The wife and I are looking at this property tonight, not as a rental, but as a potential new primary residence for us and our children:
It's not perfect for our family style, but it does have a nice amount of space. My issue with it is the price, which is $595K. This house is under 2000 sq. ft. and was built in the 1920s. It is priced at $324/sq ft, which is almost double what many of the newer homes in the area are going for. It is listed as a lakefront property, but the lake it is on is only 4 feet deep, and doesn't hold any fish, nor could you really boat on it (that doesn't really count as a lake in MN if you ask me).
My feeling is that this place is really worth about $325K (tax assessed value for this year is $304K).
Am I a jerk for wanting to offer $270K less than their asking price (pending our walkthrough tonight goes well and we like the property)? Any tips on negotiating with a seller who has their home listed far too high? I'm tempted to offer $325K, and when they turn it down, just tell them my offer stands and call me if you can't sell it.
Any insight would be helpful.
@John Woodington I think the answer to your question is largely dependant on the time on the market. Look even if you are right about the value, then you must concede the sellers are not seeing reality. They will only accept your offer if they are tenderized like a bad cut of meat that has been beaten by the butcher and then marinated. If this has been on the market for 30 days or less, then it's not worth the time. You said it yourself other homes are better values in the area. If this has been sitting for a few months or more, then just maybe your offer will get their attention. The best thing to do in this case is to have your agent call their agent and see if they are open to a low offer.
Otherwise, it's really best to focus on homes you could actually buy for a fair price.
Don't worry if they are truly as overpriced as you say they will become tenderized then you make the offer. You can always ask that the seller's agent call your agent when they loosen up.
Thanks @Tim Swierczek . This house has been on the market for 41 days, which in today's world seems like a long time to me. I appreciate your insight. I'll talk to my agent tonight to see how best to handle a low offer, and go from there. In my ideal world this house would sit until spring, and then they would come to the negotiating table with a more realistic price in mind. Plus I'd have more cash on hand by then (in theory) for a down payment.
@John Woodington good luck. It sounds like you should be able to wait them out, but your agent can help figure it out.
Are you taking into account the 9 acres of land and the outbuildings. As you know the $324 is based on the price divided by the square feet of the house and doesn't include any of the other things like the acreage and the outbuildings. If you don't at least take this into account in your discussion and factor those in the seller will most likely totally blow off your offer as it would not seem well thought out and defensible.
The other thing I would check on the tax assessed value is it one PID, sometimes they will split it into 2 PIDS, 1 house and 1 other land.
@John Woodington how did the showing go? Was it what you were expecting? Has your opinion of the price changed at all?
Hi @Tim Swierczek . The showing went well. The 9 acres for this property was beautiful, but the house was definitely not for us. I don't think overall that it is worth the $595K that it is listed for, but even at half that price, I still wouldn't make an offer, based on the main house itself. It's not run down or anything, but it definitely has the potential to have some major expenses if any of the main systems has issues down the road. Closet space was severely limited, bathroom space was also very limited. There's a right owner for this house, it's just not us. Now, if the house was more modern (like the other houses in the surrounding area) then this price tag makes sense.
That said, we really liked the area, so we're keeping our home screener set on the Dayton area.
@John Woodington Thanks for the report back. Good Luck in your search
9 Acres - that is what you are paying for. Not the house. It's a secondary residence while you build your primary. To many -- that is a steal!