I think most people who are approached, expect to get a bit more than the for sale homes around them.
You don't say how motivated they are....or are they?

If they were looking to put their house on the market shortly, I would think that 240k would be fine. Something tells me that they want to make at least 50k ABOVE what they have put into the house...i.e. 270k.

If you're comforatble with the appraisal price then go for it & see what they say.

Good luck & let us know.

I think you are right dabunch, 270k would be ok with us. We plan on staying there as long as we can. We would try to make this our forever home. They are an older couple with 2 other homes. They were planning on putting their home for sale around march or so. They leave for florida in late November. The wife has already expressed she does not want the stress of having her stuff packed and stored before she goes to florida. We have expressed we would like to be in before the holidays since we will be cramed in our smaller home through the winter months plus we have a buyer for our home now. Who knows once spring comes if my buyers will still be around or if the market takes even a bigger dive or whats gonna happen to intrest rates.
I will definatley let you know what happens soon as I get a hold of them, its probably be some long drawn out process..nothing is ever easy...

Well, since you are a walk-in and they needn't pay a RE commission, they will net more than if they wait and list later with a realtor. 270K minus 6% is about 253K, and of course if they wait prop. values may go down some more and you are a bird in the hand, right now. If you're really determined to get this property, even at the risk of over-paying, I suggest you offer 250K and be prepared to let yourselves get "haggled" up a bit. Plus you're not likely to nickel and dime them over picayune inspection issues. I wouldn't just appear to throw money at them, even if it doesn't matter to you. I think it upsets the buyer/seller relationship. My saga below may be instructive.

I have had experience trying (and failing!) to do what you are attempting. I made an offer on some property that wasn't on the market but the owner was very interested in selling. I paid for an appraisal and offered the highest amount as a cash sale (it was a range because that's the way vacant land is done here), plus I offered to pay all the seller's normal costs (here that is subdivision fees, surveys, taxes, their attorney fees, recording fees, etc.) Basically my offer was all "put in the bank" money, with no costs to the seller. And I offered to have the seller review the appraisal document. But it never went anywhere because she "knew" that people were getting $10K per one-acre lot (and that's with subdivision approval for a building with approved septic designs, a huge issue in our rural area) and since this was a 26 acre parcel she therefore "knew" it was worth $260K. Never mind that this parcel had no road frontage (I own that) and was largely a state-certified wetland that nobody could ever build on. My appraiser, naturally, took those facts into account in arriving at a fair market value for the parcel.

But since no realtor ever had the dubious pleasure of clearing away the cobwebs in this seller's mind, we were a couple of hundred thousand plus dollars apart. I suggested that she hire her own apparaiser and offered to pay half of a third appraiser's fee if necessary to referree if the first appraisals didn't come close together. (Which is a common, and possibly useful, way you might use to sort things out with your proposed seller.)

But it never went anywhere because she didn't need an appraiser to tell her what her property is worth, all she needed was the asking prices of lots in other parts of the town. (Recently I did have the secret amusement of her mentioning to me that her friend told her that she was having trouble selling her house since the RE market was crashing. You don't say!)

In retrospect, I should have tried to push the seller into hiring their own appraiser right from the start, even if I was having one done at the same time. At least that way a RE professional would have delivered the bad news ahead of time and I wouldn't have been the bearer of bad tidings. If they are reluctant to front the money, you could offer to reimburse them for the cost of their own appraisal. (They should get one anyway if they are thinking of selling as it's a wonderful way to get an unbiased idea of what property is worth, today.)

I can't recall if you are a cash buyer, but over-paying won't help you get a high amount of mortgage. A lender doesn't care if you overpay, they will only lend based on what they think the property is worth, so at the very least you'll have to fund a really big down payment, and lots of it won't "count" towards your LTV ratio, either.

Good luck to you, either way. Your sellers can't possibly be the worst ones to work with on this type of deal; I know, because that one owns the property next door to me.

Molly~

Oh Molly I'm so sorry to hear about your neighbor. But I feel this couple may be realated to your neighbor. They are very nice, but I think they are thinking their home is worth more than what the appraisal came out to. And it will be difficult to explain the current market, ecspecially here (upstate NY), we can put up the cash to make up the difference in the price. The average price of a home here is 85 to 180 for the typical colonial around 2500 sq ft. This home is a single story brick 2 bedroom around 3500 sq ft on a 29,000 sq ft city lot on a nice street. I already know I need to add a bedroom and update the kitchen and 2 baths since they are original 1950's. I know once I go there today I will then be veiwed as the enemy.....I know they have a realestate friend. Hopefully they will call her and ask her opinion, hopefully the agent will confirm what the appraisal data says. Is is better to show them the actual appraisal so they can look at it?

I know they have a realestate friend. Hopefully they will call her and ask her opinion, hopefully the agent will confirm what the appraisal data says. Is is better to show them the actual appraisal so they can look at it?

If the friend can be there to give them advice, suggest it. Also insist they get their own appraisal, with you paying for it. You won't look like the enemy. Do whatever you can to make it look like you are looking out for them. You need to know what number they have in their head.

Your hubby hasn't even viewed it yet. This can drag it out a little until he can get there. Who knows, maybe he won't like the house.

They were planning on putting their home for sale around march or so. They leave for florida in late November. The wife has already expressed she does not want the stress of having her stuff packed and stored before she goes to florida.

IMO, they let it slip that they were thinking of moving anyway. You now know it will go on the market with the price possibly going down more then what you are prepared to offer them, or who knows, if houses are scarce there, they just might get more.

It sounds like you got them at the wrong time. They may have to put the house on the market to face reality, and unless you compensate them, I doubt they will sell you the house. The only way they may is if they also do their homework. They need to know what the DOM are for the area, and if the area is also getting a price correction.

From your other post: There are no homes on the market within these few streets. We are looking for a larger home on a larger lot.

Ive already written in the letter that we dont need a realtor, we dont need to sell our home first and we would be willing to pay top dollar in this flattening realestate market (what ever that may be) Any suggestions?

You know the house appraised for $240k, which you're happy to pay. You're also ok with $270k. Do you think they will want more then that? The thing is, you said you would be happy to conpensate them, pay them top dollar, you now need to figure out what top dollar is.

From the sounds of it, you're going to have to put some money into it for it to fit your needs. By the time you do that, will you be able to sell the house when the time comes? You very well may end up losing a good chunk of change unless someone comes to you asking you to sell.

Well, since you are a walk-in and they needn't pay a RE commission, they will net more than if they wait and list later with a realtor. 270K minus 6% is about 253K, and of course if they wait prop. values may go down some more and you are a bird in the hand, right now. If you're really determined to get this property, even at the risk of over-paying, I suggest you offer 250K and be prepared to let yourselves get "haggled" up a bit. Plus you're not likely to nickel and dime them over picayune inspection issues. I wouldn't just appear to throw money at them, even if it doesn't matter to you. I think it upsets the buyer/seller relationship.

I have to agree to a point. The $250k offer may insult them even though they were thinking of putting it on the market anyway, since they have a buyer, they will now wonder how much they can profit. For some, not paying a realtor doesn't matter, especially if they know someone wants the house before they have to list.

What if they have 2005 prices stuck in their heads? Do you have any idea what that would be? Is it possible to ask the appraiser to run 2005 comps? This may give you a better understanding of top dollar, and if you can determine a price between today's appraisal and 2005 prices, you just might come to an agreement.

2005 prices were not much different. I am in an area were there were never ever 5 offers on one house, no one here made 50k in one or 2 years of owning a home here. It definatley not like FL or CA was a few years ago. You would never move here if you were not from here, no jobs, no attractions, high taxes the only store in town is walmart and I think there are maybe 10 traffic lights. We chalk it up by saying its simple living and lots of family around. My husband actually works in Miami. People usually hold there breath when selling a home here and hope to just break even. They have owned the home since 2001 and bought for 190k it appraises today for 240k tops and thats pushing it, thats only 50k compared to whats happening in other parts of the country. Well compared to other parts thats not too bad either.
As far as my husband liking it, we have the same taste, he also was the one that decided to contact these people. This home is a single story, has the sq. ft and the yard. And my husband at 40 just got a knee replacement. The other people I have contacted have colonials.
I think if I present the facts of the appraisal, and go in with a contract with the amount of the appraisal on it. They can think about it and come back to us with a figure. I guess we could go from there. If we over pay a little now and live there for 30 years I think we should be ok.

Happy,

Well I'm in upstate NY, too (Capital Region) so maybe your sellers and are my would-be seller's cousins.

I think a very important thing to try to do is to get them to have a real appraisal done, not just a CMA from a hungry agent trying to get the listing. (That was a small part of my problem.) What have they got to lose if you are willing to pay the few hundred bucks it will cost, and they can choose the appraiser they like. It will be useful to them no matter what since they are considering selling. Their lawyer may be a good one to suggest an appraiser.

Showing the appraisal doc. is a tricky thing (not that you shouldn't, IMO). It's just that the document is so complicated if one has never gone over one before, working as it does backwards from comparable sold properties and making adjustments, and so on. Not incomprehensible but in need of some careful examination by most lay people. I did take the time beforehand to be able to understand and explain it, but the complexity of it boggled my seller and I think she thought I was pulling a fast one when I was working back from solds, not from current asking prices which was what she used for price research. Hopefully your sellers won't be so inexperienced (and if they have other houses they have probably bought and sold more property; mine lived in the house she grew up in ::sigh::).

By all means get other professionals appraisers or even their realtor friend involved in delivering the bad news. Since you are planning to offer the full amount of the appraised value I see no reason to keep it confidential. Though be sure to let them know that isn't always a document buyers offer to sellers.

And of course there's always the three appraiser thing I mentioned above. It's a common technique used for asset partition in estates, divorces, partnership dissolutions, etc. Each side picks an appraiser, and then if necessary the two appraisers jointly select a third one as a referee to resolve discrepancies in the valuation. Each side pays for 1 1/2 appraisers, normally. It's is a fair way to gather info and come to agreement when all parties want an agreement.

Another arrow in your quiver may be that if you come to agreement on price you might be willing to take a long contract (to close next spring) so she doesn't have to pack up before she leaves for FL this time. They can go, and relax over the winter knowing they have the place sold. They won't have to worry every time they watch the news and hear about falling prices and think about coming back to list in the spring. They'd already have their contract with a known price, but have the closing at a more convenient time for them.

Molly~

Hi Molly, well if you are in upstate NY then you know what home prices are. I am about 40 miles from albany, in amsterdam. I'm still waiting for the appraisal. I did pay an appraiser, not a realtor. From all the research Ive done at city hall a few months ago, the most recent comp was from 2005 and it was a 4000+ sq ft home on 3.3 acers in the city, brick victorian with 5 bedrooms and 5 fireplaces a new roof and a brandnew kitchen and a carriage house. That sold for 256k. Over the summer a colonial at 2000 sq ft on a 40,000 sq ft lot sold for 165k and that is on one of the nicest streets in the city...I dont know, what ever will be, will be. My husband always says dont get emotional over a house...anyway looks like ill have to wait until tomrrow to talk with the owners...

Maybe present them with a little comparison chart
The appraisal number

What you think they'd like to sell for in the spring minus all the RE costs etc.

What normal appreciation would get you from 190,000, say 4% a year up to about 240,500 (always amazing to me how taking the last sale price and the areas avg appreciation is almost exactly what the appraisors and realtors come up with for suggested price according to comps *twinkle!*)

all the numbers come out to be right around the 240+ mark.

Then make an offer - 240 plus closing costs, whatever you want to go with.
Just don't give them the appraisal. I also like the idea of telling them you'd go in on them getting their own appraisal - maybe split it.

I think we are wasting our time with advice about what to pay for this house. It's pretty clear that the OP is going to buy it regardless of what the sellers ask. She's in love with the idea. She's telling us she will live there for 30 years so it doesn't matter if she overpays. (She doesn't consider that 'things happen' and she may have to sell at a big loss.) Heavens -- she's not even going to have the home evaluated by a HI!

Since you want a home in this neighborhood pretty badly, that means your demand is high. And right now, this home in the only one in this neighborhood, plus it's the only one on your list that has a layout that's particularly good for you, which means your supply is low.

That means a higher price--but maybe not $270k.

I'd say do this:

Get them your appraisal number in a way that is credible (not just you on the phone).

Suggest that if this number troubles them, that they ask an appraiser of their own choosing to give them his/her opinion; if they balk, offer to pitch in toward the price.

Then put together your rationale for the price, much the way marys1000 suggested, to show that the $240k mark is fair. Give them the most recent comps you can find, etc.

Then, also point out why they'd benefit from a sale now (market is slow most places, and not near the bottom yet from a national point of view; no broker fee, no advertising, no showings, whatever closing length you're willing to give them, etc.). And, if they invest the cash they walk away with, how much would they make between now and March?

But don't make the offer yet--ask them to ponder those issues for a day.

THEN offer them $250k, *IF* you can swing the mortgage/downpayment combo w/ the bank. Because, as I said, your individual supply/demand relationship is not the same as the rest of the world's, and they KNOW this. Plus, you said in your letter "top dollar"--not "fair market value."

Your initial offer being slightly higher than the appraisal will hopefully take the sting off the lower appraisal and maybe prevent them from seeing you, suddenly, as "those folks out to take advantage of us." And paying over the appraisal can certainly be viewed as "top dollar."

if you're willing to go up to $270k, keep that in abeyance until you need it.

talley sue nyc,
Like your steps to getting this deal done. Spoke again to my husband in china tonight and we discussed how right the house would be for us. We can pay 270k. I will not go crazy and pay 400k. Ill sit here in my 2000 sq ft colonial and wait until they really list with an agent and make a full offer then.
If they like the idea of selling with no hassels, no realtors, no knit picking and can be happy with a reasonable price and a bit more, then this will happen. We are not the type to nickle and dime. An older home is an older home, not everything will be perfect no matter how long you stay there. I know the major stuff has been updated, furnace, water heater, windows etc. I know they are going to balk if we ask to move in before the holidays, with their last home they were upset, the new owners wanted them out asap for the holidays so they stored all their things and when they came back the new owners still did not move in. So that has pretty much ruiend it for us. Meanwhile, if this all goes forward we are gonna be stuck inside all winter in this smaller home, the rest of our furniture is sitting in the garage when at winter time gets water and that bigger house is going to be sitting emppty. Storage units here are booked solid and im on 3 waiting lists...better look into those pod things. Sorry for sounding like a cry baby...just frustrated...
Thank you again for all your ideas on how to approach them. With my DH away and a 13 hour time difference this has really helped. Ill keep checking back. :0)

"4000+ sq ft home on 3.3 acers in the city, brick victorian with 5 bedrooms and 5 fireplaces a new roof and a brandnew kitchen and a carriage house. That sold for 256k"

Oh. My. God.

In MD 'burbs of DC, my 1320 sq ft townhouse (plus 480 sq ft finished in the basement level) on 0.7 acres would sell for about 380K.

chisue, sorry I missed your post earlier we must have been posting at the same time. Yes, I do picture myself and DH living in our next home for 30 years or so. We have moved so much in the past due to DH's job, I think its time to find somewhere to call home, ecspecially since we have 3 small children.
I do like the idea of living in that particular home. Its appealing to us, otherwise we would not had contacted the owners. It is a nice white painted brick home, on a very nice street, in our small home town. I do care if we overpay, like I stated before I was not going to pay 400k. I have one other home to look at, but it is 2 stories. I will have it inspected, but I am not going to cry over an electrical outlet not working.
I am not looking to steal anyones home. I am not looking to make someones day either by paying anywhere near double what the market value of a home is either. Just looking for a win win situation. I just would rather not offened the current owners and just seeking some guidance. If it does not work out and Dh and I feel we gave it our best shot for a win win situation, then we will continue to look. Its as simple as that.

Mary- think about it though, you are in DC. I am in upstate Ny in a small town

Since you want a home in this neighborhood pretty badly, that means your demand is high. And right now, this home in the only one in this neighborhood, plus it's the only one on your list that has a layout that's particularly good for you, which means your supply is low.

Tallysue, do you know the area?

Then, also point out why they'd benefit from a sale now (market is slow most places, and not near the bottom yet from a national point of view; no broker fee, no advertising, no showings, whatever closing length you're willing to give them, etc.). And, if they invest the cash they walk away with, how much would they make between now and March?

What I wonder is if the couple knows what the market is like and that supply is low. If they hold off and put it up in the spring, they may get a bidding war going.

There might be a bidding war at some point if it were to go on the market. But seriously, the nice colonials here goes for about 165k tops. Most people buy for in the low 120's for the normal home. Homes in the 200's are the much bigger nicer homes and anyhting priced in the 300's is considered overpriced and just sit for ever until the seller is tired of being on the market and then sells for in the 200's. Not many people can afford or want a home that costs in the 200's. Ecspecially this particular home, it only has 2 bedrooms, which for someone that has children you are probably going to have to spend more money to add on. Lastly, the taxes usually put the cabash on a more expensive home here. The taxes are around 8k. The home I am in now taxes are 5600, my houses is about 2000 sq ft, the lot is 7000 sq ft. We bought it 6 months ago....

I don't know her area; when I wrote "it's the only one on your list that has a layout that's particularly good for you, which means your supply is low.," I was going on this statement of hers:

This home is a single story, has the sq. ft and the yard. And my husband at 40 just got a knee replacement. The other people I have contacted have colonials.

Which is why I said, "the only one on YOUR LIST that has a layout that's...good..."

If she finds a home that pleases her as well, then her "supply" will go up.

I'm curious to see how it all plays out for her.

tallysuenyc- you are right , this is the only single storie on our list. There are mainly colonials in upstate ny. I am still waiting for the results of the appraisal. Hopefully tomrrow I will hear something.

Appraisal came in today for the home at 240k. He said that was pushing it because A) Not to many homes sell for that much around here.
B) Kitchen and bathrooms original to the home
C) Only 2 bedrooms
Could have easily appraised for more like 225k.
So since my DH comes home in 2 days we are going to look at it together and speak with the owners about the price.