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Should You Over Pay For A Home

Reblogger Ira Freireich
Real Estate Agent with Best Buyer's Broker Realty

Bill,

Great post - as an exclusive buyer's agent, my #1 goal is to get the home my client wants, #2 is to reduce the price.  Many times the home is located in a particular place where the home becomes more valuable to the buyer, and buyer was willing to invest the extra bucks for it.

ira

Original content by William J. Archambault, Jr. 1retiredsage

Should you over pay for a home? Should you ever pay more than the house appraises for? Should you ever pay more than the house is listed for?

Should you over pay for a home, possibly! Should you ever pay more than the house is listed for, a house No! A home possibly. There is a difference between a house and a home. A home, a place for your family, a place of your own is often worth more than the sum of it's parts! A house, one that's not intended to be your home is rarely worth more than it's list price and almost never more than it's appraisal.

It's an interesting contradiction, isn't it?

You can never get into trouble with classic conservative advice is never pay more than appraisal, but some times it's hard to successfully excel with such constraints.

With out questioning the validity of the appraisal there are few reasons to you over pay for a home. We are in the people business and homes should be bought from the heart when the buyers can afford the luxury of choice.

 Should you over pay for a home? One very experience agent Renee Burrows says: "As a buyer's agent I would work on a price reduction first... If that doesn't go through, the buyer would then have to consider whether to pay the difference between the sales price and contract price in addition to their down payment and closing costs."

Should you over pay for a home? Don't over pay, remains good advice in all markets. If this is an investment it should be absolutely don't! If this is a HOME and the buy can afford it we have to consider the people factor and consider the emotional factor and Renee did say "Consider!" every thing is relative. There is always more than one way!

Should you over pay for a home? The question is two fold should you over pay based on the appraisal or should you over pay the list price? The list price is the amount the seller is willing to settler for, not necessarily even relevant to the value!

Should you over pay for a home? People say don't for many reasons, the most common are:

It's the right advice!

They don't want you taking any risk.

They don't want you succeeding where they don't.

There is no down side, to saying don't! (If they say "Do" and you fail they feel libel, but if you succeed they can simply add "you got lucky!")

Don't is always safe advice, what we forget is man has never had great success with out risking great failure!

Should you over pay for a home? Maybe!

 

 

Bill

William J Archambault Jr

The Real Estate Investment Institute

wja@reii.org  832-259-7078 or 702-516-1569

              http://www.reii.org

Yvonne Jaramillo Ahearn, Esq. (B)
Hawaii Life Real Estate Brokers - Kailua, HI
REALTOR-Broker, CRS, GRI, ABR CLHMS

I honestly believe in the economic principals of supply and demand and that demand creates value. So, along those lines, you cannot technically over-pay. If a home is worth a particular amount to a particular buyer and that buyer purchases it for that amount, then that is the market value of the home.

Allright, I have to admit, I am one of those people that has "overpaid" for a home, meaning that my home appraised for under the purchase price and my husband and I decided to kick-in the extra money. Was it worth it? Yes. Do we feel we over paid? Absolutely not - this was a lovely location, in a good school district,  a perfect place for our son to grow up --- one of those worst house on a very nice street type of deals. All we cared about was getting into the neighborhood, not about an extra $5k which, over the long-term that we plan to live here, is insignificant. Rather than feeling that we overpaid, we feel that the home was under-valued by the appraiser, because the appraiser was not able to see and value the same things that we did - the quietness, the beauty, and can you really put a value on good neighbors? And the appraiser was not exactly comparing apples to apples - this is the first home on this type of lot, on this street, and in this price bracket that had become available in years. And none like it have come up since, as a matter of fact. So despite the slight market decrease since we purchased, we think our home has held most of its value and still believe we made a good purchase. Aloha ~ Yvonne 

Sep 02, 2009 08:31 AM