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cuddly_penguin
Posts: 10
Registered: ‎03-03-2008
0

Best strategy for new (and too high) listing?

Hi there!

As first-time homebuyers, we've been obsessively searching through Redfin for many months now, and to make a long story short, we think we've found our "dream home" (as cheesy as that sounds).

The problem? It's a *new listing* (less than 2 weeks), and the price is WAY HIGH, compared to comps in the area, and especially compared to the price per square foot for other homes for sale (or that have sold) right now.

Here are the comps..in terms of price/sq ft, compared to homes in the immediate area:

- Current listings: 15% overpriced
- Homes sold in past 18 months: 24% overpriced
- Homes sold in *past 60 days*: 31% OVERPRICED!! over THIRTY PERCENT!?

(and, this isn't taking into account any theories about how the market might even go lower than it has been recently!!!!)

Here's our theory: since the listing is a new one, we're thinking that maybe the owners are still fresh-faced, bright-eyed, naive (?)...and have not yet woken up to the realities of the situation.


So, here's my question - What do we do?!?!

Do we:

1) Make a low (but fair, based on neighborhood comps) offer pretty soon, and explain our reasoning to them and subtly point out that they are currently unrealistic (surely their listing agent has to know this?!?!).

2) BUT!! If we make an offer or EVEN EXPRESS a HINT of INTEREST right now, even at the inflated price, are we only ENCOURAGING their poor behavior??! ("Oh! Someone's interested! Let's hang in there!")

3) Wait it out and risk someone else getting it (after all, several homes have sold in that neighborhood in the past 60 days...for 31% less per square foot, mind you!, but still... *someone* out there is buying?)

4) Can we tell the listing agent that we are interested, but there is no way we will make an offer at the current price....here is our contact info...call us when you're ready to come back down to earth? (ie, put our name on an "interested" list, but not make an offer?? Does that sort of thing even exist?!)


I know that most of you will say to wait it out on the sidelines and watch gleefully as they wake up to reality and lower the price, but keep in mind that we've *stalked* that neighborhood for months, and we think this is "the one". We just wish the owners/listing agent were more rational.

As first-time buyers, we are very excited to find a home that has what we want, but are now scared that we'll make a wrong move and play the game incorrectly.

Would love any comments and suggestions from the peanut gallery! I've enjoyed reading the forums, and am hoping to get a spectrum of informed opinions (no haters though, please) :smileyhappy:


Thanks!!
Gold Contributor
TrabucoDom
Posts: 1,584
Registered: ‎01-05-2008
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Re: Best strategy for new (and too high) listing?

[ Edited ]
I cannot say the best thing to do but I had a similar situation in January, except not a new listing, but one that had been on the market 5 months. The  home was priced at 719k. It had been  reduced from somewhere around 875k or so over the months it was listed. The place should have been priced between 630-650k based on comps. I had my agent speak with their agent so we could figure out what to do. We found out that they turned down offers at 650k so my agent suggested an offer of around 680k might work. I decided to make no offer rather than offer what I wanted, 630-650. I waited it out to see if they would reduce to my ballpark and had my agent stay in contact with theirs. They never did get back to me with a reasonable price. The place sold around 60 days after I initially looked at it. I am still waiting to find out how much it sold for. I don't know if it would have helped but if I am in a similar situation I think I will be more inclined to make the offer I feel is reasonable and let them turn it down. The I would have my agent keep tabs and see if they become reasonable later. At least you will have shown you are serious about their home for when they realize they are over priced. I would be interested to hear what agents have to say about your situation. Each seller is different so maybe each situation needs to be evaluated for a seperate strategy and hopefully your aggent can steer you right.


Message Edited by TrabucoDom on 04-12-2008 10:34 AM
Regular Visitor
TimHebb
Posts: 1
Registered: ‎02-16-2008
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Re: Best strategy for new (and too high) listing?

Although this home's owners may have fallen into the commonplace trap of many post-bubble sellers - delusional pricing - you should be wary of falling victim to two traps common to first-time buyers:
 
1) falling in love with a property, and 2) thinking that your behavior can have more influence on the seller's behavior than it likely can.
 
Trap 1) is best remedied, like all infatuations, by the passage of time, and by the cumulative effect of repeated disappointments and the hard-earned wisdom that you will thereby gain.  For buyers, it is salutary to appreciate a home; it is dangerous to fall in love with one.
 
Trap 2) may be more treatable.  Like the AA creed urging sufferers to learn to recognize the difference between the things they can control and those they can't, you should recognize that you very likely cannot exert any influence over the thinking of the owners of the the home you desire.  If they were more susceptible to rational thinking, they would have priced it more reasonably in the first place.
 
Your most powerful tool here is your ability to walk away from this house, like a bad love affair, and move forward, if your relationship with it doesn't make you happy.
Super Contributor
hoping2buy
Posts: 205
Registered: ‎04-12-2008
0

Re: Best strategy for new (and too high) listing?

My husband and I are in the same situation--a wildly unrealistic price which the owners have been steadily reducing over the six months the house has been listed. They have still not come close to a realistic price. My husband called the listing realtor and had a chat. He told him we were interested but not at that price, gave him our name and phone number and asked him to call when the price was reduced. The realtor first said "Why don't you make an offer?" My husband explained that any offer we made would be so far below the asking price that the sellers--who are clearly pricing emotionally, not logically--would be insulted. The realtor then urged us to act soon because "someone else is interested." My husband told him if that was the case, the sellers should sell to them because we weren't interested at that price. The house has since been reduced once again but the realtor did not call us to tell us that--I learned from Redfin.

I guess my advice is decide what the value is, wait for a listing price within striking distance and then make your offer. If it sells before then, take comfort in the fact that you made a rational decision and wish the overpaying buyers the best of luck--they'll be paying for their poor decision for years.
Contributor
cuddly_penguin
Posts: 10
Registered: ‎03-03-2008
0

Re: Best strategy for new (and too high) listing?

Thanks everyone for your comments so far! Glad to know we're not the only ones in this situation.

I like the analogy made above likening an over-priced listing to a bad relationship! Ha! "All you do is take and TAKE from me, you selfish listing!" It's a helpful analogy, and I will keep this in mind -- right now, it's just a mere "house crush", but it's NOT TRUE LOVE...at least not yet. "If you really loved me, you'd pay attention to comps!" *sniff*!

I also like the comment about how, if someone else does in fact swoop in and get the home for a higher-than-fair price, instead of feeling blue, we should feel relieved that we are more savvy than they are!

Thank you!
Visitor
Raker
Posts: 5
Registered: ‎03-17-2008
0

Re: Best strategy for new (and too high) listing?

LMAO! That made me laugh, the analogy to a bad relationship!!

cuddly, you're obviously rational about this, which is a rare trait in this crazy market. The one thing my wife an I looked at was the possibility of losing whatever equity we put in a new home via a down payment, in a market where the rate of price declines keeps accelerating - the amount the prices fell in march is more than february and more than january!! So we won't really make offers until the rate of appreciation is a bit more stable (and hopefully not accelerating to the downside).

Everyone's situation is different, we don't need to buy, so we'll keep looking on redfin and scoffing at the asking prices. By now most realtors know that the LA/OC prices are likely to drop another 20% at least, and they should be advising their customers to consider those offers if they want to sell their house, we won't see these prices again for a good few years!!

Happy house hunting!
Contributor
Fitz
Posts: 16
Registered: ‎04-14-2008
0

Re: Best strategy for new (and too high) listing?

Never hurts to find out how much the Seller paid for the house and how they financed it to determine negotiating room.

If the Seller does have room to negotiate, an offer made at YOUR comfort level can only be accepted, countered, or rejected.
Regular Contributor
chrismt62
Posts: 73
Registered: ‎02-06-2008
0

Re: Best strategy for new (and too high) listing?

DO NOT worry about hurting the seller's feelings, you aren't asking them out on a date! This is a business transaction and if you have done your homework you know what you are comfortable with. There's no harm in presenting that offer but run the numbers by the agent to show you have done your research.

At worst they will reject your offer but if their listing agent is doing their job properly they will advise the seller to consider your offer and counter it. It may be they cannot sell at your offer price due to some equity loan or the need to get a certain amount from the sale to buy another property. Go ahead and make that offer if you are certain this is "it", but be prepared after to step back and see how it unfolds.

In the meantime keep your eyes open daily for similar properties within your target area and price range, you may be surprised to find something even better come along. You might also come across a bank-owned property that is very well priced but needs some TLC to turn it into a showplace. You never know!

Best of luck...and wish me luck too :smileyhappy:
Regular Contributor
BadKittyM
Posts: 173
Registered: ‎04-08-2008
0

Re: Best strategy for new (and too high) listing?

Don't worry about it, or try not to is the very best advice I can possibly give. Previous posters are correct: never, EVER "fall in love" with a piece of property. You will face-plant in one form or another. Shoot - I look at it the same as dating when I was single. Get out and about with your eyes open, have fun, and you will find quite a few you really like. You won't hurt anyone's feelings by making an offer, seriously. Will yours be hurt if it is refused? Honestly, I have yet to see a "perfect" house. I've seen a handful of nice places that meet our criteria, but not a one that I would EVER call perfect, or "the one." Not even the places that met every last item on our 'has to have' list.

Make your offer, and keep looking. Nothing ventured, nothing gained.
Super Contributor
Cadenza
Posts: 309
Registered: ‎04-16-2008
0

Re: Best strategy... remember the Godfather movie?

make an offer they can't refuse. Well, you can't kill them but you can walk away. I did and save $70k when I canceled my offer of $450k for a house which the seller was taking $100k hit and $200k below peak price. Currently there's another unit of the same exact spec listed at $379k. Heck, $70k is 135 payments... that's 18,000 bottles of the best Bavarian beers.