Ugh. The million dollar question, right? Almost literally so, in this case.
These days, valuations are much easier to identify, thanks to online services such as Zillow and Trulia. Realtors and valuers in particular will jealously tell you “Oh, you can’t rely on these services, only I know the true value”, but that is self-aggrandizement rather than reality. Sure, the free market ultimately gets to decide, and a buyer and seller between them will agree on whatever number feels best for them together, but services such as Zillow and Trulia (and the less public services which realtors and valuers use, no matter what they might say about possessing special personal knowledge) provide an authoritative reference point that you need a credible reason to move much from.
So, my starting point suggestion (but keep reading) is to simply take the average of the Zillow and Trulia prices and call that a fair price.
Before we move further in this “negotiation”, can I point out one thing about these two valuations. These aren’t “suggested asking prices” – these are “actual closing prices”. Everyone always prices their property a little high so they’ve got some negotiating room. So in theory, I should take these valuations, and set an asking price just above their numbers or something like that, and allow you to “beat me down” to hopefully some number still higher than what Zillow/Trulia suggest. Their prices are like seeing the dealer invoice price on a new car you want to buy. It should be the end point of the negotiation, not the start.
However, please keep reading. I’m willing to sell it for appreciably less than either value!
You probably know this anyway – selling a house is a bit like selling a car. The first thing you do before selling a car is spend money on “doing it up” to make it more desirable and easier to sell. It is the same for a house, and the Zillow/Trulia/etc valuations assume that some money has been spent to do it up. As of today, I’ve not spent a single cent doing this. And, after having lived here since mid 1997, there are some things that should be done to get it “top-price” ready. I’ve done various things during the years – new roof, new deck, new paint, new mechanical equipment (heater, water heater, etc), added a heavy duty a/c system, and a complete new kitchen about 12 years ago. But now it needs all the little things to tweak it as is normally expected.
If I can have a hassle-free sale (and I’m sure you’d love the same), then I’ll let you have the home I’ve loved these last 23 years for appreciably less that what Zillow/Trulia say it is worth. Not just because I’m a nice guy, but also because I know there are some deferred maintenance issues that I’d otherwise spend money on preparing it for a regular sale through a regular realtor, and a whole lot of hassle with timing, offers that fall through, and so on and so forth. Chances are you’ve been on both buying and selling sides of house transactions before, and know what I mean.
So let me do some negotiation with myself, on your behalf. A strange concept, but bear with me, because I’m a good negotiator, and am talking myself down quite a bit.
I expect it might cost me maybe $5,000 to have some gardeners come in, spread beauty bark everywhere, do some weeding and trimming and reseeding and so on and so forth to make the outside look nice. Well, actually, I hope it would cost a lot less, but let’s be generous here. <Ding>. Take $5,000 off.
There are cracks in the driveway mainly caused by tree roots, and some settling over the decades that have caused cracks on the concrete pad in front of the house and in the garage. That’s probably another $5,000 of items to cosmetically tweak. <Ding>. You’ve just saved another $5,000.
Then there are the fogged windows that need replacing. That might be another $5,000. <Ding>.
Plus it seems to be traditional to put a new coat of off-white paint throughout the interior when preparing a house for sale. The thing about that is that while it is very cheap to get a painter to do a rushed single-coat paintover job, the chances are you either don’t want off-white, or maybe you don’t need any painting at all, or maybe you want a quality paint and perhaps a different color. Let’s say that’s another $5,000 – and I’d rather let you benefit from and use that cash as you see fit rather than walk into a house that while smelling of fresh new paint, won’t last and isn’t the color you want. <Ding>.
Talking about paintover, the guy who painted the house two or three years ago also painted the deck railings. The thing is, he put paint over stain. Not a good idea. It is now all peeling off, and looks a bit nasty at present, and needs to be taken off and redone properly. Let’s say another $5,000, which is probably enough to actually go wild and crazy and just replace the entire deck railings rather than strip and repaint. <Ding>.
There’s a bunch of other “honey do” type stuff as well. Maybe the carpet could be replaced – the downstairs den area carpet definitely. I bought new living room carpet, and it was one of the best quality grades possible; it still looks really good when cleaned and doesn’t need replacing. The carpet on the stairs and upstairs level looks a bit tired, and was never a nice color, although you don’t really notice it in the bedroom when you’ve a nice big bed filling much of the room, and other bedroom furniture further obscuring it too. But, you know where this is going, don’t you. Let’s allow for new carpet, and again, instead of me finding the most disgusting bit of cheap beige leftover, as is traditional when getting houses ready for sale, let’s allow you the privilege of choosing good carpet of a style and color that you actually want and which will last. Another $5,000. <Ding>.
Some of the light switches had really old style Radio Shack remote control switches in them, back in the days when there still was a Radio Shack, and before Alexa or Siri or Google Assistant could do it all for you. Some of those are failing. Plus when they put the new oven/stove top in, they used the wrong plug which needs to be rewired with a correct plug. New switches are $5, a new plug is probably $50, but getting the electrician in to do it all – well, should we throw another $5,000 at that “problem” too? I don’t hear you saying “No, stop, David, you’ve done enough already”, so I guess we need to. <Ding>.
But wait, there’s more. Remember, I said I wanted to get this quickly over and done with, without the usual hassle and flim-flam and everything. How much is that worth to me (and to you). <Ding> <Ding>
So – are you counting? That looks to be nine dings. $45,000. Let’s (<Ding>) call it $50,000.
Think about that. You’re getting a $50,000 discount on an already fair buying price, and you’re also getting the ability to either save or spend this $50,000 anyway you want to update/improve the home exactly to suit your tastes. You’re not getting something that has been cheaply disguised to look new, you’re getting $50,000 to invest as you – not me – wish to make the property yours and in your image. I think that’s a heck of a deal – I hope you do too.
You’re welcome to get a home inspection and a valuation done. But here’s the thing. I’m working from the average of the two online valuation services. They’re not exact, but they’re also not biased, and they’re pretty close to accurate in this area, where there is good public data and few undisclosed distorting factors. If anything, they might be a bit low, because two of the “distorting factors” they don’t know about are two “distress sales” in the neighborhood at unusually low prices over the last few years, that sort of depressed the neighborhood averages. One resulted in the house being torn down and replaced by a new $2.05 million property (the house on the corner of NE 33rd St and 177nd Ave NE, the other wasn’t so bad and is just two doors down.
As for regular human valuers, excuse me for saying this, but they’re hired guns, who give people what they want to hear. The first thing they ask, before doing the valuation, is “How much is the property listed for, and how much are you offering?”. Why do they want to know this? And is it just a coincidence that their valuation seems to inevitably come in at right around your asking price or perhaps a very slight amount more?
And if the home inspector says “You need to spend $? on fixing xyz so as to make the property in like-new condition”, please keep in mind that is factored in to the $50,000 price reduction I’ve volunteered. It isn’t a new property, and isn’t being offered for a new price.
Please don’t come back to me and say “We like your property, but we’ll need to spend $15,000 to make it good as new, so please accept an offer $15,000 below the $50,000 you’ve already taken off the Trulia/Zillow price”. You’ve already been given $50,000 off a realistic price because I know there are things that need to be done. And because I’m a nice guy. 🙂
Other fine print : This is an invitation to treat, not an offer. It may be amended, varied or withdrawn at any time prior to a formal offer from you and my formal acceptance of same. I am including a referral fee to a third party in this, so if you are introducing a realtor who expects a buyer’s agent commission, then he would be entitled to a normal and customary fee to be negotiated with me and which would not increase your purchase price.
How We Make it Work
This can all be done through an Escrow Service, and I suggest we do that. If you wish to involve other professional advisors, of course you may and should do so, but those costs would be to your account. We should each pay those fees that are customary to be paid respectively by buyers and sellers – in the case of you as a buyer, that would be a closing fee of about $800, a mobile/courtesy signing fee if you didn’t want to go into the Escrow company’s offices (about $200), a Doc Prep Fee if applicable of about $100, and sales tax on the settlement charges also of about $100, plus a Recording and Transfer fee of about $250. In total, about $1500, less if you don’t want the mobile/courtesy signing service. (I would pay for Title Insurance, Excise taxes, a technology fee, a closing fee, some sales tax on these fees, and perhaps a realtor fee.)
If you agree to this, the first thing we would do is “qualify you as a buyer”. This simply means you have to show how you’d be able to pay for the property. This is usually by way of showing cash funds available that you’d simply write a check to provide either to cover some share or all of the purchase price (well, typically in escrow they do bank wire transfers), and/or a pre-qualification letter from a lender that says they have agreed to lend you such additional money as you need to complete the purchase over and above the amount you’ve shown you’ll be paying directly yourself.
At that point, we know we’ve got a “real deal” in the making, and then execute a typical industry standard style of purchase/sale agreement, with the usual customary provisions as such documents require. If you wished to make this agreement subject to a satisfactory valuation and/or home inspection, you certainly could. If you are borrowing money, it could also have a “subject to being approved for the loan” provision, with details of what the loan would be, matching the loan that the pre-qualification letter from your funding source has already said it will give you.
But please note, we would not accept an offer with other “subject to” provisions like “subject to my distant great/grand uncle three times removed dying and leaving me a million dollars in his will”, or “subject to me selling my present house some time in the next year or two” or “subject to me winning election as Governor of the State of Washington” or any other things. If there are other things that are preventing you from making an offer now, it is better to hold off until you have them resolved.
You would make a good faith deposit (any amount you like as long as it is five figures) that would be refundable if you exercised the valuation/home inspection provision to cancel, but which would not be refundable in case of other default. The deposit would be paid to the Escrow company with instructions to apply it to the final settlement if the deal proceeds, or to refund to you if a term of the agreement allows you to cancel and request its return, or to forward to me if you default and don’t conclude the agreement as specified.
The other thing we need to agree upon are the timings for how long you’d have to satisfy any conditions, and then when you’d fund the purchase and when you’d get possession.
Once any conditions had been satisfied, or the time allowed for them to be satisfied, you would then proceed to fund the purchase in that agreed time frame, and complete the documentation through the Escrow company, and then you’d get possession on the agreed date after closing.
Feel free to ask if any questions, or to suggest if there’s a better way for us to create a win-win for both of us.