just have have there own bills to pay. This is the best buyers market in a generation. I would offer much less than asking price. Asking price is never a consideration for me when making an offer, that is just a price that your opponents dreamed up. Dont let them push you into a bad deal, after all the agents are the ones who priced the market out of line in the first place. Now is the time for you to get a smoking deal. If you cant buy that house at a substantial discount, move on. I just closed on a duplex at 55% below the asking price, Forget the asking price. Get a deal, dont let the agents rip you off with the fancy charts and graphs.
0 votes Thank Flag Link Wed Mar 4, 2009

If the home is listed by a firm that's a member of the MLS, then the seller typically is paying the commission to the buyer's agent...so that means you generally get the services of a buyer's agent for free (there may be instances where that doesn't apply; however, more often than not, it's true). You have several choices as a consumer about how you'd like to be represented in a real estate transaction and having a buyer's agent who represents only your interests would be a great idea. Assessed/tax value isn't typically the best gauge for a home's market value (which could be more or less than tax value depending on market conditions).

Even in this market, if a home is priced correctly initially, homes still sell for an average of 97% of list price across the board, so a serious offer wouldn't be but a few % from list price if recent market data that a Realtor has access to supports it. In Wake Co., property values in most areas have appreciated in value and the average sales price has increased even in light of economic conditions. Sellers are adjusting prices more often these days and you never know what their motivation is for selling (maybe they can wait it out, perhaps there was a job transfer or family changes, they are anxious to sell ASAP, etc.). Sellers are having to be more competitive these days with pricing since there's such an inventory of homes for buyers to choose from; however, most folks anticipate making money on the sale of their investment and possibly wouldn't entertain an offer for at/less than they paid for the home unless there are undue circumstances. On the same token, any offer is better than no offer, especially if the home has been sitting for a while.

I can pull appreciation rate data for the past 13 mos, showings data, area/subarea Trendgraphix, data, price per sq ft average, a detailed comparative market analysis, etc. for the home if you decide you're ready to work with a buyer's agent. Just let me know if I can assist you in any way.

Please call or email me using the contact info from my website. Thanks and have a great afternoon!
0 votes Thank Flag Link Wed Feb 4, 2009
As some others have said, your best course of action is to work with a Realtor as a buyer's agent so he/she can find comps for you. Average appreciate over the past few years will be very neighborhood specific and what the seller paid 4 years ago is irrelevant (how do you know if they got a great deal back then or perhaps overpaid?).
Web Reference: http://craigfox.PruYSU.com/
0 votes Thank Flag Link Wed Feb 4, 2009
Average appreciation in 2008 in Wake County was still 4% per year, with variations depending on the precise area. Before that, appreciation has ranged from 4-6% per year, showing the slow, steady growth of homes and real estate in the Triangle area. At a 4% per year appreciation, an average home bought in 2005 at $170K would now be $191K.

Another factor - throughout last year, homes on the market were up double digits over last year, and sales were down. In December, we saw some significant sales increases, and January looks to be trending the same way. Inventory decreased in December, and was up just 2% to last year. Price points under $300K showed the most significant sales increases, and inventory decreases.

Of course, there are other factors to consider with an individual home, such as other recent sales, the neighborhood, the condition of the home, the amount of upgrades, the motivation of the seller, etc. The suggestions of obtaining a recent market analysis and negotiating are good.
Web Reference: http://www.StantonHomes.com
0 votes Thank Flag Link Wed Feb 4, 2009
Hi Home Buyer,

Your agent should do a comparative market analysis on the past sales and arrive at a more accurate price per sq. foot. Tax value is really not a determining factor when it comes to a homes value.

The value of the home today has no basis on what the seller paid.

You can make an offer on what you believe to be a fair price and the seller can counter until you both arrive at an amount that is agreeable to you both. In this market everything is negotiable.

Good luck!
Web Reference: http://www.LizeteSantos.com
0 votes Thank Flag Link Tue Feb 3, 2009
There are several factors to take into consideration. We would have to look at the sales recently in the same or similar neighborhood. How long has the current owner owned the home. They may not have much if any equity. Depending on where you looked, the old purchase price may not be accurate. It would take some research and i would have to know more about the property to give a professional opinion.

Leigh, licensed NC Realtor
0 votes Thank Flag Link Tue Feb 3, 2009
Hi Home Buyer
the best thing to do is to get a buyers agent to represent you, and they will run comp's and give you an ideaof what would be a fair price to offer. The cost the owners paid is really not relevant, market value of the home is the true measure, they may have gotten a great deal or they may have overpaid when they bought it. This is our job as a Real Estate Agent, to help you thru this process, and since you don't pay for your buyer's agent it's the wise choice.
Web Reference: http://www.colvinm.hpw.com
0 votes Thank Flag Link Tue Feb 3, 2009
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