You asked for a $4000 discount.
They countered to raise the price and let you finance the closing costs.
I have yet to find an area tht tax appraisals are actually an indicator of market value in more than a general way.

In negotiations, anything is possible. There are no rules that say a seller can't counter with raising the price.

I would look else where.

Enjoy the journey.

eal51 in western CT

On my small home the appraisal is probably 60K less than what I actually paid. And that's not including money I've put into it since then.
Forget the appraisal.
Do you know much about the comps that were 12,000 lower? Were they in 12,000 worse shape? You say many upgrades, well maintained - does that account for the additional 12,000?
I wouldn't get miffed, its negotiation, if you can see a way to counter and want the house go for it. This isn't personal.

Thank you for your responses. Most of the comps were also upgraded, although the ones that weren't sold for $38,000 less than the asking price of this one. I focused on the selling price per sf of the ones that were comaprable in upgrades. I plan to make one more offer and if it doesn't work out, I'll resume my house hunting. Thanks again all for your replies.

If i read it right, you offered what you believe the comps are, then asked for $4000 off the price (closing costs).

They laughed and said "$2000 more for you bucko"

I think thats a good plan buyerintx, if they come back with another sort of weird counteroffer then it is perhaps personality dependent (they are a little unreasonable) or they are getting bad financial advice from someone and its time to move on.

Make your next offer then walk away, or walk away now.

Since it's not listed, they feel like they may be able to get more since they had a quick bite. Let them list it and see how fast they get another, maybe they will come back to you. Not sure if you can let the agent know your interested and if they do get an offer you'd like the opportunity to counter.

We once received an offer on a home we were selling several years ago that the buyers lowballed because they couldn't afford the down payment and the closing costs. We countered with more than the asking price but we would then pick up their closing costs. They took that deal. So yes it can happen that a seller counters with a higher price than what the home was originally listed for, it all comes down to bottom line -- in our case (this was in 1980 when $60,000 actually bought a nice house) we had our home listed at $60,000. The buyers offered $50,000 -- we countered with $62,000 and we'd pay $5000 in closing costs.

In my area, this would commonly be done to let you know the seller is interested in working with you, but is not interested in giving you any type of price reduction. It could also be assumed that you don't have the cash for closing and it's just a way to let it be included in the mortgage. I really don't see anything unusual about it.

Gloria

Wait, I'm lost.

Let's assume the range is 300K and the following applies?:

$300K is comp
$294K is tax value
$312K was their asking price
$300K minus 4K = $296K was your first offer?
$319K minus 5K = $314K was counter?

Ok, the other thing these people are not figuring and can be bargaining tool is commission for agent. In this case they are saving almost 19K. So their original asking price should be $312K minus 19K commission) = $293. Wow. I would try a 3K lower offer showing these numbers and see what comes back. Then I would walk for anything over $293K on this one as it is equivalent to their full asking if listed.

maybe they want to pocket that money that might have gone to the agent.

Jeff, the OP said she was in Texas, and is looking at a 3/1 starter home, so your basis of $300k is high.She said she thought the house was 12k overpriced, which can be as muck as 1/6 of the asking price here, depending on where you live. 300k is dream home money here, depending on where in Texas you are.

But about the tax appraisal, in my county (Gray), they appraise at FMV. There have actually been many houses here that have sold for far less than the tax appraisal. In the last county I lived in, (Bee) the tax appraisal was approx. 10% less than FMV. In Coryell county tax appraisal is very close to FMV, as well.
That being said, no matter where you are are you going to be able sellers less than asking price when they're not even on the market yet. They called the realtor to talk about a price, and got a bite already? You gave an offer before there was even a sign in their yard, and they immediately thought "Wow, we must have priced too low." Plus, home prices here are going up. I think the OP needs to reevaluate their point of view. The fact that these sellers got an offer so quick points to the idea that maybe it's not them who is unrealistic in price. Maybe the offer would not be so out of line if they had been on the market for at least a few months?

They called the realtor to talk about a price, and got a bite already? You gave an offer before there was even a sign in their yard, and they immediately thought "Wow, we must have priced too low."

Exactly what I think & posted. Sellers think they may be able to get more.

Roselvr, I didn't mean to copy what you said. I didn't read all the replies, I just skipped over and read a few. I apologize. But it seems that you and I are the only ones that caught that part? This post isn't really about the sellers raising the price in counteroffer to cover closing costs (Which is a pretty common tactic, no?) It's about someone trying to swoop in and get a steal on a house before it hits the market, which is not commonly done at all. Most sellers would balk at such a thing, and they did. Usually we talk about offering less when a house has sat on the market or has extensive repairs to be done.

Let me state this a bit more clearly...I apologize for the confusion. I called a real estate agent I knew through a friend who had dealings with him over 20 yrs ago and told him I was interested in buying a house. The previous day he had been contacted by the sellers (who are also ex neighbors of his) and was told by them that they were considering putting their house on the market. He told me about the house and told them about me and to hold off putting it on the market because it could be a perfect fit for both of us. I was looking for something in a lower price range and they were looking for someone to buy. There was no "jump on it' on my part to take advantage of trying to get in at a low offer before it was listed. I looked at more than 50 homes during this time and was not impressed by what I saw at the prices they were selling for. It seemed to find anything in good shape, I had to go over $100,000 and being single and making below $40,000 a year, that was not in the range of my salary. I looked at many houses in the $80,000 - 90,000 range, but they did not (in my opinion) seem to be in the kind of shape to warrant the asking price. (all but 1 were vacant and some turned out to be foreclosures that were not very well taken care of) They were all 3-2-2 and approx. 2000 - 3000 sf. I am not in the position to put out alot of cash in repairs, so was looking for something that was more move in ready. I have been pre approved for $110,000 with my mortgage company and am having the closing costs rolled into my loan. After looking for 2 months and not finding anything, I reconsidered the house that is the focus of this discussion. It is a 3-1 with the garage converted into a study..approx 1286 sf and is 50 years old. Being as I am single, I felt I could be comfortable with the size of the house and it is in very good condition. While they have done improvements, there were still some amenities I had in mind that I wanted (such as a garage & fireplace) that this house did not have. I considered everything and felt I could do without those. Also, the electical circuits in the house are not grounded and since much of my electonical equipment needs to be grounded, that would be an added expense for me to have done. I was told originally that their asking price was $78,000. (This house was listed 4 months ago at $76,400..listing expired) I checked the comps in the area and they were more on an average of $65,000. I wanted to offer $66,000 and we had the contract filled out that way, but after talking to my mortage broker .. she told me to make it $70,000 and have them paying the approx $4,000 closing costs. (Making the original offer $66,000) The contract was not finalized yet so I got with the real estate agent and had him make the change before we presented the offer to the sellers. Also, it is very possible that I may qualify for a 1st time home buyers grant of almost $8,000, so I chose to go FHA (I qualify for FHA or conventional). After receiving my offer, the sellers countered with $85,000 with them paying $5,000 of my closing costs and they said no FHA loan - conventional only (their reason being that they were worried with the house being 50 years old). I countered with $70,000 with me paying all of my closing costs and they have since countered back with $78,000 - the original price they were asking. Another thing I need to mention is that the real estate agent is not my agent, he is an intermediary between the 2 parties. He deals strictly in commercial real estate now, offered to do this more as a "favor" to both parties (me & sellers) and IS getting a 6% commission from the sellers if this contract goes through. Anyway, I am not miffed about it all, I just didn't understand their counter of going $7,000 higher than their original asking price. I had the figures and printouts of the comps to back up my reasons for my original offer, had included copies of the comps with my offer and was in no way trying to lowball them. This is my 1st time to be house hunting and I have learned one thing for sure .. "expect the unexpected" lol. I hope I clarified the situation a bit more and I thank you all again for your opinions and comments .. they are much appreciated.

Sorry but this sounds really small for the money. If you can afford 80k for 2000 ft, I would not spend 70 for half that sq footage. Being single you have time to make repairs plus you never know what is only cosmetic

At 70k you are paying 54 per foot, at 90k for 2000 you are paying 45 per

As for what is going on, I think everyone gave you good answers, it is hard to follow exactly what is going on from what you posted. Yes I think countering up is unusual and I have no idea why, I would walk

Thanks for posting more info. It clarifies alot. It does sound odd, and I'd let them take their chances at relisting. Could you talk to them in person (or have realtor do so) about their odd bargaining tactic?

Also, if the realtor is getting 6% from the seller he is not doing this as a favor to anyone. He is working for the seller.

Roselvr, I didn't mean to copy what you said. I didn't read all the replies, I just skipped over and read a few. I apologize. But it seems that you and I are the only ones that caught that part?

I was actually surprised no one else said it except us.

I was told originally that their asking price was $78,000. (This house was listed 4 months ago at $76,400..listing expired)

So, house was originally listed at $78,000 - but they dropped it down to $76,400. According to what you said with comps, you're offer sounds good to me as a 1st bid. Here in NJ, when I hung out with a realtor, $10,000 lower was the norm. This gave the sellers a little room to go closer to what they wanted; from my understanding of it

mortage broker told me to make it $70,000 and have them paying the approx $4,000 closing costs. (Making the original offer $66,000) - checking comps in the area similar were more on an average of $65,000

After receiving my offer, the sellers countered with $85,000 with them paying $5,000 of my closing costs = $80,000

I countered with $70,000 with me paying all of my closing costs

they have since countered back with $78,000 - the original price they were asking

With the last counter, who was paying closing costs?

Being as I am single, I felt I could be comfortable with the size of the house and it is in very good condition. While they have done improvements, there were still some amenities I had in mind that I wanted (such as a garage & fireplace) that this house did not have. I considered everything and felt I could do without those. Also, the electical circuits in the house are not grounded and since much of my electonical equipment needs to be grounded, that would be an added expense for me to have done.

How soon do you want to buy? Do you have the luxury of waiting a few weeks?

IDK, if it was me, I would pass. As it is, what appears to be a game to them, is turning me off. You say you'd like a garage & fireplace, I'd at least look to get the garage part unless there is enough land to put a wood garage type shed up. You could also convert the study back to a garage eventually. The fireplace can always be a wood stove or one of those gas fireplaces some where down the line.

I live in a house without a garage, or basement; it's the pits. I could live without the basement if I had a garage. Since you're single, do you really want to go with something like this if it's not what you really want? What if you get married and have kids one day?

I say walk on this one. The sellers are unreasonably inflexible. The house is functionally obsolete by only having 1 bathroom and a converted garage might increase the square footage, but in my experience, it is not something most buyers would want today, or probably when the times comes for you to sell.

Wow, my house is functionally obsolete . . .

"Wow, my house is functionally obsolete . . ."
I feel for you!

what part of Texas are you looking in?

Carolyn

' The house is functionally obsolete by only having 1 bathroom'

???????

funtionally obsolete..no , a horse and buggy is functionally obsolete in a city, but a house with one bath is not.

"funtionally obsolete..no , a horse and buggy is functionally obsolete in a city, but a house with one bath is not."
I don't know of any national builder who builds SFR homes with one bath only. Condos yes.

"I don't know of any national builder who builds SFR homes with one bath only."

What does this have to do withthe stock of existing houses?
If you want a 3 bedroom, 3 bath house then talk tothe builders.
If you purchase an older house it will have older ammenities.

"What does this have to do withthe stock of existing houses?
If you want a 3 bedroom, 3 bath house then talk tothe builders.
If you purchase an older house it will have older ammenities."

I am talking about "functional obsolescense" today. What used to be acceptable many years ago, is not acceptable for buyers who are building today.
Functional obsolescense in homes is discounted, because they don't meet the needs of todays buyers.

buyerintx, did you decide what you'll do with this house?

it's the phrase 'functional obsolescense' .. it's the wrong phrase.. the house is completely functional, what it doesn't match is the amenities we now expect.

Just like a 1200 sq ft house is completlye functional, but many people want a 4000 sw ft house...
both are functional, just not what's in style now.

really, it's not about 'needs' its about 'wants'.

"...buyers who are building today.

Building is not buying an existing house.
If you want the 'latest & greatest' go for new (or a well updated older home).
I have yet to find a new house with any real detail or style.
After WW2 the level of decoration started a downward trend as a cost cutting measure. Colonial case gave way to ranch case. Baseboard sizes dropped to less than 3 inches high.
Some is coming back - you at least see crown molding at the uppper end (though rarely in anything approaching appropriate dimensions), and a few baseboards and door cases.
It is astoundng how fast I can sell an 'updated' house by replacing the trim.

I'm talking about a one bath single family house here, not design choices. It's like a ONE TV or Telephone outlet in the house today. It doesn't work for most families with todays lifestyle.

Plenty of people still start out in one-bath homes. It is not like all the little ranch home with one bath are being torn down, after all! It may not be desirable, but it does work.

One bath homes may not work for families, but retirees are another story. My mom retired and sold the big old family home to buy a 2 bedroom 1 bath ranch. Her whole sub division is little 2 bedroom 1 bath homes and lots of retirees own them.

Carolyn .. I am in Arlington, Tx

We are still negotiating, but I think I am about to walk and look elsewhere. I discovered that the supposed recent comps sent to me by the broker actually had much older deed dates. Out of the 26 I based my offer on, only 5 were sold in 2006..some of the others were as old as 2001. I reevaluated my offer, due to the comp price average being much higer based on the 5 that sold in 2006. I countered with $74,000 with me still paying my closing costs. The declined it and stayed firm on 78,000 with me paying my closing costs. I researched it further, checked out homes in the area that were listed within a $3,000 higher or lower range and found that they didn't meet or exceed the quality of the one I am looking at buying. I found out about an available grant to 1st time home buyers and being as keeping my monthly payment in my affordable range is the most important thing for me..I checked into it. It turns out that I meet the criteria so, based on that I made the decision to go with their asking price of $78,000 with the contingency that the house pass the inspection arranged by the agency issuing the grant. The grant money, which I would use as a down payment would keep my paments where I need them to be. I went to a 6 hour class yesterday that is required for the grant and they had a real estate broker, mortgage lender, insurance representative and an inpector for the Texas Real Estate Commission conducting workshops. It was really informative and I asked the inspector if the house being older and not having the electrical outlets grounded would cause it to fail inspection. (the inspection for the the grant is different than a standard inpection..in this one it passes or fails and no grant if it fails) He told me it wouldn't be a problem, but that they could not have 3 prong outlets installed if it wasnt grounded. Basically, can't appear to be grounded when it isn't. Well .. it has 3 prong outlets and when I told the real estate broker, he said "that's the problem they had with the last attempted sale .. same thing caused it to not pass FHA code" Now I know the reason that they insisted on only accepting a conventional loan offer from me and based on all they have said, I find it highly doubtful that they will switch out the outlets plates to make the sale. Although there would be a little rewiring involved ... from what I was told, it is a matter of just 2 wires per outlet and very simple and inexpensive to do. I checked with an electrician, then called the real estate broker and told him I would pay for it to be done. It was less than $200.00 and was worth it to me. I meet with the broker this afternoon to finalize the contract at their asking price .. with the contingency of the inspection for the grant added and my offer to pay for the electrical switch. He says they are firm on not changing it, based on what they told him about the last experience with this, but said he will present it to them. If they decline .. I give lol .. it will be time to move on. Hopefully, I will know something this evening or tomorrow.

Good for you for taking advantage of the first-time buyers program and learning more about the comps yourself. See how much more confident you feel now? I am sure you will make a good decision for your situation.

Well, if these sellers don't take your offer I wish them luck in ever selling their house. They're going to need it. What kind of sellers would refuse to change out the electrical outlets that YOU are going to pay for, after meeting their full asking price? Are they nuts?