A few house shopping questions
April 29, 2011 6:09 AM Subscribe
Given two identical townhouses, one with no basement, the other with a finished basement, what would be the difference in value? Also, who benefits from the savings related to doing a transaction without a broker? Buyer, seller or both?
The townhouses in question are in the 400k range and are nearly identical except one has no basement and the other has a finished basement. How much less should I offer for the unit without a basement?
Also, this transaction would be without a broker involved. As the seller would typically pay the 6% broker fee, is it reasonable for me to try to negotiate that percentage off my asking price or would it be customary for the buyer and seller to split that 6% savings down the middle?
The townhouses in question are in the 400k range and are nearly identical except one has no basement and the other has a finished basement. How much less should I offer for the unit without a basement?
Also, this transaction would be without a broker involved. As the seller would typically pay the 6% broker fee, is it reasonable for me to try to negotiate that percentage off my asking price or would it be customary for the buyer and seller to split that 6% savings down the middle?
I think buyer and seller usually split the 6%, as it would normally be the buyer's agent and seller's agent splitting the 6% - though that's a customary 6%, not an absolute. For example a seller's agent who sells to someone without a buyer's agent often tries to keep the more than 3% since presumably they had to handle most of the paperwork. Agents who fear the deal will fall through over a $1000 difference of opinion have been known to take the total percentage down so that both the buyer and seller get what they want. It's all negotiable. In buying houses, the only "absolute" is someone who's being inflexible.
In your case, the question is whether the seller says they set their asking price at 6% below what they would have set if they'd had an agent, or if they're willing to be argued down some more.
posted by aimedwander at 6:34 AM on April 29, 2011
In your case, the question is whether the seller says they set their asking price at 6% below what they would have set if they'd had an agent, or if they're willing to be argued down some more.
posted by aimedwander at 6:34 AM on April 29, 2011
When we sold our last place without brokers in 2008, we set our asking price 6% lower than a realtor's estimate of its value, because we needed to close quickly. We even showed the realtor's report with the comps to the buyers so they knew they were getting a deal.
(By the way, the buyers showed up before we officially put the condo on the market.)
I think you should certainly try to negotiate for the full 6% discount.
posted by Dragonness at 7:07 AM on April 29, 2011
(By the way, the buyers showed up before we officially put the condo on the market.)
I think you should certainly try to negotiate for the full 6% discount.
posted by Dragonness at 7:07 AM on April 29, 2011
gfrobe: "Given two identical townhouses, one with no basement, the other with a finished basement, what would be the difference in value?"
Is the Price Per Square Foot in this neighborhood fairly consistent? Check the comps on Zillow or StreetEasy. As a starting point, take the PPSF of the no-basement house, and multiply by the square footage of the basement. Move that number depending on how nice it is, how much work it needs, etc.
gfrobe: "Also, this transaction would be without a broker involved. As the seller would typically pay the 6% broker fee, is it reasonable for me to try to negotiate that percentage off my asking price or would it be customary for the buyer and seller to split that 6% savings down the middle?"
When we were in a similar situation (we saw the unit as FSBO, then he signed with a broker, so I was able to still negotiate directly with him), we settled on a price where he saved a bit more than 1/2 of his broker's fee. Of course, there are always intangible circumstances (in our case, he was very motivated to sell) that can sway things, but the best deal is where both sides feel like they came out ahead.
So, to directly answer your question, "is it reasonable?": Yes, it's totally reasonable. The seller was completely prepared to sell for $375k ($400k - 6%). That's good leverage for you.
posted by mkultra at 7:08 AM on April 29, 2011
Is the Price Per Square Foot in this neighborhood fairly consistent? Check the comps on Zillow or StreetEasy. As a starting point, take the PPSF of the no-basement house, and multiply by the square footage of the basement. Move that number depending on how nice it is, how much work it needs, etc.
gfrobe: "Also, this transaction would be without a broker involved. As the seller would typically pay the 6% broker fee, is it reasonable for me to try to negotiate that percentage off my asking price or would it be customary for the buyer and seller to split that 6% savings down the middle?"
When we were in a similar situation (we saw the unit as FSBO, then he signed with a broker, so I was able to still negotiate directly with him), we settled on a price where he saved a bit more than 1/2 of his broker's fee. Of course, there are always intangible circumstances (in our case, he was very motivated to sell) that can sway things, but the best deal is where both sides feel like they came out ahead.
So, to directly answer your question, "is it reasonable?": Yes, it's totally reasonable. The seller was completely prepared to sell for $375k ($400k - 6%). That's good leverage for you.
posted by mkultra at 7:08 AM on April 29, 2011
(sorry, correction- he gave up a bit more than 1/2 his fee)
posted by mkultra at 7:09 AM on April 29, 2011
posted by mkultra at 7:09 AM on April 29, 2011
Before you price in the basement, be sure to check the permits/housing code in your area to be certain the work was done legally. If it was unpermitted, an official appraisal wouldn't value it as livable space and you shouldn't either.
posted by Diablevert at 7:22 AM on April 29, 2011 [2 favorites]
posted by Diablevert at 7:22 AM on April 29, 2011 [2 favorites]
It wouldn't make sense to expect a 6% discount, otherwise the sellers are losing the cost of an agent while doing the work themselves. Why should you get a break for their work?
posted by bonobothegreat at 7:29 AM on April 29, 2011
posted by bonobothegreat at 7:29 AM on April 29, 2011
I think buyer and seller usually split the 6%, as it would normally be the buyer's agent and seller's agent splitting the 6% - though that's a customary 6%, not an absolute.
no. as bonobothegreat asked above, why should the buyer get a discount for the seller's the work? the seller gets the benefit because s/he does not have to pay an agent the commission for selling the house. it would, however, be a good negotiating point for the buyer.
posted by violetk at 8:43 AM on April 29, 2011
no. as bonobothegreat asked above, why should the buyer get a discount for the seller's the work? the seller gets the benefit because s/he does not have to pay an agent the commission for selling the house. it would, however, be a good negotiating point for the buyer.
posted by violetk at 8:43 AM on April 29, 2011
I just remembered that our asking price was actually somewhat higher but we settled on lowest estimate minus six percent.
So when you make your offer, you should go even lower than 6% less, and hope to meet at 6%.
posted by Dragonness at 9:00 AM on April 29, 2011
So when you make your offer, you should go even lower than 6% less, and hope to meet at 6%.
posted by Dragonness at 9:00 AM on April 29, 2011
bonobothegreat: "It wouldn't make sense to expect a 6% discount, otherwise the sellers are losing the cost of an agent while doing the work themselves. Why should you get a break for their work?"
Because the value of an agent's work on your house is not worth 6% of its price. That figure (a) includes a lot of overhead the owner does not incur, and (b) is padded on the assumption that not every house listed with that agent will sell quickly, if at all.
Is it really your argument that this owner is putting $25k worth of work into selling the house?
posted by mkultra at 9:41 AM on April 29, 2011
Because the value of an agent's work on your house is not worth 6% of its price. That figure (a) includes a lot of overhead the owner does not incur, and (b) is padded on the assumption that not every house listed with that agent will sell quickly, if at all.
Is it really your argument that this owner is putting $25k worth of work into selling the house?
posted by mkultra at 9:41 AM on April 29, 2011
Is it really your argument that this owner is putting $25k worth of work into selling the house?
In my opinion, the agent earns his/her premium by attracting lots of interested shoppers and getting a price that's higher than the seller could expect (not having access to a multiple listing service).
The house has a value comparable to others in the area. The sellers have found a buyer. I don't see where some imaginary real estate agent's overhead and padding come into the equation. As others have said, having no agent costs gives the sellers more room to wiggle down on the price.
It's also my opinion that the residential real estate industry is and has always been, a bit of a racket.
posted by bonobothegreat at 2:32 PM on April 29, 2011
In my opinion, the agent earns his/her premium by attracting lots of interested shoppers and getting a price that's higher than the seller could expect (not having access to a multiple listing service).
The house has a value comparable to others in the area. The sellers have found a buyer. I don't see where some imaginary real estate agent's overhead and padding come into the equation. As others have said, having no agent costs gives the sellers more room to wiggle down on the price.
It's also my opinion that the residential real estate industry is and has always been, a bit of a racket.
posted by bonobothegreat at 2:32 PM on April 29, 2011
This thread is closed to new comments.
posted by joyride at 6:29 AM on April 29, 2011