Posted by Charity on December 17, 2000 at 18:34:26:
Being a real estate agent, I can tell you in our market that FSBOs almost always overprice their homes. People are emotionally attached to their homes and always think that they are worth more than they are. That is why you generally still get a better deal with a listed home than a FSBO around here. You aren’t normally saving the commission on the FSBO- the owner just figures he should get it instead!
I think if they bought it for that price in 1999, there is no way it has increased in value UNLESS they bought it as a corporate relo or foreclosure or something. Either way, just remember that you have to objectively look at the SOLD comps and see what the home is worth. I don’t even count the current listings or those expired ones- just what has sold, because that is what an appraiser will look at.
I was out driving around today when I saw a FSBO Open House. Having nothing better to do at the time, I dropped by. It turns out the owner is having a house built (hasn’t started yet) and is trying to get his equity out of the house but would be willing to look at a Lease Option offer.
The owner is asking $225,000 for this house. He bought it for $160,000 in September 1999. The house is only 5 years old but is in excellent condition.
I can’t for the life of me figure out how this guy figures his house is worth $225,000.
Is it normal for owners to try this kind of stuff to test the market?
There are a couple of comps over $200,000 but not sold within the past 6 months and one of them is lake front property.
He’s trolling for any offer and obviously is in no rush. What FSBO sellers forget is that unless someone buys for all cash, the lender would want an appraisal, and if there are no comparables at that price it doesn’t matter that the buyer and seller agreed to the price, it won’t fly with the lender.
Just goes to make the point, you need to deal with motivated sellers, not just any seller with a house for sale.
Posted by Keithk2 on December 18, 2000 at 22:56:01:
No, actually, it’s pretty normal.
FSBO’s have their pride at stake when pricing their home. They don’t see their home clearly through the mists of emotional attachments, ego, and the lack of solid marketing info. Other homeowners in the area won’t share with anyone the fact that they took a big cut from their asking price to get a house sold. Their favorite answer to the question, “What did it sell for” is something like, “We got what we wanted”
Remember too, you can ASK for the Sun, Moon, and Dog Star for a house but that doesn’t mean you’ll get it. Negotiation is the fine art of getting from what we ideally want to what works. The important thing to gauge is the seller’s motivation. No motivation=no workable deal.