Should You Pay More For THIS House?

[photopress:polly.jpg,thumb,alignright]When determining how to structure an offer on a property, one of the key considerations is, “How scarce a commodity is this home?” How scarce it is to you, depends on the parameters you have set, and why you like this particular home, which varies from person to person.

If the property is unique because it has the largest lot in the area, then the seller is correct in putting a premium on this feature of the home. But, if why you are buying it is NOT because it has a large lot, then maybe you should not be the one to pay the “justifiable premium”. A justifiable premium for the seller, is not necessarily a justifiable premium for the buyer.

Often the seller will dramatically highlight their “premium” feature, such as a large lot, when they should not. I remember showing a home, with the owner in the home, and they kept raving about how huge their lot was. I could tell that the buyer had totally tuned out and had no interest in the property, but we couldn’t leave because the owner was going on and on about the size of the lot. When we got outside the buyer said, “Not me! I’m not spending my life maintaining the biggest lot in town!” I asked if he would have been worried about that just by viewing the property, without the seller’s influence. He said no, but now that I have this picture in my head of spending all of my weekends mowing the grass and maintaining the landscaping, AND paying MORE for the house for the “privelege” of it sucking up all of my free time, I just can’t see myself in that home. Otherwise, I may have bought it, but let’s just get out of here.

So the seller may indeed “deserve” more money for his house than anyone else in town, because he has the largest lot. But that does not mean that every buyer should offer that premium, in fact some will discount it, for the very reason the seller is raising the price. The buyer may deduct for the extra maintenance of the larger lot, while at the same time the seller is adding a premium for the extra land.

The photo above is in reference to “our Polly” who had the best question in the month of August. Before responding to a counter offer from the seller she asked, “What is the likelihood that you could find us a similar home within the next 60 days?” I was knocked out by this fabulous question! If only two of those have sold in the last year, then the liklihood is slim to none. If 40 of them have sold in the last six months, then you can play hardball with the seller. Excellent question to ask while in the middle of negotiations.

2 thoughts on “Should You Pay More For THIS House?

  1. It’s all true, and Ardell’s advice to us was accurate. And–based on what I’ve seen come on the market since then–we’d be kicking ourselves if we’d pushed our luck and lost out. She was right, of course.

    I think the most common example of this that we saw when looking was a fully finished basement and/or MIL. We saw lots of these listings: “Newly finished lower level with full MIL/second kitchen!!!”

    We didn’t need a huge kids’ playroom, we didn’t want to rent out part of our home, and we certainly didn’t want our respective mothers-in-law coming to live with us… a laundry room, some extra storage space, and room for a workbench is all we wanted from a basement – and so it was all we were willing to pay for. We weren’t willing to pay sellers who saw it as fully finished and useable space (even when that’s exactly what it was, and to the right buyer, it would become a “unique commodity” worth playing hardball over), because we never would have used it that way ourselves.

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