Should you overpay to buy a Nashville home?

By
Real Estate Broker/Owner with Southern Living Realty Partners TN Lic# 266926

I know we Realtors always say that the market sets the sales price and buyers determine the actual value of the property.  But at some point, does it even make sense if some buyers are willing to sign over their first born and a pint of blood just to get a house?  A friend of mine, who is a former Realtor, is looking for a house in the very competitive Nashville market.  She has has grown accustomed to the multiple offers and the prospect of having to write the seller a letter, bake them a cake, babysit their kids, and wash their car in order to get her offer accepted.   

Nashville car wash           

Last week she and her husband viewed a for sale by owner home in Inglewood.  I'm very familiar with Inglewood as I lived in Inglewood on McChesney Avenue for years before I moved to Smyrna.  The home is a modest home of approximately 1600 sq ft with one bath but it had been updated.  My friend stated that there was room in the unfinished basement to eventually add a second bathroom.  She was concerned about the asking price being too high.  After doing a market analysis and looking specifically at homes of the same age that had sold in Inglewood over the past 3 months (not even the usual 6 months span of time), I concluded too that the asking price was indeed about $20k too high.  My friend stated she would talk to her husband about it and get back with me.  

Three days later I see my friend and the dejection is all over her face.  My friend said she spoke with the for sale by owner the previous night and they had multiple, multiple, multiple offers on the house in just 48 hours.  The "winning" offer came in $30k over the already overpriced asking price and it included an additional clause that this potential buyer would increase his offer up to an additional $20k (in $1k increments) to beat any other offers.  All of this supposedly comes with no appraisal clause in the contract so the buyer will have to bring cash money to the table for the amount above and beyond what the house appraises for.   As I have said before, the Nashville housing market is super hot right now but I feel this is too extreme and it doesn't make good financial sense.  This buyer may very well end up paying nearly $50k or more over the actual real value of this property.  This run-up in pricing is almost as bad as it was in 2007!  The questions has to be asked:  Should you overpay to buy a Nashville home?  

                                                                                                                     Nashville homebuying

Posted by

Southern Living Realty Partners Logo

Rhonda Burgess, Broker

615.554.0832

 

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Topic:
Home Buying
Location:
Tennessee Davidson County Nashville Inglewood
Groups:
Realtors®
Posts to Localism
Tags:
nashville homes for sale
buying a home in nashville
selling a home in nashville

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Rainer
230,518
Mike Rock
Complete Design - Granite Bay, CA
Granite Bay Luxury New Construction...For Less

i love that post... maybe we should frame it, for the next correction, and people wonder when the time to get in is.. AND you say remember this?? :)

Jul 18, 2015 01:52 PM #1
Rainmaker
162,995
Rhonda Burgess
Southern Living Realty Partners - Smyrna, TN
Moving to Nashville TN Real Estate Specialist

I know right!  Mike Rock it's truly ridiculous.  How high can we go? is the next question to be asked. 

Jul 18, 2015 01:54 PM #2
Rainmaker
1,317,651
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

I guess it would depend on each person's situation.. So long as they have their eyes wide open -- it may make sense.  Especially if they plan to live in the property for many years.

Jul 18, 2015 01:55 PM #3
Rainmaker
162,995
Rhonda Burgess
Southern Living Realty Partners - Smyrna, TN
Moving to Nashville TN Real Estate Specialist

Joan I would hope they are planning on staying there a lifetime.  It may take that long to capture any equity. 

Jul 18, 2015 02:00 PM #4
Rainmaker
2,293,354
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning Rhonda. Great job with your post. I suppose it depends on how long someone plans on living in the home.

Make it a great week!

Jul 19, 2015 08:55 PM #5
Rainmaker
5,568,901
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is a good story to share. Home buyers need to be very well prepared when multiple contract competition is anticipated. It is easy to make mistakes.

Jul 19, 2015 11:48 PM #6
Rainmaker
162,995
Rhonda Burgess
Southern Living Realty Partners - Smyrna, TN
Moving to Nashville TN Real Estate Specialist

Thanks for stopping by Joe.  I certainly hope thes people are planning on buying and staying put for a long time. 

Jul 20, 2015 07:15 AM #7
Rainmaker
162,995
Rhonda Burgess
Southern Living Realty Partners - Smyrna, TN
Moving to Nashville TN Real Estate Specialist

Roy, multiple offers are becoming the norm around here.  Thanks for stopping by. 

Jul 20, 2015 07:15 AM #8
Rainer
85,769
Bobby Carroll
Dakno Marketing - Clayton, NC
Real Estate Marketing

Wow! What a story Rhonda and a sad one at that. Your buyers will benefit from your knowledge and experience!

While I'm leaving my comment, I trust you won't mind if I toss some SEO tips your way for this post.

  1. Add sub-headlines with keywords for each paragraph and tag these sub-headlines with H3 tags in the formats drop in the Ar editor.
  2. Add more links in the post to your keywords back to your corresponding websites
  3. Be sure to use the SEO Attributes section in your AR post editor including the SEO Title Tag and the Meta Description

By the way, awesome job to conclude your post with a question to encourage comments!

Let me know if you have any questions about this tips. I'm here to help.


Keep up the great work!

Bobby

Aug 14, 2015 10:38 AM #9
Ambassador
2,758,701
TeamCHI - Complete Home Inspections, Inc.
Complete Home Inspections, Inc. - Brentwood, TN
Home Inspectons - Nashville, TN area - 615.661.029

 Good Sunday morning Rhonda. I have to agree with the others that this is a good story to share. I can remember when Laverne was just a small town with both city limit signs on the same post – LOL

Oct 03, 2015 06:27 PM #10
Rainmaker
162,995
Rhonda Burgess
Southern Living Realty Partners - Smyrna, TN
Moving to Nashville TN Real Estate Specialist

I remember Lavergne and Smyrna both like that Michael.  If you blinked, you missed both cities along Murfreesboro Road. 

Oct 04, 2015 04:16 AM #11
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Rainmaker
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Rhonda Burgess

Moving to Nashville TN Real Estate Specialist
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