Are you in the process of looking for and buying real estate in Port Angeles or Sequim? Here’s an insider tip to buying real estate here. This tip alone could save you $10,000 to as much as $70,000, depending upon the total price. Few buyers know how common this trap is, so let’s get to it. Quite often a listing on the market will be overpriced. That’s not front page news, right? If you’ve been around looking, you’ve seen a property listed for a lot more than it’s reasonable FMV (fair market value).
Here’s the trap for the unwary purchaser by way of example.
A house is listed for $269,000. A thorough search of all the sold listings that are truly similar in the local MLS demonstrates that the comps (comparables) that actually sold (as opposed to currently listed) fetched a price of about $230,000, but all of those comps had substantial improvements that the subject house did not have. That means, the house you’re looking at is worth less than $230,000. Depending on how you value the improvements to the comps, that could mean your subject house is around $212,000 to $220,000. With that in mind, you make an offer of $212,000, substantially below the listed price of $269,000, but you’re no fool. It’s worth less than $230,000, and you know from your detailed comparisons that it is probably around $212,000. So your offer of $212,000 is actually a full FMV price.
Your offer comes back with a counteroffer at $261,000. You’re astonished. You don’t know what the seller is on, but it’s not milk or cool aide. Maybe the seller is not getting good advice from his or her agent, but you don’t even bother to make a counter to the counter. They are so far above FMV, there’s no sense wasting time when there are far better values available in this market. Far better.
What the seller (or the seller’s agent) must hope for is that you are not tuned into the market, and that you will think that your next counter should be somewhere just below $261,000. Big mistake. It is over listed, over priced, and you should NOT get caught up in this trap for the unwary by paying way too much for it, all the while negotiating back and forth and ultimately thinking you negotiated a good price. No. Walk away. Let that seller and his/her agent learn their lesson. Let someone else from California pay $20,000 or $30,000 over FMV for that house. Someone may pay too much, but not you. YOU WILL NOT PAY ABOVE FMV FOR YOUR NEXT HOME, because you’re nobody’s fool.
P.S. I see this all the time, so if you are buying, may I suggest you get a very experienced, honest, and good negotiator on your side? After all, it’s your money and your next home.
Last Updated on October 6, 2007 by Chuck Marunde
