Reply
Regular Visitor
njjturner
Posts: 5
Registered: ‎03-25-2008
0

Overpriced or not?

Does this property seem overpriced at $775K?  The 1- and 2-bedroom units might rent for around $1000 and $1500 per month.

http://www.redfin.com/CA/Sierra-Madre/138-W-Montecito-Ave-91024/home/7227474

Trusted Contributor
Mortmain
Posts: 195
Registered: ‎10-29-2012

Re: Overpriced or not?

[ Edited ]

Sierra Madre is one of the nicer cities in SGV and it is difficult to find a nice home there. So there's always someone prepared to go the extra mile with an offer. It doesn't really help that the listing agent has used only one photo and given very few details. The floor plan (two homes) isn't in its favor. It sold for $691 in 2010, and $670 in 2007. At $559 per sq ft it is way over the average of $398, but within the range. There really is not enough information to see whether this is over-priced.

 

First question is to find out why it is selling for 12% more than 2010, and 16% more than 2007. Prices have been flat so did they remodel, or do repairs? It would also bode you to find out the reason for the sale. If it is distressed, empty, needing work, will give a clue as to how motivated the seller is. Use Redfin's recommendations for doing your own comps, and visit the home noting down plusses and minuses. Look at sales to original asking price ratios and pitch your offer accordingly. Ask you broker to do the same, and see where you differ. Remember he/she will want the sale to go through quickly, so make sure your prep him in advance of your strategy and rationale.

 

The main issue with this home as far as I can see is the layout. If that is what you want great, but most buyers want a single unit so this could be to your advantage. Ask if there have been any offers, what ball park the offers were in (you might ask your broker to find this out) and what the level of interest is. If you go along to an open house, you will see. Beware that a lot of traffic doesn't always mean genuine interest. Nosey neighbors usually turn out in numbers. If interest is low, let the property sit and make the seller sweat a little. Check to see average DOM (days on market) in SM.

 

Just to give you an idea, I made an offer on a much nicer home in 2011 in Sierra Madre. In fact it was one of the nicest homes I had seen for sale, and we beat the price down to $725k. We pushed even further, but the seller was on the limit of their equity so we lost out. This was an exceptional home.

 

Homes are generally overpriced, some stupidly so, and on occasion they are underpriced to attract bidding. A fairly recent Redfin survey showed that most sellers still think it is a buyers' market, and you should avoid being influenced by broker talk of a recovery in prices, which is hooey.

 

Good luck!

Trusted Contributor
mnsweeps
Posts: 196
Registered: ‎06-04-2008
0

Re: Overpriced or not?

IMHO, its overpriced.

Silver Trusted Contributor
HarryV
Posts: 820
Registered: ‎03-20-2008
0

Re: Overpriced or not?

I've seen duplexes with similar configuration (2/1 - 1/1) at lower prices nearby in Temple City, Rosemead, El Monte. Rent may just be $100-200 lower.

Silver Trusted Contributor
HarryV
Posts: 820
Registered: ‎03-20-2008
0

Re: Overpriced or not?

Trusted Contributor
Mortmain
Posts: 195
Registered: ‎10-29-2012
0

Re: Overpriced or not?

You can't really compare places like Temple City with Sierra Madre, but they are a cheaper alternative.

Silver Trusted Contributor
HarryV
Posts: 820
Registered: ‎03-20-2008
0

Re: Overpriced or not?

Go ahead and compare the rental prices of TC and Sierra Madre for similar units. Do you expect to get $500 more per month for Sierra Madre? I highly doubt it. At most, I would say $200 maybe less.

Trusted Contributor
Mortmain
Posts: 195
Registered: ‎10-29-2012
0

Re: Overpriced or not?

I don't doubt it, but that's not the point being made. Sierre Madre is more expensive, and yes rent yields are likely lower. So what?

Silver Trusted Contributor
HarryV
Posts: 820
Registered: ‎03-20-2008
0

Re: Overpriced or not?

[ Edited ]

The OP is asking how much rent he/she can yield and if the purchase price is too high. I made the point that despite the more desireable area, you will not cover the high price of the home from rent differential. So it is overpriced IMO.

Trusted Contributor
Mortmain
Posts: 195
Registered: ‎10-29-2012
0

Re: Overpriced or not?

Harry I agree! Very over-priced!