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Unreasonable hikes in prices

Hi , i am a first time home buyer , and started to search properties. Some of the properties have prices increased over 100,000 $ in a past 2 months or so. Example according to Zillow pages - property sold in Jun 2013 for 350,000 , and now its for sale for 480,000 . How can first time buyers complete in this type of price hike.

Is it best to just avoid these properties (looks like sellers are trying to be too greedy) or should we put in low offers (example on a 350k property , put in 400k offer at max ... and see how it goes).
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September 04 2013 - Newark
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Answers (11)

Hola, potential home buyer.  I am a REALTOR® who works in the Newark/Fremont area, and very familiar with this particular market. 

There are many factors to consider when looking to buy, but what matters most is how much you can afford monthly, including principal, interest, taxes, insurance, and HOA (if this is a townhouse or condo).  Add MI to that if you are putting anything less than 20% down. 

You mentioned, you have a REALTOR® or real estate agent that you are currently working with.  It is always best to sit down with your agent, and discuss pricing strategy.  Most homebuyers pay a higher or lower price, depending on the condition of the property, features, or if the home has been remodeled. 

If you would like a referral to an experienced mortgage broker, please feel free to contact our office directly.  Please continue to work with your agent, and best of luck!
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February 05
Profile picture for user5460467
Hi Folks , thank you so much.

This is the kind of data i am looking at for a house i like , and i can see there is a lot of speculation happening (at least in the case i quote below)

Aug 17, 2013 - Relisted (Active) - $480,000
Aug 5, 2013 - Relisted (Back on Market)
Aug 1, 2013 - Delisted
Jul 22, 2013 - Price Changed - $480,000
Jul 21, 2013 - Listed (Active) - $430,000
Jul 12, 2013 - Listed  (New) - $420,000

To me Sellers list a price , try the market , hike prices and keep retrying higher prices. As a buyer i want to hit low - as low as 400k - 420k , and if the seller really wants to sell ... he should counter offer.
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September 04 2013
Hi user5460467,

Thank You for the Question. In the past 12-18 months we have certainly see huge increases in prices from month to month. Competing in this market can be tough to say the least for a first time homebuyer. A few things you should consider: 1) Interview agents who can guide you through the buying process who have a game plan for getting you into a home within your comfort level. 2) If the home that are being re-listed for much higher are still within what the other homes have sold for then you would only be paying market value. If the home is listed for much higher then you need to consider whether you see prices increasing in the foreseeable future.  

With recent interest rate increases, homes are not selling as quickly as they were before and prices have not increasing at the rate they were either. With that being said, you may have more opportunity the market we are currently seeing, so keep your head up and just make sure you keep yourself educated on the current market trends.

Hope this helps!
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September 04 2013
The best thing to do is get connected with a knowledgeable Realtor who can do a thorough price analysis of the property you are interested in. Right now is a very good time to buy with interest rates a low as they are just do the research to find out if the prices on properties are accurate. Best of luck in finding your first home! 
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September 04 2013
Profile picture for hpvanc
I'm going to disagree with Mack, that all you can do is go by what properties are selling for now. I think you need to do some deeper economic analysis. Take a look at what the average price to income for the area has been over the last 30 years, once you know what that ratio is you have a baseline on whether the properties are overpriced based on one factor. You also need to take a look at some fuzzier economic factors and try to adjust for them. Have area incomes increased or decreased relative to the national average? Is the population increasing or decreasing? What about total employment increasing or decreasing?

The idea is to make a judgement call as to whether you will be financially able to get out of the property if life circumstances change and you want or need to. The key to not destroying your financial future is to buy well, you can't predict it perfectly but with some minimal effort you can significantly beat the averages.

Nationally new construction purchases and pending sales started dropping before the end of the summer selling season. Those harbingers may be the leading indication that we had indeed entered another housing bubble and that it is over. As you have noted DOM is rising in your area, which is another indicator.
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September 04 2013
My agent is recommending to quote around the asking price which is 480k. When i talked to 3 -4 neighbors they all said the prices of house in the complex is around 400k , and zillow is right on that.

That's a big difference, I would maybe get a second opinion or call a local appraiser.

I also see the transaction history on other houses sold in the same complex in the past 2 years , and they sold around 360k - 380k - 420k range.

Looking BACK in time will only scare you out of buying a home - just get clear on what properties are worth now - that's all you can do.

Also zillow and other sites say a year-over-year growth of 12% in prices, but people are quoting 20 - 30 - 40% price hikes.

12% is what is typically forecasted, but its only a forecast. ... It might also go below that...unless you can see into the future its all a guess.... Not sure what 'people' are forecasting more but maybe late night house flippers... I tend to agree with Zillow on the 12% figure - at least today.....

 I now see that properties are staying in market (on zillow over a month or so - some are over 180 days). So the market is slowing. Will this trend continue ?

LIke I said its seasonal that home prices moderate now, people typically look for homes from 2/1 to Labor Day, post Labor Day not so much. I have seen good deals gotten post-Labor Day - typically. But is all depends on interest rates...... Yes, and homes typically do stay on the market longer now...especially in non-California areas with poor weather...

Good luck!


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September 04 2013
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Thank you folks for so many replies.

From the recommendations , it looks like the best way to go is to consider the opinion of neighbors in that complex and quote around 400k. This will be 70k or so less than expected price , and i might get rejected.

Guess thats ok . I now see that properties are staying in market (on zillow over a month or so - some are over 180 days). So the market is slowing. Will this trend continue ?
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September 04 2013
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Hi Tim / Rachel - thank you for your reply.

My agent is recommending to quote around the asking price which is 480k. When i talked to 3 -4 neighbors they all said the prices of house in the complex is around 400k , and zillow is right on that.

I also see the transaction history on other houses sold in the same complex in the past 2 years , and they sold around 360k - 380k - 420k range.

Also zillow and other sites say a year-over-year growth of 12% in prices, but people are quoting 20 - 30 - 40% price hikes.
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September 04 2013
Properties dropped so low in value when the market was at the bottom there was no where to go but up. If you are thinking about buying, it really doesn't matter what the seller bought the property for prior to placing the property on the market. If you had been looking to buy when the market was bad would you have volunteered to share the loss with the seller? Most people wouldn't.

The issue boils down to 2 questions. Do you want to buy? What is the property worth in today's market? Those are really the only questions that are important. Once you purchase a property, you will either benefit from the increase in value or not. You don't want to over pay for a home so do your homework. If you low ball an offer in today's market, your offer is just rejected. Many times the low ball offers are not even countered. If you wait and worry about what the previous seller paid, you may miss buying because interest rates will increase.

The whole point in purchasing a home or condo is to buy something you can afford, something you love, and something at the best price possible in the marketplace. Worrying about what someone else paid for the property is a waste of time and time is money, at least in our opinion. Keep your eye on the goal. You life and your home. Good luck.
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September 04 2013
Post Labor Day prices tend to be more reasonable as there are less buyers in the market, and you can find better deals. That said we have a quite a run up in prices lately.

Do your OWN legwork if buying and know where you want to buy and how much are intend to spend, then work with a good local Realtor when you find the place you want. Don't think a Realtor is going to do all of the work for you these days, you'll just lose that home of your dreams if you do....
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September 04 2013
Don't believe all you read on line. Find a local Realtor to work with and use these online sites as a novelty that are prone with errors and wrong numbers.

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September 04 2013
 
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