Author Topic: Determining value when buying a house  (Read 3014 times)

catccc

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Determining value when buying a house
« on: August 05, 2015, 10:43:17 AM »
I've never bought a house before.  There's one down the street that I like the looks of.   We used to rent the other half of this duplex, so I know what it is like to live in the area.

It's FSBO and he has listed it at $250K.  It's a duplex, 1,500 sqft, and it is very nicely upgraded and gorgeous inside. 

There are 3 houses that have recently sold that are nearby:

A SFH that is split into two units, 1,900 sqft for $234K
A SFH, 1,800 sqft for $193K
A SFH,  1,800 sqft, but with a bigger lot that includes a driveway for $330K

I might be giving some useless info here. 

My questions: 
How does it work when you make an offer contingent on appraisal?  Do sellers hate this and just want you to agree to a price? 
Since it is FSBO, does the owner expect to pay a commission to the buyers' agent?  What if there is no buyers' agent?  (We aren't working with anyone.  Can we use this as a negotiation tactic?  Or is it stupid for us to try to do this on our own having never purchased real estate before?

ShoulderThingThatGoesUp

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Re: Determining value when buying a house
« Reply #1 on: August 05, 2015, 11:06:40 AM »
$167 a square foot for a twin? My observation around here is that every area has a cap on how much a twin or a detached unit is going to be worth. My house is at or near the cap where I am, and any number of upgrades won't increase the total price. From the information you've provided your resale value would be way under that.

Or is this not a twin?

I'm a red panda

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Re: Determining value when buying a house
« Reply #2 on: August 05, 2015, 11:09:16 AM »
We sold FSBO, and the buyers ask that we reduce the appraised price by half the amount we would have given to an agent. We made more than if we/and they used an agent, they paid less than if we/they had used an agent.

(I don't have experience with paying a buyers agent FSBO; so I can't help you there. No buyers agent I ever worked with would show FSBO properties; and I guess it would be up to the seller to agree to their terms, they might just not be willing to do that; it would just be all part of the negotiation, the same as any other price reduction.)


It sounds way overpriced based on comps, but are those comps in the same neighborhood/school district? Do they have the same level of upgrades inside?
I would definitely make an offer contingent on appraisal, especially if you need financing, as your financing will likely depend on the appraisal.  I'd also have an inspection contingency.

catccc

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Re: Determining value when buying a house
« Reply #3 on: August 05, 2015, 11:22:53 AM »
It is a twin. 

Are zillow zestimates worth anything?  I just looked up them up for this house and the one that sold for $330K.  The one that sold for $330K has a zestimate of $258K.   This one that is for sale for $250 has a zest. of $211K.

The area is kinda becoming a hotspot, I think.

The comps I'm listing are houses on the other side of the cross street (so the other half of the twin and a street are between them), and the $330K one is maybe 2-3 houses down the same street.  So very same neighborhood.  I don't know the level of upgrades in the $330K home.  The other two at $234 and $193 were definitely not as nice inside, but they weren't falling apart, either.

I'm a red panda

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Re: Determining value when buying a house
« Reply #4 on: August 05, 2015, 11:48:06 AM »

Are zillow zestimates worth anything?  I just looked up them up for this house and the one that sold for $330K.  The one that sold for $330K has a zestimate of $258K.   This one that is for sale for $250 has a zest. of $211K.


No, they aren't.
But since this is a FSBO, that doesn't mean the homeowner knows that, so if you wanted to make an offer with that as some of your rationale* you could certainly try.

*If you actually talk to them vs. just sending impersonal paperwork. When we sold FSBO we had a lot of contact with the buyers and chatted regularly. It was nothing like the transactions we've had through realtors.

catccc

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Re: Determining value when buying a house
« Reply #5 on: August 05, 2015, 12:13:41 PM »
Thanks for the feedback. 

I think the homeowner is a pretty savvy guy, so maybe that isn't a good approach for this situation.  I was just wondering what the overall impression of zestimates were, generally speaking.

We really don't see leaving the area anytime soon, and I feel pressure to buy if we are going to stay, especially now given that the area is becoming so hot.  IDK.  We've been looking for a house off and on for nearly 7 years now.  Our budget used to be $400K and we were looking outside of town for land, and we were going to put a lot down to make the mortgage manageable.   $250K maybe isn't so bad.  I just don't want to be foolish here.

I've actually contacted the homeowner of the unit next door that we used to rent.  Wondering if he'd be up for selling the place.  The interior is not as upgraded and not nearly as slick and new, but I feel like it's a little nicer because it's the last house on the block and has a small garage on the side.  I think he paid $230K for it in 2006 or so.  But that was years ago and a different economy...

ShoulderThingThatGoesUp

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Re: Determining value when buying a house
« Reply #6 on: August 05, 2015, 12:20:50 PM »
Zestimates are certainly garbage in the Lehigh Valley.

I don't know where you are exactly but that's a very high price for a twin that I assume isn't new. (Maybe you're in Lower Merion or something? But that's not "becoming" a hot spot) Up here $250k will get you a brand-new townhouse that's nearly 2000 square feet in the most well-regarded school district.

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Re: Determining value when buying a house
« Reply #7 on: August 05, 2015, 12:27:55 PM »
$250K maybe isn't so bad.  I just don't want to be foolish here.


Don't go in with a full price offer unless houses in your area sell in a matter of days or hours.  If they didn't use a realtor, they likely pulled that number out of thin air based on what they "want to get".  And they know people will negotiate; so possibly they have said to themselves "we'll take anything above $220..."


catccc

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Re: Determining value when buying a house
« Reply #8 on: August 05, 2015, 01:13:45 PM »
Zestimates are certainly garbage in the Lehigh Valley.

I don't know where you are exactly but that's a very high price for a twin that I assume isn't new. (Maybe you're in Lower Merion or something? But that's not "becoming" a hot spot) Up here $250k will get you a brand-new townhouse that's nearly 2000 square feet in the most well-regarded school district.

In the interest of privacy (or at least a guise of privacy?!)  I'm going to send you a private message.  Just realized you are kinda in the area...

catccc

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Re: Determining value when buying a house
« Reply #9 on: August 05, 2015, 01:17:40 PM »
$250K maybe isn't so bad.  I just don't want to be foolish here.


Don't go in with a full price offer unless houses in your area sell in a matter of days or hours.  If they didn't use a realtor, they likely pulled that number out of thin air based on what they "want to get".  And they know people will negotiate; so possibly they have said to themselves "we'll take anything above $220..."

It's hard to say how quickly places sell.  There are some properties that I've seen sit for a while, including one of the comps that went for $193K.  The $330K place was snatched up pretty quickly.  It's actually a classmate of my kid that bought the place.  Well, her family or parents did, rather.  Preschoolers don't buy houses.  I kind of want to ask them about it but I don't really know what my questions should be...  I don't think it was a FSBO.  Maybe I would ask how they felt comfortable with the price given the zestimate?  I don't know them that well.  We are just cordial/friendly if we run into each other on the street.  DH is also friends with friends of the people that bought the place for $234K.  I actually called about that one, but it was already under contract when I called about it.  Can't remember how long it had been on the market, it could have been a few weeks, but not more than a couple months...

icebox92

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Re: Determining value when buying a house
« Reply #10 on: August 05, 2015, 04:18:28 PM »
We have bought two primary homes (one which we then turned into a rental).  Both transactions we did not use a buyers agent (and were first time home buyers as well).  We absolutely used this as a negotiation tactic.  They won't have to pay the standard 6% fee, so why shouldn't you automatically drop your offer by the corresponding rate (and then some - we've never made a full price offer)?  Granted this is a FSBO is its really only a 3% drop in fee, but still that is a significant savings IMO.