I am trying to decide how much my initial offer should be on my first property. It's a 2 family appraised (by the city) at 175,000 but the seller wants 209,000. Do I go off the appraised value or the asking price when I make my initial offer.
@William Toomey Was it appraised by the city for $175K or assessed at $175K? The city usually assesses properties for tax purposes and this value is often lower than the appraised value of the home. You need to look at what comparable homes in the area are selling for. Talk to your realtor.
Buying over the appraised value means you are buying a property for more than it's worth, which is the opposite of an investors goal. It doesn't matter how much a seller wants for a property, you should base the purchase price on the value of the home and use that as your starting basis. Assuming appreciation will bump the value up in x amount of years is speculation that takes you out of control of your investment and leaves you vulnerable to get burned. Set your max price ahead of time based on running the numbers and researching accurate valuations, then walk away if you can't close the deal for that number or less.
So the assessment is different than the appraisal?
There is not a simple answer. It depends on the property and on the comps in the area. If the property needs a lot of work and comparable properties that were virtually turn-key and sold for his asking price then I would definitely offer lower than asking.