Question: Can you ask a buyer to pay more for a home than it’s worth?
More money, please.
First, we need to consider what we’re talking about when we say worth. Is it the appraised value, assessed value, or fair market valueof the home?
Assuming we’re talking about the fair market value of the home, the answer is: yes. You can ask a buyer to pay as much for the home as you’d like. Will you get it? Probably not.
Two problems creep in immediately if you’re asking a buyer to pay more than the home is worth. One, why would a buyer pay more, when they can get a home of similar quality at a better value? Two, the home won’t appraise for a higher value than the appraiser thinks it is worth. The bank is not going to approve a large increase in the loan amount vs. the appraised value of the home. So unless you can find a foolish cash buyer, you’ll want to price your home right the first time.
If your home is on the market for less than it’s worth, there may be reason for a buyer to pay more for your home. Consult with your Realtor® if you have questions about what your home is worth.
photo courtesy of Michael Dunn~!
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Comments
I guess this is what happened in 2006!
.-= Doug Francis´s last blog ..Selling a Home before the Bank Forecloses =-.
Doug – I lived in Los Angeles during part of its heyday and it was incredible how people changed buying a home out there. It didn’t matter what the house was, if you liked it you would pay anything for it.
I do think that the pendulum has swung too far the other direction with appraisers being too cautious though. Now you get back an appraisal and they come in $500 under list price and won’t budge. Although I see the merits of trying to nail the number down to dollars and cents, $500 is not much in the grand scheme of home prices. Arguing over amounts like that isn’t the answer either.
It needs to constantly be a delicate balance between home buyer wants and needs. That balance then needs to take into consideration the overall market conditions, state of lending, and factors such as long term health of a particular market. We’ve seen what can happen when we let things get out of control, but in my opinion, we’ll be right back there as soon as we’re comfortable again.
I do think more consumers learned the lessons of speculation though, so I hope that lesson sticks with us. So many homes out here right now on the market are owned by California investors who saw us as the next big thing. Despite our growth, they missed one key fact – we are a slow growth city. Even if we add large doses of population, our historical appreciation rates are slow and steady.
.-= rerockstar´s last blog ..San Antonio MLS – What is it? =-.
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