It depends! Are you getting a good deal if you get over 25% off the asking price? It depends! Does it make sense to buy now? It depends. By now you get the idea, it takes a full evaluation to decide what makes sense this days. (It always did take a full evaluation, it just had gotten so good in some areas, folks were leaving out some steps in the process!)
As far as paying more than asking price, we have seen a trend here for the past 8+ months of foreclosures being offered at very low prices to draw out buyers. Let's walk through an example. In one case, a lovely newer home in Buckhead was offered for about $500k. The home next door had sold for over $650k just a month before. This particular home had been on the market for high $600's, when it was a short sale and the bank had turned down a number of qualified offers in the mid $600's within the past six months.
This foreclosure was offered at $495k. The home got four qualified bids within three days. The bank then asked everyone to come back with their "highest and best offer". All four parties re-bid. The home closed for $501k. This was and still would be considered a great deal. (It was six months ago!) Not many of these deals come around and when they do educated buyers should be ready to BUY! How unfortunate for the bank handling the home that they were not able to look at the original contract offers when it was in short sale and take a number that would have been over $150k HIGHER! This doens't include the carrying costs for the 6-9 months that they were not receiving a mortgage payment.
On the flip side of this is another scenario I recently heard about at our monthly mastermind meetings with other Atlanta boutique real estate firms. One of the agents shared that he had recently lost out on a new listing where he had suggested a listing price of $899k. He felt this was stretching the limit of what this Buckhead home was worth in today's challenging market and that a reasonable sales price would be low $800's. The home was listed by another agent who listed it at $1.199 Million. Even getting it at $900k is way beyond what the home should get in todays market in it's current condition, so paying 75% of listing price would still be too much!
So the answer to the question is price is a measure of value in terms of what the home is worth. It's very important to pull together all of the resources of CURRENT information you can before making any important decision to buy a home for personal or investment use. Current in my definition (as well as the mortgage appraisal basis) is within three to six months. Data from past that is not so relevant to today's market. It's a great time to work with an intelligent agent to determine what the Competitive Market Analysis yields and present that same data with your educated offer. What should you pay? It depends!
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