What is a reasonable offer on a house? (1 Viewer)

[Tim Abbott]

Robert_Z,


Price per square ft is certainly something you want to consider, and its probably one of the more important ones, but it is a two dimensional view of something that is very 3D. You should also be looking at:

-Inventory (# of properties on the market)
-Average # of days for a property from list to sale date
-Days on market (is this house lingering?)
-Recent comps (properties that have actually closed)
-Recent listings

This doesn't even take into account the non-numerical factors:

-Appreciation potential
-Desirability of the school system
-Updates done to the property
-Location
-Location
-well...I think you get the idea.


Personally, I'm not sure if your realtor is doing their job. They should be helping to educate you and letting you know what the trends are in the marketplace. They should also be using that knowledge on your behalf in negotiations. As an example, when you look at what interest rates have done over the last 12 weeks (up approx 1.25% on the 30 yr fixed) housing has become roughly 15% more expensive. Current conditions may dictate that a house that was listed 4 months ago for $400K may not be worth that today based on the increased cost of a mortgage. Your realtor should be pointing that out as a buyers agent. Make sure you are not working with someone as a sub-agent, that is a waste of time and not in your best interest.

Bottom line, if you aren't 100% confident in your realtor, you need to find a new realtor.

Good luck!

 

[Tim Abbott]

Robert_Z,


Price per square ft is certainly something you want to consider, and its probably one of the more important ones, but it is a two dimensional view of something that is very 3D. You should also be looking at:

-Inventory (# of properties on the market)
-Average # of days for a property from list to sale date
-Days on market (is this house lingering?)
-Recent comps (properties that have actually closed)
-Recent listings

This doesn't even take into account the non-numerical factors:

-Appreciation potential
-Desirability of the school system
-Updates done to the property
-Location
-Location
-well...I think you get the idea.


Personally, I'm not sure if your realtor is doing their job. They should be helping to educate you and letting you know what the trends are in the marketplace. They should also be using that knowledge on your behalf in negotiations. As an example, when you look at what interest rates have done over the last 12 weeks (up approx 1.25% on the 30 yr fixed) housing has become roughly 15% more expensive. Current conditions may dictate that a house that was listed 4 months ago for $400K may not be worth that today based on the increased cost of a mortgage. Your realtor should be pointing that out as a buyers agent. Make sure you are not working with someone as a sub-agent, that is a waste of time and not in your best interest.

Bottom line, if you aren't 100% confident in your realtor, you need to find a new realtor.

Good luck!

 

[Sean Van Voorhe]

$100/sq ft???? my "shack" is 980 sq ft and I paid $214k for it 3yrs ago. I considered it an absolute rip off at the time but with nothing else in my range I bought it. 3 yrs later it is now worth at the very least $320K, so I guess it turned into a good buy after all.

Good luck to you. Purchasing a house really can be a challenge.

 

[Sean Van Voorhe]

$100/sq ft???? my "shack" is 980 sq ft and I paid $214k for it 3yrs ago. I considered it an absolute rip off at the time but with nothing else in my range I bought it. 3 yrs later it is now worth at the very least $320K, so I guess it turned into a good buy after all.

Good luck to you. Purchasing a house really can be a challenge.

 

[Yee-Ming]

Andrew, I was about to whine about astronomical land prices in Singapore as well, but come to think of it, we don't hold a candle to Hong Kong, at least Victoria/Kowloon, New Territories doesn't "really count".

15x10 feet for a living room does indeed sound modest, similar to most apartments here if you exclude the "dining room" portion of it -- most apartments combine the two areas, so we don't have a separate dining room, many common designs give you a large "L", if you will, with one arm designated "living room", the other "dining room". Note, though, that we don't usually have halls, the front door opens right into living/dining room.

As for realtors (we call them property agents), yes, you can have them "both ways", one to market/sell a property for you, one to try to find a suitable one. You'd pay them a pre-determined percentage of the purchase price of whatever you ultimately buy, with no payment if nothing works out; typically 1-1.5%.

A friend was once selling his property and engaged an agent to market it. There was a keen buyer (represented by an agent), but parties remained about S$2,000 apart. The two agents decided of their own accord to "split the difference" out of their commissions, to complete the deal, i.e. each agent would forgo S$1,000 out of the commission so the respective client received/paid what he wanted net of agent's fees. Curious to say the least, and IMHO means no contract was actually agreed by the parties, but everyone just went along with it.

 

[Yee-Ming]

Andrew, I was about to whine about astronomical land prices in Singapore as well, but come to think of it, we don't hold a candle to Hong Kong, at least Victoria/Kowloon, New Territories doesn't "really count".

15x10 feet for a living room does indeed sound modest, similar to most apartments here if you exclude the "dining room" portion of it -- most apartments combine the two areas, so we don't have a separate dining room, many common designs give you a large "L", if you will, with one arm designated "living room", the other "dining room". Note, though, that we don't usually have halls, the front door opens right into living/dining room.

As for realtors (we call them property agents), yes, you can have them "both ways", one to market/sell a property for you, one to try to find a suitable one. You'd pay them a pre-determined percentage of the purchase price of whatever you ultimately buy, with no payment if nothing works out; typically 1-1.5%.

A friend was once selling his property and engaged an agent to market it. There was a keen buyer (represented by an agent), but parties remained about S$2,000 apart. The two agents decided of their own accord to "split the difference" out of their commissions, to complete the deal, i.e. each agent would forgo S$1,000 out of the commission so the respective client received/paid what he wanted net of agent's fees. Curious to say the least, and IMHO means no contract was actually agreed by the parties, but everyone just went along with it.

 

[Jeff Ulmer]

Truer words were never spoken. It sounds like the owners have a fixed price that they think they can get, and if they aren't willing to negotiate, I'd move on. Many people think their houses are worth a lot more than they really are, and if you over pay, you may wind up with an even worse situation. Have you done a home inspection to make sure there aren't some horrible hidden problems? It doesn't take much to eat up another $5-10,000 on a home in repairs.

Take this as a sign to look around some more, perhaps the house you really want is still waiting for you.

 

[Jeff Ulmer]

Truer words were never spoken. It sounds like the owners have a fixed price that they think they can get, and if they aren't willing to negotiate, I'd move on. Many people think their houses are worth a lot more than they really are, and if you over pay, you may wind up with an even worse situation. Have you done a home inspection to make sure there aren't some horrible hidden problems? It doesn't take much to eat up another $5-10,000 on a home in repairs.

Take this as a sign to look around some more, perhaps the house you really want is still waiting for you.

 

[Cary_H]

There are any number of reasons a seller won't move on his asking price. Some are just testing the water, and don't care one way or another if it ever sells. Some simply can't comprehend that what they think it's worth, or rather, what net figure they need to get after the smoke has cleared, has anything to do with what it's reall worth.
It's only worth what someone is willing to pay for it. It doesn't require that a potential buyer view all that many homes before he or she knows an overpriced listing when they see one.
I would suggest you make an offer anyway, if this is the one you want. If your realtor is on the ball he'll present your offer saying something along the lines of, "my people have put your home ahead of another that can be gotten for less but want to see first if we can put a deal together on yours. Please understand they have no intent to offend you, but this is a bit beyond what they can afford. Just give it a chance."
If the vendor's realtor has half a brain at all, he'll keep a tight reign on his client during the presentation of your offer. At the very least your realtor should come away with a pretty good idea of what makes the seller tick, and if his realtor should go back to selling shoes.

 

[Cary_H]

There are any number of reasons a seller won't move on his asking price. Some are just testing the water, and don't care one way or another if it ever sells. Some simply can't comprehend that what they think it's worth, or rather, what net figure they need to get after the smoke has cleared, has anything to do with what it's reall worth.
It's only worth what someone is willing to pay for it. It doesn't require that a potential buyer view all that many homes before he or she knows an overpriced listing when they see one.
I would suggest you make an offer anyway, if this is the one you want. If your realtor is on the ball he'll present your offer saying something along the lines of, "my people have put your home ahead of another that can be gotten for less but want to see first if we can put a deal together on yours. Please understand they have no intent to offend you, but this is a bit beyond what they can afford. Just give it a chance."
If the vendor's realtor has half a brain at all, he'll keep a tight reign on his client during the presentation of your offer. At the very least your realtor should come away with a pretty good idea of what makes the seller tick, and if his realtor should go back to selling shoes.

 

[Robert_Z]

Thank you all for the advice. I have decided against buying the small "overpriced" house. As background, it is listed at $139,500, and the seller would only come down to $135. It has been on the market for over 3 months. Most of the updates (pergo carpets and flooring, new kitchen cabinets, interior paint) were done in 2001, with a new roof this spring, so I am not sure how "new" those updates really are. What drew us most to the house was not even the house, it was the huge lot and the beautiful pecan trees.

My girlfriend and I were just looking at that bigger newer house I mentioned. She fell in love with it also. I liked it enough to really imagine myself in it, and now we are both having a tough time seeing ourselves living in a

 

[Robert_Z]

Thank you all for the advice. I have decided against buying the small "overpriced" house. As background, it is listed at $139,500, and the seller would only come down to $135. It has been on the market for over 3 months. Most of the updates (pergo carpets and flooring, new kitchen cabinets, interior paint) were done in 2001, with a new roof this spring, so I am not sure how "new" those updates really are. What drew us most to the house was not even the house, it was the huge lot and the beautiful pecan trees.

My girlfriend and I were just looking at that bigger newer house I mentioned. She fell in love with it also. I liked it enough to really imagine myself in it, and now we are both having a tough time seeing ourselves living in a

 

[Philip_G]

maybe they heard your 3000GT engine tapping as you pulled up and they pegged you for a sucker :b
I wish I could buy a house here for 139 :frowning:

 

[Yee-Ming]

So do I, so do I... :frowning:

 

[andrew markworthy]

Ditto.

How times change, though. When I was a student back in the late seventies I met a guy from a really rich family and their family home was worth over £100k. At the time this sounded an insanely expensive price (the house was big, though - it was the first private house I'd visited where you could very obviously see perceptual foreshortening of the walls in individual rooms). When I first came to buy a house of my own nearly a decade later, I had to stretch my budget to afford a house costing (wait for it ...) £21k. We recently spent more than that on moving to our new house, if you factor in not only legal fees but new furniture, having the garden landscaped, etc.

 

[Philip_G]

huh, I always pegged you for younger than that. I guess I really don't know why.

I just got off the phone with a guy in the UK with a bit of an asian accent on top of a UK accent, what an interesting fellow.

 

[andrew markworthy]

I just look older.

 

[Chris]

Yep, there are plenty of fish out there. My wife & I looked for about 6 months.. primarily because we had to stay within a specific school district for our son (who is autistic). We were looking in a set range, and then a house popped on the market 1,700sqft, about 2 blocks from the district. We made an offer within a week after it was on the market, closed two weeks later. ($136) which put it about $20k less then what we were looking at spending. Fairly nice yard and the location was the most ideal for what we were after. (4bdr)

Still work to do (we're taking out trees right now, removing elms and putting in pear/apple, as two of the elms are diseased..) and evening out the roll in the yard.. but not bad. Realistically, to be this close to the school at the cost, it makes it a lot easier to put changes into it. (ie, there are some foolish construction issues that just need simple solutions, but nothing major)

Funny story for the NY folks a company who is a good client of mine just relocated their entire business, employees and everyone, from san fran to KC about 3 years ago.. they promised all the employees that salaries would stay the same, but they'd help with relocation.

Their lowest paid employee - a graphics artist - makes about $65k, and was surprised how much farther her money goes here.. she was living in a loft in SanFran, but bought a nice 3 bdr. in the suburbs here..

What your money buys varies on where you go..

As a small add on to that, my favorite reminder is: my parents bought their house, a six bedroom ranch with an acre and a half plot for less then $22,000 in 1984.. last year, a neighbor near to them, with a 10 bedroom victorian three story, 2 acre sold for $72,000. If you're willing to live in rural america, and you've got a job there, your cost of living is nothing.

 

[Philip_G]

Unfortunately, there's the catch.
Where there's jobs, there's demand.

 

[Bryan_K]

Bought a house 2 years ago. there are allot of things that go into a cost of a house, NOT just how big it is. (yard size, mature tree's, newaty of appliances & upgrades, neighborhood)

Story. A friend of mine who lived in TX, had to sell her house because of a loss of a job. Because allot of minorities moved into her neighborhood she had to sell cheep. You see how the neighborhood vastly determines Property values.

Don't blame me,I didn't make up the rules.