Home values

[Coming Clean]

I'm interested in purchasing this home, but I'm wondering about the price of it and if its priced too high. I've done some research and saw where the home was purchased by the seller for $166k in Feb '05 and the current assessed value on it is about $162k. The seller currently has it on the market for $189k, and it's a 4bed 2 1/2bath home, approx 2286sq ft in a small NC town not to far from Greensboro. Average homes in that area are selling for about $171k.

Can anyone help me to understand how home sellers determine the price of their homes and give me an idea of how much would be a good offer? I am a first time homebuyer and qualify for up to $195k, but I don't want to get a bad deal when I could get a better deal.

Thanks

[jq26]

Lots of factors go into it, but mostly it is based on comp values.

First, the home market is always very regional. Your same $170k home may appraise for $300k in Philadelphia (where I live), $100k in Detroit, or $1,000,000 in NYC. You have to look at recent comparisons in the area where you are. To my knowledge, in your area, homes did not see the 100%-200% inceases over the past 5 years that big metro areas experienced, and if the economy is relatively strong in your area, any downside would be very limited. Your home is worth what others will pay for it. If there are many employed people in the area and the home is of good value, then you are good to go.

Second, if you are planning on being in this house for 5 years or more, the next 6 months is a grat tiem to buy IMO. Rates are dropping and many markets have lots of inventory (which leaves you lots of room to negotiate). Make a low offer that incorporates a risk of a reduction in appraisal value in the future. The seller can always refuse and then counteroffer.

[TheRoadBack]

I'm interested in purchasing this home, but I'm wondering about the price of it and if its priced too high. I've done some research and saw where the home was purchased by the seller for $166k in Feb '05 and the current assessed value on it is about $162k. The seller currently has it on the market for $189k, and it's a 4bed 2 1/2bath home, approx 2286sq ft in a small NC town not to far from Greensboro. Average homes in that area are selling for about $171k.

Can anyone help me to understand how home sellers determine the price of their homes and give me an idea of how much would be a good offer? I am a first time homebuyer and qualify for up to $195k, but I don't want to get a bad deal when I could get a better deal.

Thanks

go to zillow.com That is a good start where you can put in the address and it will give you the estimated value. It will also give you comps in the same area of what they sold for and when. With that you should have some good ammo. Also offer alot less then you are willing pay. This is a buyers market and you might be surprised by what someone will accept. You can always increase the offer. Good luck to you!

[jq26]

Zillow is decent but.....a few anecdotal experiences with the site leads me to believe that the Zestimate feature is not all that useful. According to zillow, my home has fluctuated up and down by $50k in the past year. Homes on my block (according to deed recordings that I've pulled) have been rock solid 100% stable for two years. Not up but not down. Also, my dad bought a house last year for $300k less than what the Zestimate stated. In other words, the software can guess at the value, but the real value is only what someone is willing to pay for it. Also, there is a house next to my buddies place that has been LISTED at $325k for 9 months, but somehow Zestmate says it is worth $400k. Obviously that can't be right.

The comp ACTUAL SALE values on that site are pretty decent though. They are derived from recent deed recordings. Keep in mind that the values that you see may be higher than actual sale prices. Many buyers in this market are opting to have the seller bring cash to the table and to have the sales price on the deed listed higher, so the net sales price could be $10k lower. Zestimate does not pick up on this, but a realtor can give you this info out of their database. Make sure you ask for it.

[ctfudge&bankofC-ville]

In my experience, but this applies only to my area, the zestimate is always high.

[jetscarbie]

4bed 2 1/2bath home, approx 2286sq ft in a small NC town not to far from Greensboro. Average homes in that area are selling for about $171k.

Is the average homes in your area 4bed 2 1/2 bath? I would try to find homes similar to the one you are looking at and see what they sold for.

Can anyone help me to understand how home sellers determine the price of their homes and give me an idea of how much would be a good offer? I am a first time homebuyer and qualify for up to $195k, but I don't want to get a bad deal when I could get a better deal.

There's different ways. Some sellers might be upside down in what they owe on the loan. That may be one reason they charge to much.

Some sellers may just be plain sentimental.....they charge what they think it's worth.

Some may have put alot of money into upgrades. Many, Many different reasons.

Talk to a professional. They can usually help you deterime what the area comps are for that area. Ask TONS of questions.

[jq26]

In my experience, but this applies only to my area, the zestimate is always high.

I noticed back when the market was still in a frenzy that Zestimate was lower than actual sales prices. Now that the market is in reverse, Zestimates seem to be very high compared to selling prices.

[Coming Clean]

I noticed back when the market was still in a frenzy that Zestimate was lower than actual sales prices. Now that the market is in reverse, Zestimates seem to be very high compared to selling prices.

Thank you all for your responses. I think I'm starting to understand a little better.

Except that a house just came on the market today, and its roughly in the same area (just a couple of blocks away in another subdivision). It's a 4brm/2.5bath, 1770 sq ft and it's going for $136500. Why the big difference? The other house has been on the market since 6/07 (maybe 5/07).

I think I might want to go for the one that came on the market today. Do you think I can start low like $127K??

Also......

"the next 6 months is a grat tiem to buy IMO" - What is a IMO??

"Some sellers might be upside down in what they owe on the loan" - What does this mean??

My area has a lot of inventory with about 5/6 new subdivision and at least 2/3 within my range. Plus alot of older homes are coming on the market too. The location is ideal because we are midway between Durham/RTP NC and Greeensboro NC.

So should I wait or make a move within the month?

[jq26]

IMO = In my opinion.

"Upside down" = owe more on their mortgage balance than their house is really worth

What I mean is, sellers who have been stuck carrying the cost of their home (some living there but barely affording it and some with empty homes) are getting close to the point of capitulation where they will drastically reduce the price to unload it. Every home will eventually sell- it comes down to price. Rates are also VERY GOOD right now.

Regarding the other home going on the market for $136k, you have to walk through them both and see why ti is $136k and the other is what it is. If you walk through 25 houses, you'll have an even better idea about value. In this market, you could easily walk through 25 comparable homes over two or three days. That's where you do your homework, compare values, see what condition it is in, and make that determination as to value. If you don't do this homework, then you are highly increasing your chances of overpaying.

Honestly, no one can really make your decision. The national market is way oversupplied and prices will probably retreat. But that says nothing about your area specifically.

[jetscarbie]

When my husband and I searched for houses...we picked a couple of smaller priced ones, middle priced, and some of the higher prices (priced right at our cut-off point:))

We knew without a doubt that we wanted certain things in our house. We also took into consideration when looking at the house...how much we would have to spend to get it the way we wanted it.

Some houses we looked at had hardwood floors, some carpet, some had decks some did not. Some had land some were just lots.

We compared the good and the bad. It seems to be a buyers market right now. Lots of people are wanting to get rid of houses but are having a very hard time doing it.

When we found the one we wanted, we knew it wasn't overpriced. It was reasonable compared to all the other ones that we looked at. We pretty much gave them asking price but made the sellers pay all closing cost. We also made them have all the appliances and other stuff inspected and updated

When we did our contract with them....we had contingencies in place...which you should always make sure you do. It just protects you in case sh*t happens.

Some of our contingencies were:

If financing falls through we can get out of contract

If any of the inspections fail, they have to fix, or we pull out.

If our home inspection is bad (it's worth the money to pay for a FULL home inspection)

If the appraisal falls through

They have to leave all appliances and garage door openers...etc.....

Some people ask for alot more.....some people ask for less. Usually if the house has alot of people interested....you would do some things different.

.

Oh and one more thing....you can offer whatever you want. It doesn't mean they have to accept though. My brother looked at a house that was 168,000 and he offered 110,000. They came back with an offer for 125,000. He accepted. But some may consider it an insult. It's always good to know...why they are selling.

Good luck!