Bidding on a house you think may be overpriced

How do you base your bid on a home that you "think" may be overpriced? I am not interested in hearing about what your realtor guides you to do. What would you do?If the home comes on at 499, and you think the market value could be anywhere from 390 - 499 (since market values have been erratic for area and supply and demand are an issue), what do you do?

Message edited 5/13/2014 12:44:18 PM.

Bidding on a house you think may be overpriced

probably not an answer you want, but i would listen to my realtor. i'm not the professional so i don't know what's appropriate market value. i use them to guide me with a bid. if its way over it wont appraise anyway and there will be problems later.

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Re: Bidding on a house you think may be overpriced

Already viewed home at open house and did not have my own realtor so I have to make my own decisions. I know what houses in my target area go for very much, and that's why I know it's a range. It's all about how badly someone wants it, if they get their asking of 499.

Message edited 5/13/2014 12:47:43 PM.

Bidding on a house you think may be overpriced

Put in an offer that you feel comfortable with. If they say no, they say no.
If the house is truly overpriced then it will eventually come down or it will sit forever. Personally in my opinion a house (or anything) is worth no more than anyone is willing to pay for it in this moment.

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Re: Bidding on a house you think may be overpriced

Re: Bidding on a house you think may be overpriced

Bidding on a house you think may be overpriced

I always start off at low end of the comps, sometimes below the comps. It really depends on the particular house. For houses on the low end of the comps, were they not updated, on main roads, smaller, or had any other negative items? If not then I definitely start low. If the sellers don't like the offer they can counter.

Re: Bidding on a house you think may be overpriced

Re: Bidding on a house you think may be overpriced

What percentage have the other homes in that area sold for respective to their listing price?

What would I factor in deciding what to offer:
location
is it a flat piece of property
premium lot
cu-de-sac
not on a main road

garage
basement
number of bedrooms
number of bathrooms
how new is the roof, furnace, water heater?
how new is the kitchen and bathrooms?
what kind of flooring does the house have?
upgrades?

How hot is the market in that area? Are there bidding wars going on? How long has that particular house been on the market? If it is under a month, then they are going to want closer to the asking price. If it has been on the market longer with no bids then they might be more reasonable. Have they already purchased something else and really need to sell?

As a buyer what are you bringing to the table? Flexible closing, any contingencies on selling an existing property, do you have a good down payment, how likely are you going to get a mortgage? Good luck!

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Re: Bidding on a house you think may be overpriced

Re: Bidding on a house you think may be overpriced

Re: Bidding on a house you think may be overpriced

To add- DH and I went through this with a house we really wanted. It was definitely overpriced for what it was. They wouldn't come down at ALL from asking price. We finally walked away because we KNEW it was overpriced, and I was genuinely concerned about the resale value down the road.

Re: Bidding on a house you think may be overpriced

We made an offer on a house that is over priced. The owner made a ton of upgrades to the house, slightly more than what the market will bare. We love the house. She originally priced the house 100,000 more than the rest of the comps, but came down. We made an offer, but she thinks another will come in. She actually said we should bid against ourselves and offer more. We are standing firm and said if you give us a reasonable counter offer we will negotiate with you but we are not going to negotiate against ourselves. So it happens. If we get the house, great, but if not something else will come on the market.

Message edited 5/13/2014 3:46:39 PM.

Re: Bidding on a house you think may be overpriced

First, I agree with the poster that said that a house is worth what a buyer is willing to pay. Period.

But if you are concerned about fair market value, based on recent comparable sales -- I am sorry, but there's no way the market value can be a range of $390K to $499K. I often give clients -- be it buyers or sellers -- a range of value for a particular home (I think it will sell for "high $300Ks" or mid $400Ks) rather than pinpointing a specific dollar value, but I think you need to get a better handle on it. Perhaps homes in the area have recently sold for as low as $390K or as high as $499K, but that doesn't mean they are all comps.

You need to look at what's recently sold (last 3-4 months), what is comparable in terms of age of home, square footage, number of rooms, lot size, upgrades/amenities, and so forth. In N. Bellmore school district, there are homes that sell for $300K (small bungalows with no updates) up to $800K+ for new construction, but that doesn't mean they are all comps to be used if I am selling a home in the area. Even if I know that a certain type of home -- say 1950s split levels -- have sold in the range of $450K to $600K lately, I really have to look at those houses and the size of the homes, specific location, condition, etc. to hone in on the value. There are a lot of subjective determinations in valuing a home -- even for an appraiser -- and it helps to really know the area and to be familiar with the comp houses.

I also agree that it would be helpful to know how "hot" the market is in the area where the house is, and what the average days on market is for the specific type of house (certain style of houses seem to be more in demand in certain areas than others).

If you can expect a multiple offer situation, then you should not assume that there will be an opportunity to counter. Sometimes the sellers just take the best offer (rather than pit one against the other and risk losing a good offer) OR often the seller will go back to everyone and request the "best and highest" offer, and you have the opportunity to go back one final time.

It's hard to advise not knowing the area, the house, etc. But I think, at the end of the day, you have to make the best offer you can with the info you have access to. If you will kick yourself if you lose the house (and were willing to pay more), then I would come in strong. I don't know how long you've been looking and what your budget is for your area or how hard it is to find a house that meets your criteria, or when you need to move. Sometimes if someone has specific criteria for a home and a limited budget and limited time, and inventory is low, they are more willing to make a high (or even full price offer) to get the house they want. If you have time, or there are a lot of houses in the area that would meet your needs, then you can afford to negotiate a bit more aggressively.

Bidding on a house you think may be overpriced

I never listened to my 1st realtor. I wanted to low ball and she would always say, oh they will not counter. They countered EVERY time. The worst that can happen is they don't counter, and you put a higher bid in. I am a take the bull by the horns type of girl though, my 2nd realtor didn't have to do much either. I studied Listingbook, picked out what I wanted to see, knew what was selling, what it sold for, comps in the area etc... That is why the 2nd realtor was a buyers agent, not a sellers agent. I didn't want to hear about how fantastic this house was, when it clearly had issues. Follow your gut, everyone is out to make a dollar.

Message edited 5/13/2014 5:43:21 PM.

Re: Bidding on a house you think may be overpriced

It depends on several things:

1. What are the comps in the neighborhood
2. What's the difference between what the listing price is and what you think it's worth?

If the house is listed considerably higher than the comps and what you believe it's worth and it just came on the market, then personally, I would wait. Wait until the sellers come to reality and lower their price (which they will within several weeks if they've had no offers bc their listing price is unrealistic). Once the price has been lowered, then I would put in my offer. Your offer may still be much lower than what the seller's reduced price is, but at that point they may be willing to negotiate.

If the comps in the neighborhood are close to what the listing price is, then IMHO you may be unrealistic in what true market value is right now.

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I always look at recently sold homes in the area with similar floor plans. Then I put in an offer I think is fair. What's the worst that can happen? The seller counters? I always go with an offer I feel comfortable with. If the house is going between $390-499 I would come in somewhere in the middle.

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I think the assumption that the value is $390K to $499K has to be an incorrect one. If I were a buyer's agent for any one of you, and you asked me how much a home is worth, and I said "anywhere from $390K to $499K," that would be a completely useless to you, and you would think I was a totally incompetent agent! Likewise, if someone on here asked me to come give them a market evaluation for their home and I said "I think it's worth anywhere between $390K to $499K," you would NOT have been happy and probably would think I wasted your time by meeting with you. Of course, no matter how all over the comps are, as a professional reatlor, I am going to be able to put a value on the home.

And you KNOW that a bank appraiser will come up with an actual value, assuming the OP is getting a mortgage.

So I really think the OP has got to get a better handle on the comps and go from there. Once you have an idea of market value according to the recent comparable sales, then you can devise an offer strategy that makes sense given all of the facts/circumstances, including how in demand the home is, how long it's been on the market, how desirable the buyer's terms are, etc. (There's also the - usually - unknown "x factor" of the seller's situation and motivation to sell.)

It's all about negotiation leverage. If the buyer has some, then yes, it probably makes sense to start at the lower end of the value range. When you have leverage, you can be aggressive in negotiations. But if this is a house that there is a pent-up demand for the house (e.g, in N. Bellmore, there's been a pent-up demand for split levels in the $450K to $550K range, and those have been selling very quickly), and the house just hit the market, and the buyer has a smaller down payment or a specific timeline or contingencies that may be undesirable for the seller, then it may make sense to go in at full asking if you want the house.

A lot of people want hard and fast rules -- like, "always start 10% below what you will pay," -- and that type of one-size-fits-all thinking doesn't work. It's really important to adapt your strategy based upon the particular house and circumstances of the transaction, imo.

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Re: Bidding on a house you think may be overpriced

Re: Bidding on a house you think may be overpriced

Message edited 5/15/2014 5:40:03 PM.

Re: Bidding on a house you think may be overpriced

I would bid the lowest price the market would bear..Ex: if the most relevant comps say another home sold for $399K - I would offer maybe $410K and hope seller will counter. If they do not, then increase that offer. If the house continues to sit because the seller refuses to come down on price, then that's on them, not you. Offer what you want to pay, and see where the negotiations take you.