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rated:
Okay - I have asked questions related to this 3 times in the last 4 years already. But FWF members - please chime in once more.

I am looking to put in an offer in a house that has an interesting listing history.

This is in CT - with the backdrop of stressed real estate market due to some big businesses moving out of the state.
1. The house was built in 1979. Last sold in 1999 for $150k. Currently owned by an elderly woman.
2. First listed for sale on 2014 at 400k+.
3. Three separate listing agents later, and several price reductions later it is now listed for sale at $285k!! City appraisal for tax purposes is at $330k+, Zillow estimate is even higher.

Location is good. Probably even great in terms of school etc!!! Residential areas all around. No commercial stuff nearby.

Given the listing history - I was skeptical as to what was the catch! Problem is I could not find any!! At this point - I'm thinking of putting in an offer, but before that I wanted to poll the hive mind as to what other things to double check before we walk into any kind of a problem.

So what can be wrong? What should I watch out for?

Also - what kind of offer do you typically start with? a little lower than asking always? or at asking when the price is right?

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To clarify, I believe the rule of thumb is 1% of the replacement value of your home and not the home's value (i.e. purch... (more)

pj737 (Nov. 05, 2016 @ 6:00p) |

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We decided to put an offer at a different house. Both of us wo... (more)

puddonhead (Nov. 10, 2016 @ 12:13p) |

$150 for a home inspection? That isn't the norm in the Tristate area. Try 3x that, minimum.

jaytrader (Nov. 10, 2016 @ 12:20p) |

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rated:
It's listed at what it is because that's the market price? Sounds like you think it's under-priced, so why hasn't sold already with multiple offers?

How much to offer depend how much you want it and local market condition. I have no idea about CT. Get a good inspector and look over the disclosure form, there may be clues in there.

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It seems underpriced - but has not sold yet!! That is what I am perplexed about!! And also afraid of walking into a mess that I don't have the skill-set to detect or easily fix.

On paper, and what I can find with my bare eyes looks alright. Minor wear and tear here and there that you would expect from a 35 year old house. Nothing huge or major that I could find out!

Houses within commuting range of NYC, and good school district don't usually sell in the $200k's.

Last price reduction for this house was a couple of days ago. Reduced from $310k -> $285k. Based on comps (depressed this year in this specific area) I'd estimate a house with similar specs should easily sell for around $320k, probably more if updated well.

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Hmmm

1) Has lots of liens
2) Owes back property taxes
3) Someone was murdered in the house
4) There is a ghost in the house
5) House is not to code and you will spend 100k to fix it. (I forget the website but a guy discovered this when he 'rushed' his sale)

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Get it inspected by a professional and include an inspection contingency in your offer.

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BostonOne has the correct answer.

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What does the market say it is worth? The listing price is more or less irrelevant to True Value, look at closed comparable sales.

If it is worth 285K to you, put an offer in, hire a top-notch home inspector and go from what he/she says. If there is a major issue, you are only out the $150ish for the inspection and a bit of time.

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Down vote away, the post has an excited tone meaning the advice given here probably won't be listened to.   OP is already in love emotionally with the property and at this point we should just be looking for the next thread in 6 months, "I bought a house without a proper inspection and now X is broken, can i sue the title company, seller, real estate agent" 

https://www.grammarly.com/blog/how-to-use-an-exclamation-point-properly-how-not-to-use-it/


 

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puddonhead said:   It seems underpriced 
 Based on???

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Expecting a house to increase in value 260% in 16 years is not a realistic expectation* unless you put $100k in updates during that time. So unless the elderly lady is very hady, there probably havent been any updates since 1999 so a 90% increase in value might even be doubtfull. That's all I have to offer except:

1.) 1979 is a good year, it should lack a lot of the PIA traits of older homes ( lead paint, plaster walls, etc.)

2.) If you buy this home you should IMMEDIATELY petition to lower the property tax assessment. As long as the low price is not due to a property condition, then your purchase contract should be all the proof needed to lower the assessment.

*- excluding periods of absurd and unsustainable property value inflation like 2002-2008

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I'm going to pick #3 from forbin's list.

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If you think its a good deal, I would put in an offer ASAP. Add a inspection contingency, and then you have an out if something is a problem.

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The only way you'll get to inspect the place is if your offer is accepted.

Obviously a higher initial offer is more likely to get your inspector in the door and then you can renegotiate based on what he finds.

Without knowing CT I can't speak to the price being high or low. I know out here when a place is priced low it is done so to create a bidding war. There are also thresholds agents will stick below, knowing that more people will see a place listed at 299,999 than at 304,999.

Anyway you could have a moneypit with a bad roof, an old unupdated interior, or something else. Your agent can probably get some info from the listing agent without putting an offer in even.

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My guess is MAJOR code violations or foundation problems. Has to be a reason. +1 to everyone who said get a good inspection.

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long days on the market can scare people also the listing goes stale. could be why or it could have problems, have you contacted the agent to see if any major issues

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I imagine the seller could be a crazy lady who's impossible to deal with. (rejects offers, won't negotiate) That could explain the string of different realtors.

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Next question - how do I find a good home inspector?
Buyers agent will obviously refer some. But the inherent conflict of interest makes me hesitant to go with any of them. How to find the "deal killer" home inspector that will really inspect the house well?

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Find an experienced general contractor to do it instead. Or perhaps a combo of electrician, plumber, roofer. It won't necessarily be cheaper though.

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puddonhead said:   Next question - how do I find a good home inspector?
Buyers agent will obviously refer some. But the inherent conflict of interest makes me hesitant to go with any of them. How to find the "deal killer" home inspector that will really inspect the house well?

  I used the inspector my buyer's agent used on his own house and verified with a few other references. I knew I chose wisely when the seller's agent complained about how he hates when people use that inspector.

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DShaw94 said:   

2.) If you buy this home you should IMMEDIATELY petition to lower the property tax assessment. As long as the low price is not due to a property condition, then your purchase contract should be all the proof needed to lower the assessment.


Many localities automatically lower tax assesssment values to sales price if it is lower. Extremely ymmv, but any decent city shouldn't require a petition.

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Good inspectors are not going to allow you to get into a home with a bad roof/ structural damage just to help the realtor get the sale.    

Also, if the home is in a flood plain, you may want a foundation inspection.  

ANOTHER NOTE:

The reason you are uneasy, is that you don;t know the market well enough.    Research the area, looks at MLS comps and you should come to some clarity. 

But a good inspector is HAPPY to give you a laundry list of whatever problems the home has. 

If you (and inspector) painstakingly go thru the home, CRAWL thru the attic, moving insulation,;CRAWL thru the crawlspace, pull up carpet, etc.  -   you will find what's up, 

newly painted/newly remodeled areas may be hiding something. 

Is the home being sold "AS IS"???

Good luck

Also remember, the market has been ON FIRE for a couple of years now in many areas and MANY are calling for a correction. 

Of course, real estate markets are local.   

Also, there are far fewer buyers in the winter months as people generally are focused on holidays.   You can get better deals October to Feb.

rated:
She's asking for almost 4% annual appreciation while major industry is leaving the area? What is it that leads you to believe it's undervalued, again?

17 years is getting there...Does it need roof? HVAC? Flooring?

If a property is initially badly overpriced, it is common for it to need to go lower than it would sell as a fresh property into the same market in order to finally transact. People are rightly suspicious of aged listings. I'm not necessarily seeing this as a smoking deal yet, though, even if there is nothing wrong with it.

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wilesmt said:   DShaw94 said:   

2.) If you buy this home you should IMMEDIATELY petition to lower the property tax assessment. As long as the low price is not due to a property condition, then your purchase contract should be all the proof needed to lower the assessment.


Many localities automatically lower tax assesssment values to sales price if it is lower. Extremely ymmv, but any decent city shouldn't require a petition.


The Auditors office will likely take into account a recent sale price 'automatically' but it won't happen until the next tri-annual revaluation period, at least in all the cities I've lived in. So if OP is in YEAR 1 of the period, he gets the house for $250k, he'll be stuck with a $330k value for 3 years unless he make a petition for a mid-period adjustment. And there are deadlines for the petitions to be filed each year.

I know people who fight the assessments every year. Ultimately, it becomes a war of opinions: Your choice of comps vs the States choice of comps. They dissagree. You appeal, etc. Personally, I don't have the time to do that but I was in a similar situation to OP where the assessed value was $300k+ and I bought the house for $250k. I didn't have to dig up comps, I just sent in my sales contract with the request. It took over 18 MONTHS for the review board to get back to me but there was no argument and I got a check from the state for $2,700. Not bad for filing a couple of forms.

ADVICE: Estimate what the difference is. If you're in a low-tax rate it might only be $270 and you can decide of its worth the effort....

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Been on sale for two years in a seller's market and the price has been reduced by almost 30% over that time, while being in a good school district with an easy commute to NYC... Something's amiss for sure.

Check one of the real estate site's "Price History" portion of the listing page to see if there have been any Pending Offers after which the house continued to be on the market. If so, that may be a sign of the house not passing previous appraisal and/or inspection contingencies leading to the contract(s) falling through. If none of this appears, which could be because an agent didn't enter it in, and you decide to put in an offer, be sure to put in all necessary contingencies as others have said, including appraisal and inspection. Get an excellent locally experienced Inspector, don't just try to find the cheapest one.

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JerseyJay said:   Been on sale for two years in a seller's market and the price has been reduced by almost 30% over that time, while being in a good school district with an easy commute to NYC... Something's amiss for sure.
 

And 3 separate listing agents in the last 2 years. 

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oppidum said:   
JerseyJay said:   Been on sale for two years in a seller's market and the price has been reduced by almost 30% over that time, while being in a good school district with an easy commute to NYC... Something's amiss for sure.
And 3 separate listing agents in the last 2 years. 

  There has not been a seller's market in Connecticut since 2006.

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puddonhead said:   Last price reduction for this house was a couple of days ago. Reduced from $310k -> $285k. Based on comps (depressed this year in this specific area) I'd estimate a house with similar specs should easily sell for around $320k, probably more if updated well.
 

Have you been inside the house? I can't tell by your posts.

A house with a FMV of $320k that's listed for $285k is not an anomaly...it usually just means the finishes/kitchens/bathrooms are dated, or there are some conditions issues that need rectifying versus a turn-key decent house, poor curb appeal, odd lot, or any number of other factors that make a place hard to sell. We aren't talking about a 25% discount here.

if you want to get good deals (nevermind great ones - that's a whole other matter), you need to know your local market intimately....unfortunately there is no substitute for this knowledge.

 

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solarUS said:   
puddonhead said:   Last price reduction for this house was a couple of days ago. Reduced from $310k -> $285k. Based on comps (depressed this year in this specific area) I'd estimate a house with similar specs should easily sell for around $320k, probably more if updated well.
Have you been inside the house? I can't tell by your posts.

A house with a FMV of $320k that's listed for $285k is not an anomaly...it usually just means the finishes/kitchens/bathrooms are dated, or there are some conditions issues that need rectifying versus a turn-key decent house, poor curb appeal, odd lot, or any number of other factors that make a place hard to sell. We aren't talking about a 25% discount here.

if you want to get good deals (nevermind great ones - that's a whole other matter), you need to know your local market intimately....unfortunately there is no substitute for this knowledge.

 

  I agree with this.
as far as the price going from sold in 1999 for $150 to listed at $285, that is an irrelevant data point really.  Its far to long to have any bearing on what the market value currently is.  Tax value and Zillow are borderline useless as well.

You need to get to know the market in that particular town and school district to know what it is worth.  Then you can decide whether its under-priced.  I'm commuting distance from NYC on Long Island.  285K in a good school district is very low.  But realistically all those are fungible terms.  What I think is good, some may say is excellent, and others might say is mediocre.  I think commuting distance is 45-50min.  I know people who would commute 75+ minutes on the train to Penn and had a 10-15 minute drive on the front end, while others are looking for 25 minutes to Penn.

Point is, I know my town and surroundings enough to know that if a decent sized house comes up for sale for $285K in my area, not on a main road, it is a bargain, but probably would be in such a condition, that you couldn't get a loan on it.

get a home inspector as well, but don't be too scared at the report, ask him to explain the real concerning items.  I swear most must feel they get paid by the page.

There are definitely crazy sellers who are a real pain to deal with, this could explain some of the issue.  Also, houses that have been on the market for a long time tend to get a stigma to them and sell ultimately lower than getting it priced right at the beginning.  

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>> Have you been inside the house? I can't tell by your posts.
No. Have an appt at 6:30 pm today. I plan to show up with a big flashlight in case it gets dark ...
Any pointers about things to look out for would be fantastic.
The pictures (quite extensive in the listing) seem alright - and that is what I based (perhaps amateurish) my assessment that there isn't much wrong with the condition.

>> I think commuting distance is 45-50min. I know people who would commute 75+ minutes on the train to Penn and had a 10-15 minute drive on the front end, while others are looking for 25 minutes to Penn.
I commute 90 minutes to GCT. We definitely have differing opinions one what commuting distance means. 
$285k within a 45-50 min distance, would be a steal. Even complete raze and rebuild would be a good value at that price.

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It sounds like you don't have an agent you trust. It's really critical to have a buyers agent that you will listen to their recommendations and not feel like they are shilling you. In some states they can't recommend inspectors, but they can give you a list. You can ask them who they would use... you can check local review sites. You can call a few and talk to them on the phone -- if you explain the situation they will tell you enough on the phone to make you feel comfortable about their expertise (or not).

Stop trying to figure everything out, spend a few dollars and get a professional to help you. You obviously can't do this on your own, you need some qualified advice (and frankly that isn't here on FW for a local market question).

rated:
>> It sounds like you don't have an agent you trust. It's really critical to have a buyers agent that you will listen to their recommendations and not feel like they are shilling you

For whatever reason - I have felt that the agents I tried to work with are honest (i.e. they don't lie outright), but their priority is to earn their commission as quickly as possible.
It's a classic conflict of interest situation. They get paid by selling - anything - as quickly as possible. Most of them first try to have me sign a completely ridiculous exclusive agency contract. Once pushed back - almost all of them try out the typical sales pitches and only shut up about it once I ask them to make the contract exclusive both ways with the same "responsibilities" on him/her that he is demanding off me.

I don't mind paying for advice. FWF is valuable in terms of pointers - hence I came here first.

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puddonhead said:   >>
For whatever reason - I have felt that the agents I tried to work with are honest (i.e. they don't lie outright), but their priority is to earn their commission as quickly as possible.
It's a classic conflict of interest situation. They get paid by selling - anything - as quickly as possible. Most of them first try to have me sign a completely ridiculous exclusive agency contract. Once pushed back - almost all of them try out the typical sales pitches and only shut up about it once I ask them to make the contract exclusive both ways with the same.


You've hit on the biggest issue with RE. And this is why you need to keep your best interests in mind at all times. This means hiring your own people as well, and not relying on your agent's network of inspectors contractors etc.

Maybe it is a state by state thing but I've never had to sign a contract and I've used 4 agents (and fired/not executed with three of those).

I've had to back out of deals with very few days because of big issues that the seller didn't disclose, my inspector found and my agent dismissed as 'minor.' When you back out of a deal a good agent will say 'let's get back out there' and a bad one will try to talk you out of it.

The house pictures are irrelevant. No one is going to put up BAD pictures. Check yelp for a good inspection company, one where people were talked out of purchsses. I like to ask inspectors 'would you buy this house?'

Also just so you're ready, if there's a serious issue like code violations or a bad roof (think:red tag) you might even have trouble financing the place.

rated:
puddonhead said:   >> Have you been inside the house? I can't tell by your posts.
No. Have an appt at 6:30 pm today. I plan to show up with a big flashlight in case it gets dark ...
Any pointers about things to look out for would be fantastic.
The pictures (quite extensive in the listing) seem alright - and that is what I based (perhaps amateurish) my assessment that there isn't much wrong with the condition.
 

  Pictures lie! You dont know when they were taken. They show what the seller wants you to show. A professional with good camera/lighting can mask blemishes and highlight the good things. See the house in person (inside and out), preferably is bright daylight.

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Its really premature to think about this stuff before you've even been inside the house yourself.

The problems may be obvious once you visit the house.

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Let us know how your viewing went.

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Okay - so I went in the view the house. As others have mentioned - pictures don't quite give the right impression. It looked pretty dated, but still livable - barely so.

A couple of the rooms have half carpet and half hardwood. Some places the floor is a little warped and possibly needs replacing. All the appliances and stuff are old. The sunroom in the back leaks and probably needs repairing. etc. etc. etc.

Essentially the old lady selling the house has only done the bare minimum upkeep to allow her to live there - but nothing more!! A bunch of updates would be necessary for this house to be in a easily sellable condition in future. We live in an apartment with significant compromises - so we can probably live in this house still, but won't be able to sell it again without significant updates.

I've asked for another viewing in daytime. Let us see if we discover anything new at that time.

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This actually gets me thinking of a tangential but related topic - what % of a home price do you need to account for as the "clean-up and update" cost when you want to sell a house?

This house seemed severely outdated from nothing but lack of active updates - which costs money. So how much does it cost - over time or one time before selling - to prep a house so that it sells?

I used to think the 6% agent commission to be the only transaction cost. Not quite so! You'd probably end up spending more (possibly over time) to keep the house from becoming the outdated one - even when it is in a fantastic neighborhood..

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puddonhead said:   This actually gets me thinking of a tangential but related topic - what % of a home price do you need to account for as the "clean-up and update" cost when you want to sell a house?

This house seemed severely outdated from nothing but lack of active updates - which costs money. So how much does it cost - over time or one time before selling - to prep a house so that it sells?

I used to think the 6% agent commission to be the only transaction cost. Not quite so! You'd probably end up spending more (possibly over time) to keep the house from becoming the outdated one - even when it is in a fantastic neighborhood..

  The rule of thumb is that you should budget 1% of your home's value annually for maintenance/upkeep. Huge YMMV depending on age of home, quality of build, etc.

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puddonhead said:   This actually gets me thinking of a tangential but related topic - what % of a home price do you need to account for as the "clean-up and update" cost when you want to sell a house?

This house seemed severely outdated from nothing but lack of active updates - which costs money. So how much does it cost - over time or one time before selling - to prep a house so that it sells?

I used to think the 6% agent commission to be the only transaction cost. Not quite so! You'd probably end up spending more (possibly over time) to keep the house from becoming the outdated one - even when it is in a fantastic neighborhood..

  

The last house we sold we lived in for 6 years.  It was brand new when we bought it, and kept is pretty good condition.  The month before we put it on the market we replaced all the carpet, and painted every room in the house, as well as replaced the back door which I had put a dog door into for our pooches.  Overall I would say we spent about 2% of our homes listing price on updates.  This helped our house sell in 7 days(average selling time in our market was closer to 30 days), for a very reasonable price.  The lady buying the house was older, and mentioned multiple times she liked how she wouldn't have to paint/update the house when she moved in.

Skipping 4 Messages...
rated:
tennis8363 said:   What does the market say it is worth? The listing price is more or less irrelevant to True Value, look at closed comparable sales.

If it is worth 285K to you, put an offer in, hire a top-notch home inspector and go from what he/she says. If there is a major issue, you are only out the $150ish for the inspection and a bit of time.

  $150 for a home inspection? That isn't the norm in the Tristate area. Try 3x that, minimum. 

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