How much is it and what did they pay for it? How many times have you been asked that question. It really doesn't matter on both of them (kind of). Lets take a look at both of them.
How much is it? What I am referring to here is when I visit with a seller about selling their property and they say that they called about the house down the street and they are asking X number of dollars, shouldn't mine be worth the same? If you're smart you will say "I don't know" unless you have personally inspected that property and done a comparative market analysis (CMA) on it. That other property may have gold covered trim or expensive additions that are driving up the price, they may have a different motivation, they may owe more than it is worth and so on. I had a second hand conversation this morning and it went something like this: The house down the road is being sold by a short sale (not in my town, for the locals) and it is $150,000 less than what they were asking for it before and the property down the street is listed for more than that. That doesn't matter. You have to look at what SIMILAR properties are SELLING for, not what they are listed for. You have to take into consideration things like; what are their motivation for selling (divorce, bankruptcy, loss of employment, just testing the market etc..), what is the condition, how many days on the market, square footage and the list goes on. If you are looking to buy a home, be sure to work with a Realtor that will do a CMA on the property your are considering purchasing. Besides, if you're getting a loan you want to be sure it will appraise before you shell out $400 for an appraisal.
How much did they pay for it? It really doesn't matter! Yes, I do look it up in county records. I want to know an idea of what they might be thinking but I don't let it influence my opinion. Again, you have to do a CMA to determine a listing price or a price that you want to offer on a property. Look at what other properties that are similar in size, condition and location to come up with your value. I recently wrote an offer on a property and the offer ended up being just a little more than what the seller purchased it for two years earlier. With the current market conditions, the property didn't seem to appreciate based on the CMA and that will occasionally happen. Sometimes, and I have been in this boat, if you want a particular property, you have to pay the top price for it or even a little more just to get it bought. We seldom think that we might have to sell it in a year or two. But that was known on the frontend.
All in all, we need to give our clients ALL of the information. We need to explain to them that we are not responsible for the market conditions. When we sell a property, that property in turn will end up being used to determine the value of the next property being SOLD! Happy Selling :)
I am a Realtor in Searcy, Arkansas and I sell new homes, existing homes, commercial property, farms and land as well as manage and own rental properties. If you are looking for real estate for an investment or a home, I will be glad to assist you! You can call my personal cell number at 501-278-7659 or e-mail me at Larry@Searcy4Sale.com.