How to handle overpriced house for sale

[bobbeym]

There's a house for sale in our neighborhood that DH and I would dearly love to buy. It would be absolutely perfect for our family. The house itself has 2 master bedroom suits plus 2 more bedrooms and a bath. {No more sharing a bathroom with teen boys! We could have an exercise room AND a computer room!} The 65" built-in TV and Bose surround system stay with the house. The furnished, 1-bedroom garage apartment would be a fabulous first place for a newlywed couple.

 

The owners are asking $169,900 but the 1/1/13 county appraisal puts it at only $90K. Yes, there are a few additions that would increase the price above appraisal, but not $80K worth, not even with all those perks. At $169K it's well out of our price range but if we could get them to drop their price to $140K or less (preferably below $125), we could make it work.

 

How do we approach the owners with the intent to negotiate price? What should I know that I don't?

 

We've never even considered buying a home before and all advice/tips/whatever is appreciated. TIA

[Orthodox6]

County appraisal and market value typically are on skew lines.

 

You could ask a realtor to run the comps.

 

If the house is new on the market, the sellers may not wish to drop so drastically yet.

[OrganicAnn]

Can you look for what houses in your area are selling for? Newspapers will sometime list property transfer information. The key thing about real estate is it is worth what one person is willing to pay for it and what the seller is willing to take for it, not matter what the appraisals say.

 

If they aren't anxious to sell, then they won't drop their price very much.

[bobbeym]

The house has been on the market for at least a year. Since it's not listed with a realty agency, how would I find one that can run comps for me? Will any of them do that?

[merry gardens]

_{If they aren't selling through a real estate agent, then brining one in to run your comps might be awkward. You can check out Zillow to get ideas on what similar homes sold and are selling for in your area. Some counties put real estate tax assessed value on the internet and that can give you some idea on value but not necessarily if they have made improvements that didn't require home inspections.}

[Halftime Hope]

Is it listed FSBO? If so, the seller may not want to pay a buyer's agent (your realtor, who would typically get 3% of the purchase price in TX, paid by the seller,) but the only way to find that out is for someone to ask.

 

If they flat out refuse to pay anything to a buyers' agent, then it really isn't fair to a buyer's agent to sink any time into working the sale on your behalf unless you, the buyer, are willing to pay them for their services. Perhaps you could negotiate that on a fee for service basis rather than a percentage basis.

 

You could just pick a random realtor and ask them if they would be willing to run comps for you on an FSBO house, even though you are not sure if the sellers are working with buyers' agents or not. The random realtor can always say no, and they may be aware of something with the house that they would be willing to tell you about why it hasn't sold.

[QueenCat]

County appraisals often have little to do with market value. They are for taxing purposes only.... However, something is off if the property has been for sale for that long (maybe). It might be overpriced but it could also be that it's not showing because it isn't being marketed. Since housing prices vary so much from place to place, and we don't know the square footage, comps, etc, it's hard to say whether or not it is priced well.

[zoobie]

County appraisals mean little to nothing for market value. They usually are looking at lot size and house size with a formula to calculate property tax. Every 2000 sq ft home on 1/2 acre would have the same tax bill, with slight variance for "condition" based on outside appearance. Or that's how they do it here. DH says he's never going to paint the house or landscape the yard so our tax bill decreases. ;)

 

Check zillow.com, which isn't necessarily accurate either, but it will show you recent sales in the area to better gauge value. If this is your first home purchase, I would work with a realtor. Does the listing say no agents? Buyers agents protected (means they will pay your agent's fee but there is no selling agent)? If you don't want an agent, google the real estate disclosure laws in your state and ask the sellers for their disclosures. Definitely get an inspection. Get a lawyer to review the contract... I'd really use a realtor!

 

Good luck!

[LibraryLover]

Make an offer.

[Anne in CA]

I agree that you can't know unless you make an offer. This exact thing happened to my sister. Her dream house was for sale but she could not make it work with the asking price. Her dh would not let her offer what they could pay, and later the house went for less than my sister would have offered. Eventually people want to move. Enough to make concessions, lol. But I wouldn't trust Zillow. They show our home as wayyyy less than comps from a realtor would. They are off by $45k at least, if not more.

[prairiewindmomma]

A private appraiser can run comps....I would start by approaching the owners.

[Amy in NH]

You can run your own comps by going to the local tax office and looking at what has sold in your area recently. Look at comparable properties (comps).

[Mrs Mungo]

I would ask them if they are willing to have a private appraiser come and appraise it. Since it has been on the market for over a year, they would probably be willing. Keep in mind that they might owe too much on it to sell below a certain price point. There are a lot of people in that predicament right now.

[Erica in OR]

I would ask them if they are willing to have a private appraiser come and appraise it. Since it has been on the market for over a year, they would probably be willing. Keep in mind that they might owe too much on it to sell below a certain price point. There are a lot of people in that predicament right now.

 

 

Agree with this. We haven't done it ourselves when negotiating an offer, but the recent appraisal we had for our mortgage refinance had a stunning amount of information, including a very detailed summary of comps in the area.

 

Erica in OR

[lynn]

I've heard of people putting their home on the market "Just to see what they could get". They may not be serious sellers but will sell to make X profit. Make your offer and see if they will take it then you will know.

[Mama Geek]

You can run your own comps by going to the local tax office and looking at what has sold in your area recently. Look at comparable properties (comps).

 

Look to see if the city tax assessment websites have the selling prices of houses on it. You can then look through all the houses in the neighboorhood to find the houses that sold in the last 6 months and calculate the cost per square foot. If the information is online it can be a PITA, but it can be done.

[Shelly in IL]

Please get a home inspection!

[G5052]

I would ask them if they are willing to have a private appraiser come and appraise it. Since it has been on the market for over a year, they would probably be willing. Keep in mind that they might owe too much on it to sell below a certain price point. There are a lot of people in that predicament right now.

 

 

Yes, counties only reassess every 3 years or so, and I wouldn't say that the tax value represents the whole picture. That said, the house across the road finally sold after being on the market for a long time, and from my perspective, the county tax value was reasonable. The new owners paid $60,000 over county valuation for a small house that was *not* at all upgraded or maintained while the previous owner lived there. There were many years of financial difficulties culminating in the police removing the people and a trash-out company emptying the house of their belongings. Then the bank came in and painted/cleaned/replaced damaged fixtures. The builder wasn't very good either, and the other houses built by him on the same road have had significant problems.

 

I'd definitely see if you can find the back story and get it inspected.

[Murphy101]

You can google the address and see when it was last appraised and what for.

 

ETA: I was not referring to county assessment. But if they have had a bank or appraiser come out within the last couple years, I bet it's on the net.

 

I was actually really ticked off that the appraiser my bank used when we refi put all the pictures and such they took on the net and it showed up in a google search. Search ended up taking me to the pics and $ info on realtor.com

 

The photos bothered me because we were and even had company the day the appraiser showed up. So the pics showed the kids bedrooms and and such. Freaked me out. And yes, I pitched a fit and complained about it. I don't *think* they are on there anymore, but once in the net...

[Lang Syne Boardie]

I would ask them if they are willing to have a private appraiser come and appraise it. Since it has been on the market for over a year, they would probably be willing. Keep in mind that they might owe too much on it to sell below a certain price point. There are a lot of people in that predicament right now.

 

I was going to mention this. Homes on our street are worth $40,000 less than we all paid for them just a few years ago. Everybody who really needs to sell puts it on the market for what they owe, not for what it's now worth. Although nobody's sold for that price lately, obviously you have to start there.

[Scarlett]

If it is that overpriced it may be that no one is even looking at it. Make a reasonable offer. Be prepared to show them some comps. Be kind and respectful and complimentary of their home.

[SailorMom]

Just agreeing with the "county appraisals have nothing to do with a houses market value" comments. They are frequently 1/2 the price of the houses around here.

You'd have to go by an real estate appraiser and comps in the area.

It could be that they are in no hurry to sell and are waiting out the market.

[PeacefulChaos]

There's a house for sale in our neighborhood that DH and I would dearly love to buy. It would be absolutely perfect for our family. The house itself has 2 master bedroom suits plus 2 more bedrooms and a bath. {No more sharing a bathroom with teen boys! We could have an exercise room AND a computer room!} The 65" built-in TV and Bose surround system stay with the house. The furnished, 1-bedroom garage apartment would be a fabulous first place for a newlywed couple.

 

The owners are asking $169,900 but the 1/1/13 county appraisal puts it at only $90K. Yes, there are a few additions that would increase the price above appraisal, but not $80K worth, not even with all those perks. At $169K it's well out of our price range but if we could get them to drop their price to $140K or less (preferably below $125), we could make it work.

 

How do we approach the owners with the intent to negotiate price? What should I know that I don't?

 

We've never even considered buying a home before and all advice/tips/whatever is appreciated. TIA

 

Wow. I'm so incredibly jealous that any houses, anywhere, sell for the prices you want. :p Sigh....

In any case, I would say research it up and make an offer. It can't hurt, anyway...

[gardenmom5]

for starters - county appraisals done for tax purposes tend to be low. there is a lot of information that affects house price that the county doesn't have. (and Zillow tends to be off by a lot.) our latest is a lot lower than the appraisal done at the same time for a refinance. to be sure of what is a fair market value - talk to some real-estate agents. you could also get a fair idea yourself by looking at the features, flooring, finishes, etc. of this house, and doing price comparisons for similar houses sale prices in your area.

[gardenmom5]

I wouldn't trust Zillow. They show our home as wayyyy less than comps from a realtor would. They are off by $45k at least, if not more.

 

in my area, they show home values as being LESS than the house JUST SOLD FOR within the last six months. I consider Zillow a place for a laugh, but not serious information. they use the tax assessed value for us - which is a good 1/3 lower than the assessed value by the bank for a refi. I've also seen them way over value a dumpy piece of property.

. If you have something to back up a lower price (besides the county appraisal) that might help.

 

 

and "around here, houses sell for ___% lower than the asking price" isn't a legitimate back-up for justifying the offer. we had one of those for my mother's condo. (we sold it for ALOT more than the moron real-estate agent told his clients to offer. I wanted to send them a note suggesting they find a more intelligent agent.) another thing that affects the bottom line is if you use a real-estate agent and a commission must be give or not. if there is no commission to be paid, they can accept a lower offer and still get as much out of the house.

[DawnM]

Do you know why they are selling? If they don't need to they may not be willing to negotiate.

[Liberty]

Most counties allow you to search all deeds registered on properties in that county. Often, this will tell you what they paid for the house, which might be helpful. Here is a great website: www.pulawski.net You can use this website to access the tax assessment website of any county in the nation.

[LisaKinVA]

Actually, the county appraisal can differ from the actual value by quite a bit, as can Zillow. (FWIW, Zillow is $50k below actual appraised value of our home, and our property assessment is nearly $100k below actual appraised value...it was actually set at the construction loan amount). I have no idea where your house is, but 4 BR, 3 baths (assuming about 2500 sq.ft.), PLUS a (rentable?) 1BR Garage Apartment for $169k doesn't sound like it could be THAT overpriced (granted, my house pricing is skewed to No. VA and the Bay Area of CA... where 169k may you a double-wide...and not a new one, or a seriously old home in need of much repair on a very busy street). A property that makes income is also more than a property one just lives in (although, I'm assuming it doesn't come with the renters...so potential rent shouldn't count as much).

 

If you love the home, I do suggest you make an offer on it. I would look at Trulia.com for houses that are on the market for rent or sale, and compare to those. Since they are FSBO, if they aren't in the MLS system, their house isn't getting seen, which is why the home is sitting (FSBOs use a service that would get their home into the MLS system...but Realtors aren't likely to show your house if they aren't getting any cut at all). It isn't easy to market a house on your own.

[UrbanSue]

Have you actually been inside the house? Did the owners show it? Do you have a sense for how eager they are to sell? That will be a useful piece of information.

 

If they are selling FSBO they could be completely clueless as to the current state of the market. They could also be not really ready to sell yet. Or both. We tried buying a house from someone who was selling on his own. We did manage to talk him down from his dream-land asking price but once we agreed on a price, he stopped returning calls and wouldn't sign anything. He didn't really want to sell, in the end. That house is still on the market over two years later.

 

But I will affirm what everyone else has said: county appraisal and market value bear no relation to one another. You want the former to be as low as possible (because taxes are tied to it) and the latter to be as high as possible. Zillow isn't always a good judge of current home values but, depending on how brisk the market is in your area, you may be able to find at least a few similar recently sold homes. That will at least give you a ballpark.

 

But, also, a serious home seller is not going to expect someone to walk up and pay his full asking price. At least not in most markets right now. If he's planning to sell, he's planning to negotiate. Making an offer may be the only way to find out what the situation is. But if the seller isn't willing to pay an agent for either party (usually the seller pays BOTH agents out of the proceeds of the house) then you should really think about getting a lawyer or calling a realtor and negotiating a flat fee to help you through the contract. If this is your first time, you should be careful.

[gardenmom5]

I have no idea where your house is, but 4 BR, 3 baths (assuming about 2500 sq.ft.), PLUS a (rentable?) 1BR Garage Apartment for $169k doesn't sound like it could be THAT overpriced (granted, my house pricing is skewed to No. VA and the Bay Area of CA... where 169k may you a double-wide...and not a new one, or a seriously old home in need of much repair on a very busy street). A property that makes income is also more than a property one just lives in (although, I'm assuming it doesn't come with the renters...so potential rent shouldn't count as much).

 

If you love the home, I do suggest you make an offer on it.

 

I think she's in Texas? dh made the same comment - $169K in the greater area here (I looked. there are five, 2bdrm condos in older buildings in that range. the largest is 1000sqft.) is a used double wide that is at least an hour commute. (probably more.)

 

if she wants to rent out that grandma apartment, she needs to also check into what the going rents are, and the rent market is. how in demand would the apartment be?

[City Mouse]

I lived in the Houston area for many years and that actually sounds like a fair price for a 4 bed 3bath home with a separate apartment, but it would depend on the condition of the house and the neighborhood.

 

We sold our 3bed 2 1/2 bath Houston house in Jan 2012 for around $150,000. It was less than 10yrs old and in very good condition.

 

[bobbeym]

I visited Zillow, Tulia, HAR, and a few other sites and all showed the same numbers as the flyer we got from in front of the house. The house was originally listed in Oct '12 for $185 and dropped to $179.5 in mid-Nov '12, then to the current $169.9 this past May. That does seem to be comparable to what other houses of similar size are asking based on one site that gave me price by sq.ft. I could online find online data for 1 house that sold in May for $155K that similar. Many of the houses for sale around here are considered water-side properties and seriously skew the data.

 

The main house is 1902 SF, with 4 bedrooms (2 master suites) and 3 full bathrooms. The garage apartment is 1 bedroom w/ kitchen and bath, 816 SF, for 2,718 SF total. Both have covered patios. There's a covered storage area attached to the garage and an outside storage building in the backyard.

 

Do you know why they are selling? If they don't need to they may not be willing to negotiate.

 

No, we don't know. DH agreed to call them tomorrow to ask questions about the house after I did the info gathering.

 

Have you actually been inside the house? Did the owners show it? Do you have a sense for how eager they are to sell? <<snipped>> But if the seller isn't willing to pay an agent for either party (usually the seller pays BOTH agents out of the proceeds of the house) then you should really think about getting a lawyer or calling a realtor and negotiating a flat fee to help you through the contract. If this is your first time, you should be careful.

 

No, we haven't been inside but we've viewed pics online. It's a beautiful house and I now I see why they're asking $170K for it. It's available for private showings upon request, so DH will ask about that when he calls tomorrow. Several of the websites show a broker listing, but the flyer has the owner's name and number on it so that's something else DH has to find out about. If we decide this might actually be doable, we'll definitely need to find someone more knowledgeable to review all this with us. We've always rented and never been interested in buying but this house would be so perfect for our needs that it makes us seriously consider buying an option.

 

I think she's in Texas? dh made the same comment - $169K in the greater area here (I looked. there are five, 2bdrm condos in older buildings in that range. the largest is 1000sqft.) is a used double wide that is at least an hour commute. (probably more.) if she wants to rent out that grandma apartment, she needs to also check into what the going rents are, and the rent market is. how in demand would the apartment be?

 

We'd be renting the apartment to DS19 and his lovely bride. Current rental rates for ~800sf apartments run $600-900/mo. That's slightly more than what they pay now for "room and board", so I don't know we'd increase their rent all that much. Either way, if we bought the house we'd draw up a legal rental agreement for the kids and probably call it ###B Street so they could feel like it really was their own place and not so much as they were living with mom and dad.

 

I'm hesitant about applying for a mortgage right now b/c our car won't be paid off until September, but our lease isn't up until the end of November so I can't move much earlier than that anyway. I'm also concerned about being able to come up with a down payment, but that's one of the things that DH will ask about to see if they'd be willing to work with us. In my dreams, they're not in a huge rush to sell, are willing to wait until November, and will rent to us for a year in lieu of down payment in order to give us time to feel more firmly situated financially before buying outright for a lower price. DH is convinced that even at their asking price we could handle it but I'm a huge money worrier. That's almost 3/4 of a paycheck and I feel like that would give us absolutely no wiggle room if something happened, nor do I want to be completely dependent on the kids' rent payment to ensure I make mortgage.

[SunnyDays]

You're the correct one on the money.... If you will have to depend on the kids' rent to make mortgage, it's more than you want to spend. Also, 3/4 of a paycheck.... Is that a monthly paycheck, biweekly, or what? Keep in mind most banks won't approve a mortgage payment more than 25-30% of your monthly income, of course that varies a bit.

 

It sounds lovely... It certainly doesn't hurt to take a look and talk to the owners. :)

[KungFuPanda]

Nobody in their right mind will move and rent to you for a year while you save for a down payment. It's too risky for them.

 

Also, the minute you move in, something will break . . . washer, hot water tank, HVAC unit, roof etc. . . . It just will. No house is worth sleepless nights.

 

You seem like you're already emotionally attached and that's not good for you.

[bobbeym]

You're the correct one on the money.... If you will have to depend on the kids' rent to make mortgage, it's more than you want to spend. Also, 3/4 of a paycheck.... Is that a monthly paycheck, biweekly, or what? Keep in mind most banks won't approve a mortgage payment more than 25-30% of your monthly income, of course that varies a bit.

 

It sounds lovely... It certainly doesn't hurt to take a look and talk to the owners. :)

 

 

That's biweekly. DH knows what my comfort number is for any house we might live in, rental or not, and that my number is completely separate from the kids. No matter how much he may think we can afford more, and since he does the budgeting he's probably right. But he's not going to go above what I feel comfortable with b/c then he'd have to live with me constantly stressed out. LOL

 

Nobody in their right mind will move and rent to you for a year while you save for a down payment. It's too risky for them.

 

Also, the minute you move in, something will break . . . washer, hot water tank, HVAC unit, roof etc. . . . It just will. No house is worth sleepless nights.

 

You seem like you're already emotionally attached and that's not good for you.

 

 

Oh I know that. I did clarify that it was in my dreams. LOL No, I'm not emotionally attached, just a dreamer. I can take anything and imagine what I'd do with it but at the end of the day my life is what it is and I'm more than happy with the blessings I currently have.

[Lanny]

Make them a serious offer, as close to their asking price as you can get, and they might accept it, or then be willing to negotiate with you. The tax value of a house and the actual market value are totally different numbers, whether you are in the USA or here in Colombia... GL

[UrbanSue]

You might want to call a bank and start the pre-approval process for a mortgage. It doesn't lock you into anything but it does give you two important things: 1) it lets you know what you can afford--no matter what you and your husband think about your budget, the bank is the one who decides if they want to give you money and 2) if you are approved for the amount you offer, you can let the seller know. This can really increase your negotiating power because the seller knows you are serious and the deal won't fall through once you talk to the bank.

 

And I agree that something will break the moment you move in. Get a really good inspection, and do not buy without an emergency fund in place.