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What the seller paid for the property is completely irrelevant.
How do you figure?
It definitely matters to the seller. Sellers seem remarkably unwilling to sell properties for less than they paid.
It usually matters to the buyer. It matters to me, I know, and I'm a prospective buyer.
Case in point -
I just looked at a house that sold for $128,000 in July 2008. The buyer refinished the floors, slapped some paint on, and put in some low-end appliances, and put it back on the market for $200,000. Even if I liked the house, there's no way in hell I would just give this guy ~$50,000 worth of profit. If its "Current Market Value" was $128k this summer, why would it suddenly be $200k now?
So of course it matters, to both buyers and sellers.
If the current owner got it for free or $1 or won it in a poker game, would that impact what the current market value is?
Maybe, but it doesn't necessarily have to have an impact. It doesn't follow that a house which sold for $1 in 1988 was worth $1.04 in 1989, or any certain amount today.
That wasn't the issue, though. A few posters claimed previous sale price was completely irrelevant, so the topic was whether or not it can have an impact on current market value. And yes, it can, so it is not completely irrelevant.
Agreed. It is one part of a puzzle that I would want to know as the buyers agent and as the buyer.
For instance, if said seller had bought the house last year for 250k and has it on the market for 255k, and market says it is worth 220k, not only is said seller upside down, but probably doesn't have the cashola to come to the table with on my aggressive offer. So, it is telling me something.
However, if said property were bought for 200k a year ago and is on the market for 255k now and the market is 255k........ he probably isn't going to just sell it for 205k cause I feel that is all he should get. But it can't hurt to put the offer in. As long as you, the buyer, understand the game!!! Let's play : )
The price someone paid for a house does not factor into the market price of the home. Just look at an appraisal - it's based on comps and not the price the seller paid for the house. Now saying that, I always look at the price the seller paid to know if I have room to negotiate down the price lower than the market price.
What the seller paid for the property is completely irrelevant.
I don't agree with you as a buyer...I wan to know what the previous owner paid and how the current price justifies the listing price....From a appraisers point of view I do undertand where you are coming from but in the mind of a buyer, that is something different and the buyer is the one who has to make an offer and not the appraiser looking on paper what it is worth.
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