Bay Area

[buyer11]

Hi everybodyy,

            I am going to buy a house by HW 880 in forestpark elementary area in Fremont. HOw much discount should I get? 10% , 20% , OR 30% if I compare with other homes in the same area. MY realtor is saying me that it should be 10%. I feel like 10% is not worth it. Asking price is 539K. It been on the market for 70 days. Would you please give me suggestions?

Thanks.

[mediaguru]

Based on the recent history and the fairly high inventory, I'd say the recent bump up for houses in that area is not justified...

As much as people like to slam Zillow estimates, I think in this case it looks to be helpful -- not the median one, but the low end ($463k)... looking at comps and factoring in location/freeway, I'd say somewhere around there might be the going price (about 15% under current asking price)... if not a bigger discount.

Do not underestimate the value damage caused by road noise; even if you don't mind or can deal with it, it is a huge factor on marketability to potential buyers in the future.  10% is definitely a conservative estimate and I wouldn't fall for it. There's a reason it's been on the market for 70+ days.

In this similar Trulia thread, one agent estimated that a comp in the same neighborhood on a quiet street sells for 20% more than one with road noise, so he recommends a 20% reduction. 

For what it's worth, you might find this to be a very interesting (and more scientific) read:

http://www.usroads.com/journals/p/rej/9710/re971004.htm

Conclusion: If it were me, I'd probably lowball an offer of 404k (25% off) and see what they do, and if they counteroffer I would refuse to go any higher than $450-460k (~15% off)

[i_wanna_buy]

in my opinion, you just can't say, 'take off X% because its next to a highway" because its subjective.  its the same as a death in the house. some people don't care, others wouldn't step foot in the house, but you can't say "take off 10% because someone died here."

but, if the house has been sitting for 70 days, that is leverage for negotiation. make a discounted offer and if you don't like the highway, then factor that into your comfort level with the offer.

[mediaguru]

I didn't just say take x% off.  I actually found the listing with the house details, photos, location (practically right on top of the freeway), the recently sold comps and other nearby current listing prices.

Given that, I say it's definitely more than 10% off of what they are asking.  I am 100% certain of it

And numbers don't really lie, either. There can always be outliers (though I don't see why this particular house would be one -- nothing so unique about it), but overall trends are good to go by:

"Studies in the 1970s "estimated that background noise in a typical urban neighborhood was roughly 55 Ldn and that housing prices decreased by 0.2 to 0.6 percent for every one unit increase in Ldn." A major study of noise costs conducted for the 1982 Federal Cost Allocation Study "assumed a 0.4 percent decrease in the value of a housing unit for each dBA (Leq) increase over a threshold value of 55 dBA."  ( http://www.usroads.com/journals/p/rej/9710/re971004.htm )

It sure sounds like, based on statistical analysis, you actually can put a number on noise vs. house value relationship, or at least a ballpark range.  Highway traffic noise typically ranks at a range of 70-80 dBA (and 880 is typical, if not worse); so that is 15-25 dBA * 0.4 = 6% to 12% decrease in value right there.   But this doesn't take into account that the house is overpriced to begin with (probably like many of the others who hiked the price hoping for a strong summer selling season)  So I'm making a strong bet that this house will sell for no more than 15% lower than current asking price.

[buyer11]

Thanks you so much for all of info.

There is another house by HW 880 in forestpark area. REO property. 1650 sq ft. asking price is 509k. There are many people interested in. Should I bid more?  What will be your opnion  about an offering price? The house is in good condition but original kitchen and bath room with no upgrade. I have not make an offer on the first one yet.

Thanks in advance.