Saturday, July 22, 2006

What would you pay?

I've received a number of emails lately, which all asked the same question. If people are boycotting open houses, and not placing bids, how are sellers supposed to know that their homes are overpriced? It's a good question. Unless the sign in sheets are blank, and their home has been on the market a long time, they probably don't. Very few people in New Jersey are keeping as close a watch on the market as we are, agents included.

So here is what we're going to do. I want you all to go out to realtor.com and find a listing or two that fits what you might be looking for. Once you find it, paste the link up as a reply, along with the price that you would seriously consider buying it for. You can post anonymously if you wish. This is a serious exercise, please don't post a link to a $4.5m home with a bid of $10.50.

Here is an example, chosen at random:

This property is in Parsippany, NJ. I drive past it every so often, and I just so happened to drive past last night. Naturally, being a card carrying member of the National Trust for Historic Preservation, this kind of place appeals to me. Am I looking for a house in this price range? No, not at all, I just like the place, so I'm going to use it as my example.

MLS ID#: 2270226



The house is on South Beverwyck and is probably recognizable by anyone familiar with the area. The current asking price is $1m, and it's been on the market approximately 3 months. I personally feel this house is a bit more overpriced than most, thus would offer somewhere in the $700 range.

I'll be posting my selections up later in the day, anonymously. However, if this home was in my price range, and what I was looking for, I would most certainly purchase the home at that price, barring any major structural issues (especially with the roof and underlying structure).

Caveat Emptor!
Grim

32 Comments:

Anonymous Anonymous said...

I loved the green carpet on the stairway--worth another 10% reduction.

7/22/2006 06:00:00 AM  
Anonymous Anonymous said...

It's Parsippany. I wouldn't pay anything. You'd have to pay me to live in Parsippany.

7/22/2006 07:35:00 AM  
Anonymous Anonymous said...

Probably very high fixed cost utility taxes and maintenance.

7/22/2006 08:11:00 AM  
Anonymous Anonymous said...

Grim my boy---$700??

That seems a little too high for you, no? I thought you would low ball lower than $700.

At first glance of the house, and knowing what type of market we are in and where it is going, I would say $650-$600. That price is baring doom and gloom scenario.

SAS

7/22/2006 08:15:00 AM  
Anonymous Sugee said...

Grim,

What is the basis for arriving at 700K as fair price for thsi house ?

Thanks.

7/22/2006 08:45:00 AM  
Blogger grim said...

Was just an example.

The properties you list and the prices that you'll pay here are completely subjective. We're not trying to determine fair value here, only to state the price point at which we might consider purchase.

Personally, I think the house has structural problems. The weight of the slate looks to be caving the roof in. The "nightmare" potential with that place is very high.

I can't imagine the cost involved with rebuilding the roof and new slate on that place.

Keep in mind the photos are a bit misleading, the house itself is enormous.

grim

7/22/2006 09:21:00 AM  
Anonymous Anonymous said...

$700K is fair. It's a lovely house - I also drive past it every so often. However, it's on a main road right across the street from Route 80. It would be more appealing if it was on a more private street. RML

7/22/2006 09:24:00 AM  
Blogger lisoosh said...

It's a beautiful house. You are right though, places in that age range need a lot of upkeep and doing it right, with period appropriate materials and workmanship is expensive.

7/22/2006 09:47:00 AM  
Blogger grim said...

I'm sure that when it was built in the late 1700's, the owner thought to himself, "location, location, location".

Damn the state and federal goverment for putting those highways in. So much for location, eh?

:)

grim

7/22/2006 09:51:00 AM  
Anonymous Anonymous said...

Looks like the MONEY PIT.
You would have to be insane to even consider it at any price. Life is to short.

7/22/2006 09:59:00 AM  
Blogger grim said...

"Mr Blandings Builds His Dream House"

7/22/2006 10:08:00 AM  
Anonymous sugee said...

Well, 'fair price' is very subjective. For instance, I keep trying to use an annual 6% to 7% increase from a certain point in time. Now, which should that certain point be ?

For eg, I looked up the previous price of a certain house that had been originally listed at 329 but had been brought down to 299. The previous sale of the house had been in 1989 at 155. In 94, comparable houses in that area had sold for 110. If we use 5% appreciation on 155 it comes to 355 after 17 years, and at 4% 305. If one started on 110 and compounded for 12 years the result would be lower than 200. Very complicated, right ?

The second rule one might apply is the rent vs own calculations. Of course it will not be possible to ascertain rent for certain properties like Grim's favourite heritage house. Also decision to buy cannot rest entirely on rent vs buy math, it also has to include some speculation of the real estate market. Subjective again.

I think it all comes down to what 'feels' fair. If I were to buy a house today in my area, I think I would be very satisfied with paying 2004 prices. I would pay 250K for McGreevy's Woodbridge condo, if he still had it with him to sell. The last sales of similar condos is about 315.

7/22/2006 10:26:00 AM  
Anonymous Anonymous said...

Question/Favor

Could someone with a membership to RealtyTrac tell me what house # is in pre-foreclosure on Fairway in zip code 07871? (My guess is 14).

Thanks so much!

7/22/2006 10:29:00 AM  
Anonymous UnRealtor said...

What a beautiful house. The stairway is incredible. And it's huuuuuge (a good way to get a feel for a house's scale from a photo, is to look at how large the front door is, and how it relates to the size of rest of the house).

Factor in that the house was built in 1700s, though (read: "Money Pit").

The heating bill would also be enormous with 3 floors, 6 bedrooms, and 14 total rooms.

This house could easily soak up $200,000 in renovation cocts and ruin a person financially if they didn't have lots of cash reserves (i.e., were not loaded).

Given that, between $600K and $700K is probably about right.

7/22/2006 11:14:00 AM  
Anonymous Anonymous said...

30% reduction from asking price after 1/4 year on the market, coming down from what we now know was the peak?

Sounds about right. Still, I'd go another 10% down (from 700, so it's really more like 7% again of the original listed price), just to permit the seller to bargain up.

Cos, y'know, that's how I roll.

If we were talking Ocean City, NJ RE, I wouldn't enter the game higher than 50% of asking--maybe 40% of the asking of one of the glut of subdivided SFHs and condo'd duplexes.

It really has deteriorated into a game. An irrational market will do that--for tulip bulbs, eToys stock, and houses in NNJ.

7/22/2006 11:24:00 AM  
Anonymous Anonymous said...

I'm thinking of lowballing on a house in Morristown, but when i go on zillow, it appears as though prices are going up weekly. Do you know anything about the bubble with respect to Morristown?

7/22/2006 11:52:00 AM  
Anonymous UnRealtor said...

Zillow is more of a toy, than a representation of actual values.

It's useful for past sales data, finding the year a house was built, and tax info. It also gives a nice map of nearby home tax assessments.

Other than that, it's just a novelty at this stage.

7/22/2006 01:12:00 PM  
Blogger Richard said...

it's hard to say what i'd pay for it. i know nothing about the quality of materials and upkeep on the place. the difference could be $100k or so. i recently voided a contract to buy a house because once the home inspection came back all sorts of corners were cut and work was done half-assed and shoddy. i told them knock $50k off the price for all the crap i'd have to fix and they didn't budge so.

7/22/2006 01:15:00 PM  
Anonymous Anonymous said...

Hi Guys,

Grim the house in parsippany is probably a good buy if you can appreciate the details. It will be expensive to maintain and fix. I love to look at old homes of that era. What is so special is the materials (ie: wood). Alot of these homes were built when you could use any kind of rare wood (cheaply). The craftsman 70-95 years ago worked cheap. It could be worth the money if you had a big family and it was in a good community. It might even be a better buy than the standard doll house McMansion(vinyl sided!!!) This house might be cheaper than new construction...even considering replacing the roof. One hidden cost would be outfitting the windows properly. The house under the right stewardship could be great because its not slammed up (15ft.)against another newer house. I think these homes can use a little updating but are well worth the trouble. Why do we have to tear everything down thats old. I would love to see this historic home get the right kind of TLC.

Also why slam living in Parsippany???? People can be so snotty!!!! There are private schools here, parochial schools, public schools. Personally when I am forced to go to Morristown Beard School functions you would retch if you could see what unlimited money can do young children. Parents are practically wiping these kids asses for them...UGH!!!!! Sometimes I wonder what people are thinking when it comes to their children. Case in point: I went to a public skate at the Mennen Arena and every parent there was peeling off their kids shoes and socks and then lacing up the kids skates. I got sick to my stomach these kids were not babies (8 +Up) I can remember doing my own skates for myself at their ages. One girl was on cell phone fighting with her brother while Mommy played butler with her skates. People wake up and stop catering to your children. Sorry for the rant!!!

Chow Dog Owner

P.S. I live in Parsippany with a Morris Plains mailing address. The next street over from me is Denville. My sister lives in South Orange. I have friends all over in this area. My kid is doing just as well as the other children in more rarified schools environments. It really comes down to the individual childs abilities. And please don't do your childs school work for them. I see so many private school children and the parents are way to involved in the school work. I have one friend who does at least 40% of her sixthe grade childs work. On the last day of school exams he was busted for cheating on a French Test. The teacher was really trying to send a message to Mommy!!!!!!!

7/22/2006 01:16:00 PM  
Anonymous Anonymous said...

Grim,

the maintenance will kill you

7/22/2006 03:20:00 PM  
Blogger grim said...

No no no no..

The exercise was for all of you to go out to realtor.com, pick a listing, post it here and tell us what you would pay.

The house I picked was just an example of what I wanted you all to do..

grim

7/22/2006 05:16:00 PM  
Anonymous Gary said...

MLS ID#: 2620007

I would pay $475,000 for this house. If it appreciated in a real market, that would be the price.

7/22/2006 05:56:00 PM  
Anonymous Anonymous said...

http://tinyurl.com/g8rs6

http://tinyurl.com/fr8dm


Both of those houses are in South Plainfield (not sure about the schools in the area, but seems like a good commuter town).

Both are listed for 700k and I would pay anywhere from 550 to 600. What do you think they are worth?

7/22/2006 06:02:00 PM  
Anonymous Anonymous said...

Any information on the new construction activity in and around jersey city.$600k for a 2bdr condo seems insane,but according to the developers these are selling like hot cakes?? any insight on this market?

7/22/2006 08:21:00 PM  
Anonymous Anonymous said...

Developers will say anything to give the confidence.

Take what they say with a grain of salf.

SAS

7/22/2006 08:26:00 PM  
Anonymous Anonymous said...

MLS #2294775

I would Pay $250K for this property.. only because of the town. it's been on the market for a long time...

7/23/2006 08:15:00 AM  
Blogger njresident286 said...

MLS ID#: 2290434

New Providence

House says it was listed at 579,000 26 days ago, and is now down to 559,000. People who owned it have bought something else already and the realtor threw out the term "motivated seller". 8000 a year in taxes.

Older kitchen needs updating and so do a few other things. I would offer 479 and let them work me back up to 500.

7/23/2006 04:36:00 PM  
Anonymous Anonymous said...

300K for townhomes in Westgate-Edison
Middlesex, they are priced to high at 380K plus.

7/23/2006 05:51:00 PM  
Anonymous Anonymous said...

I did a search on Realtors.com for MLS # 2620007 to see the property discussed in the thread. Three listings popped up, one in Bergen County (the property in question) , one in AZ and the other in IN. Needless to say you get much much more for your mula in IN than in Bergen. Why in all other states the Realtors show almost the full details of the MLS listings, including square footage, taxes, and most importently the proprty address. I guess NAR' monopoly on information is even in higher gear in New Jersey than the rest of the country. Any one knows why?

7/23/2006 09:13:00 PM  
Anonymous Anonymous said...

Anonymous said...
Any information on the new construction activity in and around jersey city.$600k for a 2bdr condo seems insane,but according to the developers these are selling like hot cakes?? any insight on this market?

From what I understand from friends and RE agents (who I talk to on a personal basis, not on a buyer/realtor level)property whether old or new is not selling like "hotcakes." It is slow and there is a glut of inventory in the area. People are also slow in lowering prices.

7/23/2006 11:02:00 PM  
Anonymous Anonymous said...

MONTVILLE TWP., NJ 07045
MLS ID#: 2297511

$1,449,000
5 Bed, 4 Bath
6,000 Sq. Ft.
2.99 Acres

Nice Million Dollor house, I would pay 1.10~1.16M for it.

7/24/2006 08:46:00 AM  
Anonymous Anonymous said...

I see a few people are asking about realtytrac. It is a pointless website. I have found out that it is hardly ever updated. There are properties on there that are not longer in forclosure. For real listings you can check out http://www.somcosheriff.com/sales.htm
for somerset county. Although make sure it has no leans on it and make sure to see if you can find similar in the market. I have seen a few forclouseres that people must have won during the bidding wars and now cannot pay, and the places are still overpriced. Honestly finding a decent priced foreclosed home will take a while. This site is updated weekly. Morris county does not have a site, you can go to the sheriffs office somewhere in there...google for it. Bergern and sussex and union I am not sure about. At this point I would reccommend people lowball at a minuim of 30%. If more and more people lowball the more and more sellers will realize they cannot get these outrageous prices anymore. Its up to us.

Grim
MLS Number: 2279946
City: HILLSBOROUGH TW
3 BR,2 1/2 BA
List Price: $324,900
I think a fair price on this townhouse it $200,000.00 Considering its a townhouse and there is no land with it, taxes are fairly high, maintenace is not that bad. What do you think?

7/24/2006 04:43:00 PM  

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