When the buyer asks "How much did the owners pay for the house?"

By
Real Estate Broker/Owner with Riverbend Realty, Cape Girardeau, MO 2004008944

When buyers ask "How much did the sellers pay for the house," they are usually trying to determine exactly how much the sellers have in the house, in hopes of gaining an insight into how to negotiate.

MY response is usually going to be that the key issue is what they will TAKE for the house (not what they PAID), and that is reflected by the listing price.

I'm not sure about other states, but Missouri statute does not require disclosure of purchase price. What you may find at the courthouse is how much the mortgage is, but that is not the same as the sales price. Without knowing the terms of the loan (20% down, etc), that figure only represents the amount of the lien.

I know that some MLS systems require disclosure of the actual purchase price, but I see $1 recorded in MLS frequently as a sales price.

The sales price is only part of the equation.I know what you paid Sellers may have made major, costly changes to the house since they bought it. They may have finished the basement, remodeled the kitchen, added a deck or patio, upgraded the bath/s. It is worthwhile to note here that an upgrade is something that adds to the functionality of the house. Repairs are not really upgrades and do not add significant value. While new carpet is nice, it does not add dollar for dollar value to the sales price. For that matter, even upgrades may not add dollar for dollar value to the price, even when they do add value and improve marketability.

How I respond to the question, as is true of many questions, often depends on whether or not I am a buyer's agent. For a client, I will research the MLS history and disclose any information I can find about past sales and current days on market. Comparing a past MLS sheet with the current one and past disclosures with the current one may also shed light on how much the sellers have in the house. Still, though, what really matters is how much the sellers will take for the house. Trying to second-guess that always starts with the list price. Factor in what similar houses have sold for, and that will help you determine what to offer. After all, if your "reasonable" offer is significantly different from the list price, you may need to move on quickly. For help with such an analysis, you need a buyer's agent.

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If you are looking for a foreclosure in Cape Girardeau, Perry, N. Scott, or Bollinger counties, I am the region's most experienced REO agent. As the area's ONLY Fannie Mae direct listing agent, I list more foreclosure properties than any other agent in this MLS. I am among the few local agents approved to both list and sell HUD properties. Give me a call if you are looking for help with the purchase of a foreclosure property.

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http://www.homepath.com/  for Fannie Mae properties

http://www.homesteps.com/  for Freddie Mac properties

http://www.hudhomestore.com/ for HUD properties (foreclosures that were FHA financed)

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Rainmaker
1,058,216
John G. Johnston
John G. Johnston & Associates, LLC - Westcliffe, CO
An Exclusive Buyer's Agent ~ Westcliffe, CO

The listing price in my neck of the woods often has zero reflection on the value.  The listing price might be 25-50% above the value.  The sales price is recorded and public information at the County Assessor's website.  It is always an eye opener to discover how business is done in other states.  Thanks for sharing.

Nov 10, 2012 11:38 AM #1
Rainmaker
1,248,613
Alan Kirkpatrick
Austin Texas Homes - Round Rock, TX
Alan in Austin

Liz:

Nice post and cartoon. Hope you have a wonderful weekend. 

Nov 10, 2012 11:39 AM #2
Rainmaker
737,879
Ed & Tracy Oliva
West USA Realty - Arizona - Fountain Hills, AZ
The Oliva Team Arizona Agents
This is some good Info for all in the business, keep up the good work and good luck with your business, E
Nov 10, 2012 11:41 AM #3
Rainmaker
264,436
Pat & Steve Pribisko
Keller Williams Greater Cleveland West - Westlake, OH

Good blog, Liz.  In Northeast OH, all sales prices are in our public records.  So, that is a piece of info the buyers want to know for each home we show.  We deal with the issues when our buyers have narrowed down their search to one or two homes.

Nov 10, 2012 11:56 AM #4
Rainmaker
1,468,618
Donna Harris
Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com - Austin, TX
Realtor,Mediator,Ombudsman,Property Tax Arbitrator

Texas is also a non-disclosure state. I usually say it doesn't matter because it will sell for what it's worth and still needs to appraise. The only reason it slightly matters is the sellers might be unrealistic in their negotiations and it's good to know that up front.

Nov 10, 2012 11:59 AM #5
Rainer
243,750
Brenda Whitman, Live in Laramie Real Estate
Live in Laramie Real Estate, Laramie, Wyoming - Laramie, WY
Broker/Co-Owner, Laramie, Wyoming

LOVE the cartoon!  But you are right it pretty much isn't relevant to the home's value in the current market....

Nov 10, 2012 09:32 PM #6
Rainmaker
371,368
Dana Hollish Hill
Hollish Hill Group, KW Capital Properties - Bethesda, MD
Lead Associate Broker
Really? I like to know what the sellers paid for the home before I start negotiations. Don't you? I always hate it when it is not recorded. If someone paid $800K on a house that is selling for $600K and we think it is worth $500K, we have an idea why they are asking such a high price. If they paid $400K for it and the pictures from the last sale show that they have not done anything to the home, we have another story, but I'd like to know that as well. I work in three states and in all three, you can look up the public record and see the sales price. Thanks for sharing another example of how different real estate can be from state to state,
Nov 10, 2012 09:48 PM #7
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Rainmaker
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Liz Lockhart

GRI, Cape Girardeau Real Estate
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