Would you buy this house?

Question

My husband and I found a house we really like. It's in the best school district in the city. Also, it's in a safe neighborhood near a golf course. The thing is that it is considerably more than any of the other homes in the subdivision. Granted, it has a lot of upgrades, like mountain views, marble counter tops and hardwood floors. They are asking 325k whereas the only one close in square footage is 260k. It is not landscaped either. I'm concerned that we might be making a foolish decision to buy the most expensive house in the subdivision as we might have a difficult time with potential resale. What are you thoughts?

Answer 1

I think you should ask the real estate agent straight out--Why is the price of this home so much higher than the others? I would also drive into the neighborhood and look for others there and ask them what they thing of that house price, and again, why so high? There may be a good reason for it, and if there is your real estate agent should be the first one to know exactly why. But I would trust the neighbors opinions just as high. Real estate agents are EXACTLY like care sales men. Trust none of them fully. Your houses location, its scenic view, the lot size, and all the interior and exterior improvements should add up to the extra you are paying.

Answer 2

It sounds like they are asking a bit high, however you have to decide if it is worth it. Personally, in this market, I would wait and see if they come down on the price or either express an interest with the house but tell them you are concerned it is overpriced. If you really love it and want to know for sure, you could put an offer contingent on the appraisal value.  

Answer 3

The number 1 reason why a particular house may cost more than another is due to Fair Market Value. Fair Market Value is the price a willing buyer will pay and a willing seller will accept for a property that has been exposed to the market for a reasonable length of time, where neither party is under duress. In other words, if 3 other homes exactly like the one you have in mind (exact same size, condition, and amenities) sold for $100,000 the Fair Market Value of your house would be $100,000. HOWEVER, when there are other houses in the same neighborhood which look similar, have the same floorplan or similar, same size, same upgrades, etc.but there have been no sales of those homes in the last 6 months to a year, sales of properties that were similar, but not exact, are used with adjustments for differences in condition, amenities, square footage, and other factors that affect the value.

It could be other things as well. Our house is the first house on our street and is worth more than my 4 neighbors next to us. My direct neighbor's house value just recently dropped due to his neighbor selling her home for a VERY low price. Whenever your neighbors sell their house for really cheap, it brings down the value of your home. However, ours is still pretty high.

Our house is the first on the corner, next to a huge open field, and right by a playground and lake. This also adds to the value of the house.

The next thing is how it looks. An attractive, well-maintained house will cost more than a similar house that’s not in great shape.

Is your house perhaps newer than the other ones? What about a basement? A full-finished basement vs. an unfinished basement makes a difference too.

The view you are talking about as well as the upgrades indeed can increase the value of your house. Do the other houses in that neighborhood have that same view? The view alone could add anywhere from 10% to 100% to the price!

Upgrades - I wonder how the other neighboring houses look inside. Perhaps those don't have all the upgrades like the one you are thinking of buying. I can honestly say that everyone on my street still has the same standard out-dated oak cabinets in the kitchen that got installed when the houses here were first built.

I just think that the other house that you said that comes close to the same square footage is probably just older and without all the upgrades. Perhaps the people who are selling the house that you are looking at are just really asking for too much. I'd try to talk them down.

Go to Zillow.com and see what it says about the house and neighboring ones.