Does it really matter what the seller previously paid for the home?

By
Real Estate Broker/Owner with Christiansen Group Realty (260)704-0843

As a Realtor in Fort Wayne, I get asked certain questions by my buyers a LOT.  

Home values in Fort Wayne IndianaOne of them is always "What did the seller pay for the home when they bought it?"  

It's obvious why my buyers ask this question so much.  They don't want to over pay for a home.  It's that simple.  

Here is my response to every buyer that has ever asked me that question:  

It doesn't matter.  

Gasp!  What?  What do you mean it doesn't matter???  

 

Buyer 1: 

The home in question was a flipped home.  The owner bought it as a foreclosure for $35,000.  He put X amount into it, and put it on the market in amazing condition at fair market value at $89,900.  

My buyer was concerned that she may be over paying for the home based on the $35,000 purchase price.  I understand her concern, but explained it to her and showed her the current market, and that it was priced to sell.  

She understood and purchased the home for $88,900.

 

Buyer 2:  

The home in question was previously purchased for $200,000 in 2005.  It was listed for $225,000.  

My buyers were concerned when they saw this, and again, didn't want to over pay for the home.  

Even more concerning for them was that the current owners didn't really make many improvements on the home to (in their minds) justify the asking price.  

What they didn't know was the previous owner's situation in 2005.  They HAD to sell due to medical issues, and the current owner got a heck of deal at $200,000.  

I showed them that $225,000 was a fair market value and after some negotiating, they purchased it for $220,000.  

 

My point here is simple.  

If you are going to purchase a home, focus on the current market, not the past.  I'll tell you if the home in question is priced where it should be, or if it's over priced.  

I wouldn't focus on what the current owner paid for it, or how much (if it's a flip) the owner is going to pocket.  

That doesn't matter.  Make sense?  

If you are considering buying a home in the Fort Wayne area, and would like a Realtor that knows the market and will help you decide whether something is priced right or not, please give us a call at 260.704.0842.  We look forward to hearing from you!  

Buyers agent in Fort Wayne Indiana

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Fort Wayne Realtors Jared and Amanda Christiansen with Century 21 Bradley

Amanda Christiansen is an award winning Realtor with Christiansen Group Realty.

 

Jared Christiansen is a business partner and in charge of marketing and taking care of things behind the scene.

 

Enough about us...

 

Tell us what you want your real estate experience to be, and we will do it YOUR way.

 

Buying a home in Fort Wayne? Tell us your wants and needs. Let us know how you envision your family living.  Tell us what's important to YOU, and we'll find the community and home that fits.  

 

Selling your home in Fort Wayne?  Our job is to make you the most money possible in the shortest amount of time. We offer our sellers professional staging, professional photography, and more internet marketing than most. 

 

We are committed to giving you everything we have to offer.  We are both full time agents and will work around your schedule.  Do nights and weekends work better for you?  NO PROBLEM. We are here to help YOU at YOUR convenience.

 

Amanda can be reached at 260-704-0843, and Jared can be reached at 260-704-0842, or you can email us at JaredChristiansen@gmail.com, or Amanda427@gmail.com.

 

 

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Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Jared and Amanda- it makes a lot of sense.  What the seller paid for the house doesn't matter... what matters is what the current market will bear. Happy Sunday!

Mar 23, 2014 12:11 AM #1
Rainmaker
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Valerie Crowell
Keller Williams - Walnut Creek, CA
Broker Associate

I get asked that a lot.  It is completely irrelevant.  The relevance lies in what the market is going to pay for the home.  I don't care if they picked it up for $100k at a garage sale last month, if other buyers are going to offer $250k for it your bid needs to be $251k if you want it.

Mar 23, 2014 12:14 AM #2
Rainmaker
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Larry Johnston
Broker, Friends & Neighbors Real Estate and Elkhart County Subdivisions, LLC - Elkhart, IN
Broker,Friends & Neighbors Real Estate, Elkhart,IN

Good morning Amanda and Jared, It makes sense to me!  They even say things like, "They've lived there all their lives and it's paid for, so why would they not come down on the price.  They are making a bunch of money on it, anyway."  The answer I give is, "If you won't paid that much, someone else will probably be pending within days at that price."

Mar 23, 2014 12:20 AM #3
Rainmaker
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Women of Westchester Working Together
Women of Westchester Working Together - West Harrison, NY
Women helping Women get ahead

Interesting perspective and what you're saying makes sense.  But, it's funny...I would have thought the reason they were asking was to for negotiation purposes...so they know/can try to guess the position of the seller to help detemine if their offer will go through. - Debbie

Mar 23, 2014 12:29 AM #4
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Amanda Christiansen
Christiansen Group Realty (260)704-0843 - Fort Wayne, IN
Christiansen Group Realty

Exactly Kathy.  Focus on the market today!

Valerie:  Agreed.  While it may be painful for some buyers to see sellers profit, it's part of the game.  

Larry:  Exactly.  If it's priced at fair market value and a buyer wants it and the seller isn't moving, they need to pay the seller's price.  If not, NEXT.  

Debbie:  That IS why they're asking, but again, it doesn't matter.  Buyers can guess all day to WHY a seller is moving and what their motivation is.  They can know the history of a home and what the seller paid for it.  It doesn't matter if the seller isn't willing to move on price.  

Mar 23, 2014 01:07 AM #5
Rainmaker
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David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

No it really doesntmatter but the reason everyone, or most everyone, asks is to feel better about the price they are paying and I guess that part is likely not going away

Mar 23, 2014 02:35 AM #6
Rainmaker
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Pete Xavier
Investments to Luxury - Pacific Palisades, CA
Outstanding Agent Referrals-Nationwide

Was just asked that yesterday by an interested buyer at my open house.

It doesn't matter nor should it matter in making any offer.

Mar 23, 2014 02:58 AM #7
Rainmaker
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Troy Erickson AZ Realtor (602) 295-6807
Good Company Real Estate www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Amanda & Jared, I often get this question as well, and I say the same thing. It doesn't matter that the seller purchased the home in 2003 for $175,000, because the market value right now is $260,000.

The same things goes if the home seller bought their home for $340,000 in 2006, and it is only worth $295,000 today. Would you, Mr. or Mrs. buyer, want to pay $340,000 for a home worth only $295,000 because that is what the current owner paid? I think not.

Mar 24, 2014 04:34 PM #8
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