What is a reasonable offer on this home?

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General Disarray
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What is a reasonable offer on this home?

Post by General Disarray » Sun Apr 19, 2015 7:10 pm

I am a first-time homebuyer and am working with a broker.

Asking price for a townhome is: $360,000
Owner paid $350,000 for the townhome
2015 assessed value is: $263,700

Nearby townhomes in the immediate vicinity and same street were sold for $247,000 (2014), $338,000, $291,000, and $300,000.

What offer would be reasonable based on the above information?

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grabiner
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Re: What is a reasonable offer on this home?

Post by grabiner » Sun Apr 19, 2015 7:35 pm

What the owner paid is irrelevant in determining the value of the home. (It may affect what the owner is willing to sell for, but that isn't really your problem. If the owner refuses to sell for a loss and the home isn't worth what he paid for it, he won't sell.)

The assessed value may also not be relevant; many cities and counties don't assess properties at their actual value. (I just had my own condo reassessed at about 70% of what I paid for it, and less than any of the four recent sales in the same building; this is apparently how my county handles things.)

The comps are relevant, as this is what agents and appraisers use in determining sales prices. A year-old sale is usually not used as a comp, but if you use it for reference, you need to adjust it for changes in the market. And then you need to look at the differences between the comps and the home you are considering.

Your agent may be able to help you with questions such as: Are the comps the same size? Have they been remodeled? Do they have garages? Is that $247,000 a normal sale or a foreclosure/short-sale?
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Re: What is a reasonable offer on this home?

Post by Grt2bOutdoors » Sun Apr 19, 2015 7:56 pm

General Disarray wrote:I am a first-time homebuyer and am working with a broker.

Asking price for a townhome is: $360,000
Owner paid $350,000 for the townhome
2015 assessed value is: $263,700

Nearby townhomes in the immediate vicinity and same street were sold for $247,000 (2014), $338,000, $291,000, and $300,000.

What offer would be reasonable based on the above information?
What were the assessed values of the homes that sold up above?
I would use that as a starting point for "is the seller being reasonable or trying to sell to break-even which as Grabiner points out is not your problem". It would be helpful to know if the other townhouses are in the same development (ie. cookie-cutters) or unique in their own respects (upgraded, etc.). You can not go on price alone when making an offer.
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General Disarray
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Re: What is a reasonable offer on this home?

Post by General Disarray » Sun Apr 19, 2015 8:11 pm

Thanks for your replies. Before I received grabiner's reply, I received the comps from my broker.

Nearby townhomes in the immediate vicinity and same street were sold for:
$247,000 (July 2014) --> 2015 assessment @ $263,700
$338,000 --> assessed @ $264,000
$291,000 --> assessed @ $263,700
$300,000 --> assessed @ $288,400. --> Also visited this townhome. It felt tiny and was pretty filthy and not up-to-date, since a single guy lived there.

However, all of these units have at least a 1-car fully enclosed attached garage. Some of them have a 2-car (tandem) garage. The one I looked at and am inquiring about has a 2-car garage. The kitchen has been remodeled, but the bathrooms will need remodeling in the near future. Right now, though, they aren't so bad.

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grabiner
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Re: What is a reasonable offer on this home?

Post by grabiner » Sun Apr 19, 2015 8:53 pm

General Disarray wrote:Thanks for your replies. Before I received grabiner's reply, I received the comps from my broker.

Nearby townhomes in the immediate vicinity and same street were sold for:
$247,000 (July 2014) --> 2015 assessment @ $263,700
$338,000 --> assessed @ $264,000
$291,000 --> assessed @ $263,700
$300,000 --> assessed @ $288,400. --> Also visited this townhome. It felt tiny and was pretty filthy and not up-to-date, since a single guy lived there.
The assessments may not adjust for condition; unless you appeal an assessement, the assessor doesn't know what distinguishes your house from others on the block.
However, all of these units have at least a 1-car fully enclosed attached garage. Some of them have a 2-car (tandem) garage. The one I looked at and am inquiring about has a 2-car garage. The kitchen has been remodeled, but the bathrooms will need remodeling in the near future. Right now, though, they aren't so bad.
I don't know what the standard addition for a 2-car garage versus a 1-car garage is, but your agent may be able to help you. And you also need to decide whether that is worthwhile to you; just because a feature is worth $10,000 in home value to a generic buyer doesn't mean you should pay $10,000 for it. (You may get the $10,000 back when you sell, but you will be losing the use of the money for little benefit if you park one car in a 2-car garage.)
Wiki David Grabiner

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greg24
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Re: What is a reasonable offer on this home?

Post by greg24 » Sun Apr 19, 2015 9:02 pm

It is extremely difficult to expect people on the internet to come up with a fair offer on very very very limited information.

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NateH
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Re: What is a reasonable offer on this home?

Post by NateH » Sun Apr 19, 2015 11:06 pm

greg24 wrote:It is extremely difficult to expect people on the internet to come up with a fair offer on very very very limited information.
+1

A good buyers agent will help you find a winner by showing multiple properties within the same price range.
Although they try, County assessments are not good predictors of property values. i would generally ignore them. They rarely go inside of a property they assess, but rely on similar statistics.
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Re: What is a reasonable offer on this home?

Post by bloom2708 » Mon Apr 20, 2015 9:28 am

Check with the realtor to see what percentage the similar condos are falling compared to asking price.

If the average is say 97% you could start an offer at 5% below asking and go from there. $342k is a 5% discount. Without any other details, that would be a starting point. You can offer more and ask for points against closing.

Many factors come into play. How long on the market? Other offers? What is your budget?

Some locations get above 100%, so you know that a 97% offer likely has no chance. Too low an offer and you risk not even getting a counter offer.
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