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jfunk138 · Guest

FTHB here so I'm really clueless when it comes to price negotiation. Put an offer of $377,500 for a property listed at $398,000. Property has been on the market 7 days. It's in great shape and has alot of upgrades. The problem is so many of the upgrades I'd never choose on my own. Carrera marble, gourmet kitchen with some sort of $1000 sliding drawer microwave?!?!. It also has one of those big soaking tubs which unfortunately my wife has fallen in love... It's also overpriced for the neighborhood. It's in Leominster, so it's in the high end overall. House next door just reduced $10,000 to $289,000 after being on the market for 60 days. Anyway, they countered that they'd go $397,000. Their agent says they wanted to go $425,000 but she talked them into $398,000 saying it might spawn a bidding war after the open house on Sunday. Thus far we are the only offer. So I figured some of the experts here could help me decide whether to give them some time or just make my wife happy and pay asking.

http://www.redfin.com/MA/Leominster/41-Sacramento-Dr-01453/home/16540272

JCK · Joined: 15 Feb 2007 Posts: 559

Why is this place asking a $100k more than its neighbor? Can that be justified? (I'm not seeing "the house next door" on Redfin.)

I personally wouldn't want to buy the most expensive home on the block; I think it puts you at greater risk of loss. The standard advice is to buy the least expensive home in the best neighborhood you can afford, especially for FTHBs.

If it were me, I wouldn't get too attached to a soaking tub, quite frankly.

If you're the only offer, I would suggest not bidding against yourself.

Guest · Posted: Wed Mar 24, 2010 1:44 pm GMT Post subject:

Thanks for the reassurance that I'm not out of my mind, my wife thinks I am.

Here's the neighbor for reference, even though the address numbers are not sequential it is the next door:
http://www.redfin.com/MA/Leominster/27-Sacramento-Dr-01453/home/16540273
It's very clearly worth less... but $108,000 less?

Kaidran · Joined: 17 Mar 2010 Posts: 289

I think that regardless of reality, if the sellers put it on for that they were hoping to get it. After only 7 days they might not be ready to negotiate.

I would leave the offer open for a week or two while you keep looking and see if they get back to you. Definitely don't bid yourself up on a house you don't think is worth it.

GenXer · Joined: 20 Feb 2009 Posts: 703

Looking at this guy, he bought two houses in Leominster in 1994 and 1996. He paid about $180k ($160k mortgage) for one (the one you are looking at) and about $160k ($140k mortgage) for the other. I bet he does NOT have to sell. He can probably hold out for as long as necessary (at least, that's my impression). He's obviously not going to lose money if he sells for $377k, but again, he doesn't have to. I'm sure he can rent it out and get his mortgage paid (or whatever is left of it). In 1997 the rate was pretty high - possibly 8% or so, and I'm not seeing him refinance. Can anybody comment on the weird lot 36 sale and resale? It appears that he may have sold some land to somebody as well on that property (the 41 Sacramento dr).

JCK · Joined: 15 Feb 2007 Posts: 559

There's huge square footage difference b/w the two houses, which explains the price difference.

My concern would go back to whether you're buying the biggest or most expensive house on the block. I personally wouldn't want to go that route, as I think it exposes you to more downside risk.

GD · Guest

Hi GenXer

How do you see what each person has paid for?

JCK · Joined: 15 Feb 2007 Posts: 559

Go to the registry of deeds for the town (available online) and search by address.

Bubblegum · Guest

Also note that the 41 Sacramento house is including 1100 sq ft of basement living space, so the sq footage disparity isn't more than double.

CC · Guest

I think you will be glad they didn't accept your offer in just few weeks. Your offer is too much for what you will get. Don't worry. The house will just sit.

Yeah... they don't have to sell since they bought it so low about 15 years ago, but it's still the best time to sell. I don't think the price will be back in at least 5-10 years. When interest rate reaches 6% or more later this summer or fall, they will regret they didn't accept the offer.

jfunk138 · Guest

This might just be some pent up rage on her part but I'm beginning to suspect my marriage might not last a few weeks to see it sit...

She's been talking with our agent at Redfin who is telling us to bid 394,000. I know Redfin agents are not on commission but in order to get the reviews to get their bonus they need to close deals. Would you trust that the agent is providing accurate guidance on pricing?

JCK · Joined: 15 Feb 2007 Posts: 559

Do search for recent comparable sales and make sure you're comfortable with the price.

I don't know this market at all, but my sense is that you're jumping in before doing enough diligence to even tell where the local market is at.

JCK · Joined: 15 Feb 2007 Posts: 559

CC · Guest

Kaidran · Joined: 17 Mar 2010 Posts: 289

They are salaried, but they really like to be able to say they have the best agents in the area for sales so they try to push things through.

394k is it the mentality of something the sellers would probably accept right now so its not a bad offer. The property would likely have to sit for a while before they would accept less. You just have to realize that the sellers may be delusional on pricing but it will take more than you telling them they are delusional to break that. Since the tax credit will expire soon there may be a second artificial sales hump so you risk losing the house if you wait for the owners to drop the price. Remember there are crazy buyers as well as sellers.

It just comes back every time to how much you like it and how much you need it now.