Asking price vs. Offer price?

Question

How can a seller justify price their home $3000 more than the comprable home on sale nearby and the comprable has more bedrooms. If a home is worth the asking price, what is the standard price to offer. Is it $5000 less or more?

I think when I view the property for the first time, I will not only bring an RE expert, but also an appraiser so I can get a better idea on the true value of the property. Has anyone ever did this before?

Answer 1

People can ask whatever they want for their property. Nothing ventured, nothing gained. They may have a better location, view, newer appliances, or other amenities that make their home have higher relative value than those in the neighborhood.

Number of bedrooms is key, though, and one reason why those wishing to add value to their homes will add on a bedroom because it puts their home into another pricing category versus just a remodeling job like a kitchen.

Usually a seller anticipates they will be negoted down from what they ask for their property. I think 5% to 7% was a norm I was told when I bought my first home, so they may automatically price up by 5% to 7%.

If the house just came on the market, then that is top price. It may have to sit a while before they decide to start discounting, but you run the risk of losing that house if you don't throw your bid in the ring before someone else does.

If you go with an appraiser, you must pay for that appraisal although that may just be $150 to $200. Be prepared to swallow that cost if the bid you submit is not accepted.

If you have mortgage financing through a bank or mortgage lender, an appraisal is typically REQUIRED before your loan is approved. This gives the lender confidence that the loan-to-value ratio is in an acceptable range according to their credit standards and that they are not financing a house priced too far above market. But you don't have to have the appraisal done if you don't want to before you make your bid.

Ask the seller when the last time the property was appraised and if they will share that information with you. Also ask what the total square footage is although fewer people are giving this information out because it provides too easy a yardstick to compare with other houses.

Answer 2

There is no such thing as a "standard offer". To "bring" an appraiser with you is highly unusual, but if you insist, they will charge you about $350 and most likely you won't be able to use that appraisal, because the banks hire their own to prevent loan fraud, so that means you'll have to pay for another appraisal.

Keep in mind that each property is unique, and just because a home is smaller, or has one less bedroom, doesn't necessarily mean that it should go for less money.

What is the overall condition? Does it have hardwood floors? Is the landscaping and curb appeal superior to the other comparables? Is the lot superior? Is the lot larger? Is the subject property on a better street?

All of these things can cause a subject property to be worth as much as 10% MORE than a comparable.

Also, keep in mind that homes FOR SALE are NOT used for comparables...ONLY closed transactions...anyone can list a property for anything that they want...doesn't mean that it will sell for that.

When you get a Realtor, they will explain this to you in more detail.

PS: Fren is incorrect that appraisers are just real estate agents that specialize in appraisals. In NO STATE, are appraisers required to have a real estate license, and in fact the MAJORITY of them do not. They report to a completely different commission for regulation, go through a different licensing process, etc.

Answer 3

Before you bring a professional appraiser along with you, ask permission to do so. A seller does NOT have to agree to allow you to have an appraisal done without their permission.

A price difference as small as $3000 could be explained easily by condition and/or additional amenities provided. You won't know that until you view both properties to compare what is being offered.

As far as what you offer, there is no set and fast rule about offering any amount more or less than asking price. Within the past year, I've sold a couple of houses which sold for considerably MORE than their initial asking prices. Both were listed at very attractive prices, and both sales turned into bidding wars.

Answer 4

Calm down! You can offer anything you want and they can ask anything they want! If the local comps are bigger houses with more rooms doesn't always mean they are worth more! Look inside and out! You may find that the CONDITION or AMENITIES of the smaller house to be much nicer! That could be the reason for the higher price. Most homeowners will attempt to ask more for their property because of the sentimental value! Make the house hunting easier on yourself by offering what you think the house is worth and see what happens! Good Luck!

Answer 5

A house with more bedrooms is not really a comparable. You need a simular house in the SAME neighborhood. From there you price per square foot, not bedrooms.

I generally offer 20-25% less then asking and ignore any property listed for higher then it is worth.

Answer 6

In the states, if similar homes have been sold in the area, you can always check the actual price houses have been sold for in the county courthouse. They are public records. Some counties have this information on line too.

Otherwise, it is difficult to say why one house is more expensive. You never really know what someone put into the house that has appreciated the value of the property. The options are near limitless (landscaping, finished basement, deck, fireplace). You really have to see the house first. If you take a RE expert or appraiser, just remember that you'll be paying for it.

Answer 7

Welcome to the wonderful world of Real Estate.

The seller that has a $3000 premium over the other house you mentioned may well be justified, even if the other house has one more bdr.

Reasons:

Home may have new a/c units, new waterheater, remodeled kitchen, floors, electrical wiring work, etc.

The homeowner has the RIGHT to ask whatever they want.

The SPO that you are referring to is an AVERAGE for homes of similar sq footage, age, and assumed condition in THAT AREA ONLY.

Asking prices vary above the SPO and can range in the TENS of THOUSANDS for varing reasons mentioned above.

Good advice, like you said, take RE agent and appraiser with you.

Answer 8

It depends on how many bathrooms it has, too. Usually homes with three bedrooms have 2.5 baths. If there are more bathrooms I can see why they are asking for more. Also, the house in question could have more amenities like marble counter tops or newly furnished cabinets, that sort of thing.

Answer 9

As everyone has said, you can make any offer you like. In the uk the estate agent is legally bound to pass on your offer to the vendor. Which means you do not have to worry whether or not the vendor feels insulted by the amount.
Remember, if your offer is accepted quickly then you've probably offered too much.

Answer 10

without knowing where you are, and the market trends there at the moment, it's hard to say, but, you're on the right track, take time, take experts, and don't fall into anything you can't afford just because it looks better..

good luck.