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Saturday, April 19, 2008
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21 comments:
I went out this weekend looking with my realitor. He said no one pays list price. He also said he would get the sellers to buy us points which we could take off our taxes. It sounded like me a way to keep sale prices high, and thier commissions up.
Isn't the fact that it is on your loan instead of you paying up front easier on your wallet today?
I don't know anything about this inside-the-beltway Alexandria complex, but I was struck by the discounts
http://www.eos-21condos.com/buy.htm
STUDIO CONDO
Was: $178,700 Now: $132,000
ONE BEDROOM CONDO
Was: $222,900 Now: $166,000
TWO BEDROOM CONDO
Was: $246,900 Now: $199,000
The answer is that this is better for the some buyers, because the buyer pays less up front. However, it is worse for the seller who pays more in commissions than if the selling price were just reduced.
Whether this is better for a particular buyer depends on that particular buyer's cash in hand. If the buyer only has, say, 5 or 10 percent for a down payment, then that buyer would likely prefer to have some closing costs paid by the seller.
Bubbleboy said:
"5 or 10 percent for a down payment, then that buyer would likely prefer to have some closing costs paid by the seller."
True. Since many loan programs used to have a minimum %'age down requirement, this was a way of working around that. I.e., The downpayment actually came from the loan itself via the seller. Hence why 0% down loans weren't as bad as some would have us believe. They were just the lenders' recognition that there were already many 0% down loans out there being informally worked by way of the seller paying closing costs and the like.
john, most agents will help you get a price lower than the list price and help in closing costs. Mine got me $157K down from $165K condo in Reston with $4400 in closing costs on a bank owned property.
The points can or can not be part of the closing costs discussion. Some agents will ask for X dollars towards closing with the excess going to towards points that can go towards points that reduce the cost of the mortgage. Others will ask for X dollars for anticipated closing costs and then points to be paid to make the loan work for you. Not sure of what difference it makes though.
Remember your closing costs being paid by the seller reduces your out of pocket money at closing. Getting the seller to also pay points can reduce your loan cost. Not sure if points paid by the seller are deductible on your taxes though.
Yes, these items paid by the seller can increase the amount of of what a seller may accept by a buyer - meaning that if you want to offer $300K ($325K list price) for a home with $8k in closing costs and one point (in this example each point is $3K) - you could offer $312K and end up close to the same. But IMO it was better for me to have the closing costs paid by the bank that owns the condo.
kob, I saw something in the last couple months about fire sale pricing that is now lower with the link you have shared. IIRC the prices were the "was" pricing. Nice discount - but I would be ticked right now if I bought that those levels.
One has to wonder if these are the rock bottom prices. Wonder what others are selling for and what the comps are.
I have been watching this house since it came on the market in October, 2007.
http://homes.longandfoster.com/Real-Estate/PropertyDetails.aspx?MlsCompanyID=2&MlsNumber=LO6561051&Add=38433%20MILLSTONE%20DR,PURCELLVILLE,VA-20132&FromParnter=true
It has been listed for $699,000 and suddenly increased to $724,000. Nothing else about the listing has changed, same description, same agent, same pictures.
Does anyone have any explanation as to why a seller would RAISE the price on a house that hasn't sold in 6 months?
Thanks all.
eva, a good realtor will be able to share with the dom/p data and tell you something behind the scenes...
Chip,
What is dom/p data?
Is there any logical reason to raise the price on a house that hasn't sold? Is the owner trying to ensure that the house doesn't sell? If so, why not just take it off the market? If it hasn't sold in 6 months, at the old price, what are the odds that it will now sell at a higher price? Seems backwards to me.
What are the odds that the agent will tell the truth about the increase, rather than some BS excuse?
eva, this link may help you:
http://en.wikipedia.org/wiki/DOMP
It is possible that the market out there has changed allowing for hirer prices...
Your agent, if they are good, can do some digging for you.
The thing is finding a agent that is willing to work for you. Mine is...
Eva,
More than likely the owner kept getting lowballed 50-75k less than his asking price so he increased the asking price thinking that the lowballers would then come in at where he actually wants to sell.
eva asked:
"Does anyone have any explanation as to why a seller would RAISE the price on a house that hasn't sold in 6 months?"
I noticed that happen too when I was looking for my house. My agent explained that because you have different buyers searching for houses at different price levels, by underpricing a house it can get overlooked by the people who are in the market for it. For example, in your case, $700K may be a "breakpoint" between different kinds of buyers. So, while $699K may be at the high end for people looking for a house "somewhere between $500K and $700K", it might be getting overlooked altogether by people looking for a house "somewhere under $900K" ... i.e., it might be off their radar even though they are the ones most qualified to buy it.
This kind of pricing strategy happens all the time with other products such as cars, jeans, etc. Do you think there's really that big a difference in how Levy jeans are made and designer jeans ... which cost maybe double?
So, to get back to your question. The agent may be thinking it's wrongly priced because it's simply too expensive for the people looking to buy "in that range" but may be a bargain for people looking to buy in a higher range. Of course, only time will tell if the agent is correct, or if he's just trying to "put lipstick" on a pig. I.e., the house really has to be a "house worth somewhere around $723K" for it to actually sell for that.
Kob, I'm struck by their bizarre map.
It shows Old Town Alexandria on 395. Compare to the Google Map.
Their text is strange too,
"GET CLOSER TO THE ACTION
...
EOS twenty-one is literally across the street from shopping, banks, grocery stores and restaurants. You don't have to rely on your car – everything you need is at your fingertips! Yet you're also minutes to Old Town Alexandria, the Metro, and several major highways, which makes everything convenient – from Adams Morgan and Georgetown to Tysons Corner and the Rosslyn-Ballston Corridor."
According to Google, they are just over a mile from the Metro, which is not horrible. They seem to be in the industrial part of Alexandria, near the Beltway.
EOS 21 is a dump complex that was converted to condos.
you can read some stuff on the net about the renters who were left and how they were treated (worse than the cockroaches that live there).
anyways, they just auctioned off the place.. not sure if they sold everything at auction.
there is shopping across the street and it is conviently located as they say. and yes their map is a little screwy, even national airport is on DC side.
A bit of an update. I spoke with my agent today. She has 22 years in the real estate business, in Fairfax and Loudoun county. I asked her why the price would be raised on an unsold house. She said "Only because he's stupid". She added that if a client insisted on raising the price of a house that hadn't sold in 6 months, "It would be time for us to part ways, I would have to fire a client who did that". She also said what Doug suggested, that the owner won't take less than $699,000, and thinks that raising the price will communicate that to buyers. But obviously no one else, over the last 6 months, has thought that the house was worth that much.
I might add, Loudoun County has assessed the house at $608,000, down from last year's assessment at $789,000.
My agent is calling the listing agent tomorrow about the price increase. There is NO way will offer even the original $699,000. We're going out to see it and will decide then what to offer, if anything.
eva, there seems to be "idiot agents" out there.
There was a property in the Shadowood community that was listed at $120K a week or so ago. I forget whether it was a short sale or a foreclosure - but when my agent called their agent - they admitted freely that they just needed to get it listed quickly and they had no idea as to what to price it at! So they just winged it.
There were/are some properties that have been sitting for over 400 days in the Foxcroft in 22031! One that I visited that that had a meager price drop that was vacant when I visited the place, They wanted 200K+ when there were other units in the same condition for like 170K. Go figure....
Hey John,
I don't believe in points generally.
I disagree with nobody paying list. I would rather have you buy something $10k OVER list then buy a place that is overpriced by $100k and getting $80k off. (and don't think I don't see it)
Sometimes the best homes are properly priced and sell for full list, or even over list (my latest listing).
The average price drop for a listing that sells in 7 days is only 1% drop.
As for buying points, that is silly. But I DO recommend a higher price and maxing out the seller subsidy. Yes the damn Realtor makes $100, but we aren't THAT scummy.
The reason (at least for why I do it) is for your resale. If you buy a place for $480k, vs $500k with $20k back, the $500k looks better and the next sale will be priced based on your "$500k" sale. Yes some Realtors will net it out, but not all.
Also yes it might raise your taxes $50 a year, tops. But how many of you look at Tax Assessment? Well you shouldn't, but you all do. "It is x% below Tax As." As if you figured out some secret to home buying.
Well if you do the $500k with $20k back, your tax assessment will go up a tad and that helps your resale.
If you REALLY feel scammed, go ahead and make your agent "freeze" their commission at the net amount.
Frank
Broker FranklyRealty.com
Owner Franklymls.com
(I have a post about NOT fighting your tax assessments)
Hey Kob,
EOS had an Auction recently. Watch out for "deals" since they might just have another Auction that will wipe out your "savings."
Also those are "Starting" prices. Oftentimes they face the highway, near dumpsters, etc etc. And the "was" might be as far back as 2005, so watch out.
Frank
Chip, Eva Sorry for the plug, but my site is the only one that shows both the DOMM and the DOMP (dom/p) and it explains that it is.
Watch out for Realtors that illegally fudge the DOMP by putting a fax taxID.
Frank
franklymls.com
Another update. Listing agent said he didn't know why the seller insisted on increasing the price. He was 'at a loss for words'. Sigh................
Frank, thanks I knew that. Your MLS sight is the main source that I used in looking at properties.
The DOMM and DOMP info was helpful...
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