Are properties usually cheaper than what’s advertised online?

3 Replies

What are the basic principles here when looking at listings on sites like Zillow, Redfin, Roofstock etc?

Are advertised prices usually a little higher than what they’re worth? Are they pretty accurate otherwise?

When going through the listings, should you take a % off the advertised price before negotiating with the agents?

Thanks so much!

Are you talking about automated valuations (such as the Zestimate), or are you talking about asking prices for advertised listings.

I'll assume it was the latter and answer that...

The answer is, there is no set formula - it depends. 

Sellers and listing agents can employ a variety of pricing strategies. A property that is priced below market value can stimulate multiple offers and end up selling for more than asking price. Whereas a property that's priced too high may sit on the market and force the seller to drop the price later on. A property that's priced "just right" will often sell within 30 days.

In addition, a property that's worth $100k to you (according to your financial situation and investing goals) might be worth $120k to me, and might be worth $140k to an owner occupant with an emotional attachment or some other motive.

Advice:

1. Know what your goals are. Are you investing for cash flow (if so, how much), or appreciation? Stable assets, or value-add? Etc...

2. Know your market. Know a great deal when you see one. If I see a $100k property priced for $80k, I might offer $99k or more for it just to snap it up quickly and avoid a multiple offer situation. The asking price is irrelevant, the value is what matters. 

3. Find a great buyer's agent to help you with all of the above. I'm continually baffled by people who think they will somehow save money by not having someone to represent their interests in the transaction and negotiate on their behalf, and/or by working directly with the listing agent, who is contractually and ethically bound to represent the interests of the seller and get the the highest price possible for the property.

@Nathan Asher Robson Online data from Redfin.com and Realtor.com come straight from the MLS and are the accurate purchase (asking) price of the homes.

Zillow is NOT a brokerage so it often has inaccurate information.

But you can always offer whatever you think the value of the home is, even if it's lower and see if the seller accepts your offer.

But don't be "that guy" that only offers lowball offers without doing adequate evaluations!  You'll be hated by agents and they'll warn their clients about you!

Don't be the a$$hole that wastes everyone's time!!! ;))

Sellers don't have to lower their prices but most do if it doesn't appraise for the contract price and they really want to sell it.

Cheers to your success Nathan!