She is NOT lowballing

I'm a seller in North Easton. Five separate CMA's from unrelated brokers/agencies (in February) suggested we price our home between $370K and $389K. We went with the low end of the middle, $375K. We've dropped the price one time to $365K. Since February we have written a check for $20K for a brand new septic system and landscaping.

Last week we were presented with an offer of $300K. I wanted to reject it outright, but my broker encouraged us to counter at $360K. They came back at $310. We said no.

Will I be kicking myself and come back to this buyer with my tail between my legs, as you say? Good Lord, I hope not.

RH, if CMAs tell you one thing but your place *does not sell* at that price -- and even at the lower price -- it is really time to consider that the CMAs are simply wrong.
And I think that is the problem with many a seller. They look at CMAs and think their house is priced just fine, because it is within the CMA range. But if it isn't selling, it isn't priced right. Yes, even in this market, sales are happening. It can take sellers a long time to realize that, apparently, and I bet there are a number in the state here who rejected offers, insisting it was priced as low as it should be, only to have it sit... and sit... and sit... on the market.

RH,
Right now, unless your property sells within 1-2 weeks of listing, its likely overpriced and is going to sit for MONTHS.

I am seeing properties selling for an average of 12-15% LESS than their listing price, eventually, IF they havent sold within 1-2 weeks of listing.

Figure 15% less than your listing price, as what to counter offer them. This market is still going DOWN....

Didn't have the seller come back to me with their tail between their legs, but I made an offer a few months back on a property with extensive water/freezing damage. My initial offer was about $100k off the asking price and it was not accepted.

Two months later they dropped their asking price $50k and I reoffered at my maximum ... about $30k higher than my initial offer. Again, offer was rejected and another offer was accepted.

The final selling price was just recorded in the MLS at about $5k less than my final offer (I was also asking for a $7k sellers concession and wouldn't have been able to close for 45-60 days). Final price was $76k below their initial asking price.. $24k above my inital offer. So while they initially felt I was lowballing (so did my broker until we got a quote from a contractor)... I feel a little bit of vindication knowing my original assessment was correct.

At the end of the day, the VALUE of a home is only determined by one factor and one factor only: how much a buyer is willing to pay for it.

No more and no less.

But at the end of these days the value is determined by the bank appraisal, unless you can find a cash buyer.

There are alot of games going on out there. With everyone guessing as to to the current value, sometimes you win big and sometimes you lose.

We received an offer $69,000 less than what we FSBO'd our condo for, with Case Schiller stats presented to back it up, but then within several days sold it for only $15,000 less than asking, without any broker involved (a $11,500 savings)

We then made an offer on a condo for $454,000 that was listed for $479,000. They refused to move a penny. One month later the broker called back to see if we "were now willing to increase our price." We said no and moved on to other property. It sold for $450,000.

The house we then bought was originally listed at $750,000 and was listed at $659,000 when we found it. We offered $580,000 and bought it for $600,000.
With a 4.25% interest rate. But that was in February when people were still talking about the next Great Depression.

If you are tenacious, you will find the deals

So I've

This happened to me. SFH in Dedham. They wanted $470. We offered $430. They countered with $465. We countered with $440. End of negotiation.

Fast foward 8 weeks. They come back and suggest $450. We decline. House eventually sells for $440. This is in December 2007. We know the market is tanking. Zillow's optimistic estimate puts it at $420. The reality is that its probably closer to $400.

If you are a first time homebuyer with flexibility, time is your friend. By the time bottom hits, that same house is $375. Cost savings = $75k on the lowside

If someone offers what a property is "worth" vs. a seller's dream price, that can hardly be considered "lowballing. There is so much more to go in this correction.
As a seasoned real estate investor, I can tell you there are very few "deals" out there unless you consider paying 2003 prices a deal.

I'm curious if someone may help me. I am a buyer that recently received an appraisal that omitted a 3/4 bath. Therefore, comps were assessed on homes with 3bdrm, 1.5 baths instead of the actual 3 bdrm ,1 full bath, 1 half bath and 1 three quarter bath. My lender says the appraisal company is sticking with their assessment. Is there any recourse for me to correct factual errors with the appraisal? The document is useless to me to renegotiate the price of the home.

Anyone watching this discussion about putting in a 15K home buyer credit for next year? They just won’t let this thing naturally correct, will they? One really doesn’t want to buy when these credits are active; it devalues his/her savings and puts one in competition with people who shouldn’t be able to purchase the house (thereby pushing prices up).

Also, 15K, leverage 5 to 1 (20% downpayment) raises the price of the homes about 75K.. That's the way people should look at it, by far the biggest obstacle for most buyers in the downpayment this removes that hurdle and allows bigger and bigger purchases. We just went through all this with NINJA loans, no down payment loans, etc. A pathetic attempt to prop up a crashing market, just let it fall...

Hey Cynthia, The only way I can think of to correct the appraisal situation is to hire another appraiser. Explain the situation of the first appraisal. Of course you will have to pay for this and there is no guarantee that the results will be any different. If your main reason for doing this is to renegotiate the price of the home you are buying you might not want to bother. If you have already signed a purchase and sale contract renegotiating a price will probably not be possible. Unless your attorney added certain language to do so. the standard purchase and sale contracts do not contain that.

If you are in a typical transaction and your financing is about to go south due to the appraisal the seller might be willing to renegotiate. If your financing is not an issue then why would the sellers renegotiate their price when you ahve signed a contract to pay the original price?
Hope this helps.

Cynthia,
If the 3/4 bath is in the basement, the appraiser is probably within his/her guidelines. If it is on the main living levels, then you have a dud appraiser who is being subborn.

Even if the 3/4 bath is in the basement, it should appear on the appraisal grid and be considered in the value estimate. If you have a copy of the appraisal and the 3/4 bath is not on it, then the appraiser goofed and you should contact the appraiser and ask him/her to correct the appraisal. If he/she does not and you do not get a satisfactory explanation, you can file a complaint with the Massachusetts Board of Registration of Real Estate Appraisers, which is the licensing body for appraisers in this state.

Cynthia - You're the buyer... why would you want to re-negotiate the loss of 3/4 bath in the appraisal... it would only make the price go up and as previously stated your bank wouldn't do an appraisal until a P&S has been signed.. so unless you have the worlds best RE Attorney and the worlds dumbest sellers... there is no negotiation to be had. SO the only reason I can think of is b/c the bank now won't lend you the $$ b/c the appraisal is too low and you don't have the cash to make up the difference. I say this w/ a kind heart Cynthia... if you're 3/4 of a bath away from being able to afford or not afford this home... you can't afford this home. Walk away and find a less expensive home where your numbers are not as tight - you'll be much happier in the long run/ Good luck!

i was told by my assessor's office and by my appraiser (who did a private appraisal for us) that any rooms below grade count in the comparison to other homes, but are not included in the assessment or the appraised value (we have three finished rooms, a full bathroom, and a kitchenette in the finished basement of our house). our assessor considers our house a 10/4/3, and the appraiser an 8/4/2. go figure.

regardless they consider below-grade rooms to not be included in the market value. or so they say. my assessor thinks my house is worth a lot more than my appraiser does :)

a question for rona.... is there some resource that tells you what criteria/guidelines appraisers use in general? the appraiser we used took value away based on his opinion of how the age of our title 5-passing, functioning just fine, septic system affected the value of our house. not an engineer, just an appraiser. took off about $20K for this -- and it works fine. seems awfully subjective to me -- and i do have familiarity with septic systems and title 5. also curious about the above-grade versus below grade (it's a ranch).

Re comment #5: No, it's the PRICE that's "only determined by one factor and one factor only: how much a buyer is willing to pay for it." VALUE is a whole different question.

Chloe,
There are standards that appraisers use. But I am not a licensed appraiser, so I don't know how specific they get. Maybe Sam Schneiderman will answer you abotu the septic system value. He has that training.

Thanks for everyone's input - we're grasping at straws for answers.

The thing is, we're fine with selling at 10% below our current, reduced asking price. We're not idiots and we know the market is continuing to go down. But we do have a bottom point of pain. We paid $410K for this house in 2004 and are currently into it, with improvements, for $460K, so clearly we are not looking to make any money. We have a unique situation and we just want to get out of this property at a price that doesn't completely insult us. Should I take it so personally? No, but it's our home and it's lovely and we're very aware of what else is on the market in our town and where it's selling. We'd probably sell at $325K. But much below that, we wouldn't be able to pay off our mortgage after the closing costs and broker fees. We'll jump off that bridge when we get to it, I guess.

But I do consider an offer of $300K on a 2000SF 4 bed, 2BA home in North Easton that literally needs NO updating - it's as lovely and renovated and neutrally decorated as can be - a bit of a pipe dream. Split levels on busy roads and homes that need tremendous amounts of work are selling in the mid 3's here over the last few months, so I think we can wait it out a little longer. We are one of those unfortunate families that bought a house we could afford without any difficulty and might quite honestly be better off financially if we let the bank foreclose on it than sell it at the lowball offer we got two weeks ago. (If it wasn't for that whole, you know, credit score thing.)

Our agent is very experienced and does a lot of business, and we trust her to guide us well. I don't think the difference in price on our home makes much of a difference in her paycheck when she also sells million dollar properties. No one has anything to gain by sitting on top of a high horse waiting for a high price - not even our agent. I know, I know, I'm one of those crazy sellers with big dreams. But not really.

Personally, even though we're looking at over a one hundred thousand dollar loss in four years, we're happy to see the market decline and hopefully stabilize somewhere around where it currently is or even maybe lower. It's far too expensive for a family to own a home here.

Chloe-
Below grade rooms can count as 'living space' meaning they do add *some* value to the home during appraisal- but it does NOT count towards GLA. The formula for GLA determination is at least 3 sides have to be above grade. (It may be 2, but I'm pretty sure that it's 3). There also has to be heat in the room- a garage wouldn't count as GLA for example since it's not heated even if it's above grade. A sun porch also wouldn't count as GLA unless it has heat in it.

I only know this because our GLA on paper is 2700 sq ft. But we have a fully finished walk-out basement- tile floor, media room, sliding doors, heat and natural light with 1 side above grade that counts only as 'living space' and a value for it was determined outside of the GLA calculation. Had it been counted as GLA our home would be 4000 sq ft. We had our home appraised 3 mo ago for a refi and I asked the appraiser what the deal was with our basement.

If you own a 'split' then chances are, your finished basement is not above grade, even though there are probably a few rooms and a bathroom down there I'm guessing. So it would only count as 'living space' not GLA.

Should I take it so personally? No, but it's our home and it's lovely and we're very aware of what else is on the market in our town and where it's selling.

This is what is so tough about this market for sellers. I looked for this house on the MLS, and it does look like a nice, pretty, well maintained house. It is also nearly 150 years old, has a long, narrow floorplan and is situated on what looks like a corner very close to some businesses with parking lots, etc. Each of these features will cause some buyers to dismiss the house out of hand. Selling a house is about finding a buyer who the house speaks to. And, with so few serious buyers out there right now, that can take a long time, especially for more unique properties.

JIM - exactly! (Although we are on a fairly quiet side street - walk to town and lots of great stuff, but not next door to any businesses. Our lot is at a "bend" in the road, but we are not at the corner of our street and another.)

We realize that is going to take some time to find a buyer for our beautiful (but unique) property. It doesn't seem to us like the answer is as simple as it being "overpriced." Personally, I think the person who just closed on a raised ranch (that is now 60 years old and needs a new kitchen, baths, and flooring) located at a spot on Bay Road where people drive 50+ miles an hour is CRAZY to have paid $360K for such a home. In other words, not the property for my family, certainly.

We could give our home away, but probably better to wait it out until we find someone who loves it - including the small, very manageable yard that is mowed in under 20 minutes and 'walk to everything' location - the way that we do. A home very similar to ours (that actually IS on a busy road and needs a lot of updating) finally just sold last week at $325K - so I think we are smarter to be patient than grasp at anything we are offered. Bottom line for us? We still feel that a $300K offer on our property, with the buyer only being willing to negotiate up to $310K, was a lowball offer. But only time will tell.

It is only a lowball offer until you get another offer in hand.

For anyone who cared, we got an offer at $340K that is pending. So we're glad we waited.