Is A Rejected Offer A Reliable Pricing Benchmark?

Two years ago, Matt Townsend put his 16-acre complex in rural Delaware on the market for $550,000. He was offered $540,000.

He turned it down.

Is that rejected offer still a valid pricing benchmark, given how slow the real estate market is in Delaware (as it is in most everywhere)?

Finding out was one of Townsend’s motivations for entering the ForSaleByOwner.com “Is Your House Priced Right?” contest, which invited Americans to submit short essays about their homegrown methodologies for estimating home value. The Townsend story was chosen as one of the four winners because the family's real estate situation mirrors that of many other Americans who re-invested in their houses during the property bubble -- and now wonder, was it worth it?

The Townsends had sunk over $100,000 into the modern log home they bought for $340,000. Besides replacing basics like the roof, they added a three-car garage with an office and bathroom, updated the kitchen, and customized the space to accommodate the needs of their many children.

Townsend knows that an unusual property like his is hard to compare to recently sold properties precisely because it’s unlikely that any recently sold properties would be sufficiently similar. But, he figured that the rejected 2009 offer set a pretty good baseline.

A local appraiser wasn’t so sure. Tune in tomorrow for the last installment of the Townsend tale of home valuation. Or, check out all the stories of  the ForSaleByOwner.com contest winners.

Little Cabin in the Big Market

You can’t put a price on peace and quiet. That’s why Matt Townsend built an office and bathroom as part of a new three-car garage. With a wife, eleven children and a grandchild living in the Townsends’ eight-bedroom modern log house in central Delaware, privacy is at a premium.


The Townsends aren’t planning to move, but they were curious about how much their unusual property might fetch in today’s precarious real estate market. That is why Matt Townsend submitted an entry in the ForSaleByOwner.com “Is Your House Priced Right?” contest, which invited Americans to submit short essays about their homegrown methodologies for estimating home value.

The Townsends know that their 16-acre spread is unusual, and that it is hard to put a price tag on ‘unusual’ even in the best of markets. Their lively sketch of their situation made them one of the four winners in the contest. Stay tuned for a local appraiser’s opinion of the likely market value of the Townsend place. Can’t wait? Read about all the winners at ForSaleByOwner.com 's education section. 

And if you have a home pricing dilemma of your own, take a spin through the Pricing Guide and other pricing tools at ForSaleByOwner.com.

Worse in Reverse

April home sale numbers were dismal.

The headliners were the 5% drop in median home values nationally (to $163,700) and that 37% of all home sales were either short sales or foreclosures. That’ll drag down prices.

Pricing misfires were equally responsible for driving down sales and values. According to the National Association of Realtors’ own numbers:

• 11% of agents had April sales canceled due to appraisals that did not support the negotiated price 
• An additional 10% of agents had sales delayed due to valuation headaches 
• 14% eventually renegotiated a lower sale price 

Now, wait a minute: Doesn’t this rather undermine agents’ constant claim to pricing expertise? Clearly, many of them are not setting asking prices that appraisers consider even in the ballpark. A seller might reasonably wonder exactly what expertise his commission covered.

Even if your agent seems to be in tune with local market trends, you still need to check her work. Use our new Pricing Guide.

As a back-up source of information to ensure that your agent is looking beyond the local multiple listing service to determine the correct pricing.

And if you’d put your home-value-estimating skills up against anybody else’s any time, prove it by entering our “Is Your Price Right?” contest.  You could be one of four winners of a $1,000 home improvement gift card and a free appraisal to see if you were able to outguess that local agent after all.

Image courtesy of Morguefile contributor jdurham.

The Upside of High Down Payments

Lending standards continue to tighten; indications are that the default downpayment threshold will soon rise to 20%. If that had been the requirement for the past 12 months, it would have killed 40% of the home sales completed in that period. Lenders are responding to market conditions. Home sellers can too….be becoming lenders, of sorts. “By Owner” selling affords homeowners a wide berth for crafting terms of sale that meet their needs and those of buyers.

Seller financing is on the rise; last year 56% more houseswere sold via seller financing than the year before. That still accounts for only 1.5% of all home sales, so there is plenty of room for alternative financing to grow. Of course, seller financing requires a firm grip on market trends and home pricing dynamics, which are outlined in our Pricing Guide.

Got a good home pricing story? Enter our “Is Your Price Right?” contest and win a $1,000 home improvement gift card for telling us all about it.

If  you are buying a house, you can quickly find by-owner listings with seller financing options by opening up the Advanced Search function at www.ForSaleByOwner.com and clicking the “lease to own” option. 

That will pull out the properties whose owners are open to creative solutions  for both of you.

Five Top Ways Homeowners Estimate What Their Houses Are Worth

What’s your house worth? That’s the question likely to dominate block parties this spring. Here at ForSaleByOwner.com, we’ve been collecting answers to that question for a few weeks.

And the Top Five Ways that 860 homeowners guesstimate the current market value of their homes are: 

• 19.1% - Realty agent’s “comparative market analysis” 
• 18.3% - Recent appraisal 
• 18% - Guesstimate based on recent neighborhood sales 
• 17.6% - Zillow.com  
• 12.1% - These days, who knows? 

That a full-on appraisal is nearly tied with agents’ comparable analysis is a bit surprising to us. After all, agents’ research is not nearly as comprehensive – or unbiased – as an appraisal.

Surprised? That’s just one gem of wisdom you’ll find in our new Pricing Guide.

 
Why not profit from your opinion of what your house is worth? Enter our contest, “Is Your Price Right?” and tell us what you think your house is worth.

 
You could be one of four winners of a $1,000 gift card. And what would you do with $1,000? Whether you enter the contest or not, let us know how you’d spend your windfall!