Determining price for off-market sale
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Anonymous
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We have a neighbor selling this spring (we currently rent) and they've reached out to let us know. If we can do this off market without an agent, what is a reasonable way to reach a price that feels fair for both sides? A couple of ideas: 1) Get 2-3 professional appraisals and take the median/average; 2) we write down a price we'd pay / they write down a price they'd take, and we split the difference if there is overlap (if not, repeat until there is); 3) Given we'd collectively save $60-70k in realtor fees (this is NWDC), split the difference between redfin/zillow estimate and tax assessment?
Those approaches may seem crazy, open to suggestions! |
Anonymous
| You let the seller decide the price. They are driving the train as you have more to gain from an off market transaction than they do. |
Anonymous
| Look at comps in the area and propose what you feel is a reasonable price. I don't think you should lowball them, nor should you ask them to share the saved realtor cost with you. |
Anonymous
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We got an appraisal and offered slightly lower than that when we bought off market.
That accounted for the some but not all of the realtor. |
Anonymous
| Look up recently sold houses the last 3-6 months in the neighborhood using Zillow, Redfin and Realtor.com and come up with mutually agreed price. |
Anonymous
NW DC is hot and sellers get multiple offers usually with no contingencies. IF they are willing to sell to you ask their price / look at comps. I would get multiple appraisals but they can probably get the top or more depending on location and state of the home. If I sold my house now to a neighbor I wouldn’t have to clean and de clutter and I probably wouldn’t repaint (the outside has some areas we need to paint so we were going to repaint this spring), I also would offer as is, but share the work we have done. I might give a slight discount but definitely not the realtor fee! I would also look at comps and see how much more homes have been going above in the area (our home is move in ready all new baths and kitchen with high end appliances) and decide if it’s even worth it for me. I’m not selling but a neighbors home in the last few months went for $400k over ask and it was tiny, a lot smaller than my home, less baths, and not as well done. |
Anonymous
| OP seems to think this transaction is like a divorced couple when one buys the other out of the house. The sellers are in the driver’s seat here; it’s their house! You pay them a price they are willing to take or they put it on the market. What’s “fair” is subjecting it to the market. As buyers you are already getting an unfair advantage by not having to compete with other buyers; you have to pay a premium for that privilege. |
Anonymous
| Ask them what they want for the place. See if you want to pay that. |
Anonymous
+1 exactly. You are lucky you don't have to compete with a bunch of other buyers who may offer more than you, all cash, etc, etc, etc. Ask the sellers what they want/timeline/etc. You get to decide if you like the price and terms, but I would not go in and haggle and ask to split the realtor fee! That would put me off as a seller. |
Anonymous
And OP’s No. 3 pricing suggestion — split the difference between the Redfin/Zillow estimate and the county-assessed value — would be a total sweetheart deal for the buyers (i.e. themselves)! Any buyer in this area would take that deal in a heartbeat. |
Anonymous
| We bought from acquaintances. We had a number in mind based off of comps, but asked them what they were asking. They gave us a price that was 50k higher than we had hoped, but we paid it. There isn’t really a negotiation - it is their house! In our case, they figured they could get a lot more if they put it on the market, and they were right. |
Anonymous
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I did this twice, once as a buyer and once as a seller. As a seller, we sold a townhome to tenants. because it was a townhouse we had a very comparable comps to work with and so we went with that. This was in 2016 in a desirable part of DC. We had previously lived in the house and were trying to sell before the date by which we would have to pay cap gains taxes so that decreased our leverage a bit. We ended up accepting a price that was about 3% below the comps.
When we were the buyers, the seller was planning to put his house on the market in a few months and had not started fixing it up yet (it needed to be repainted and staged - nothing major). he was clearly in no rush to sell - we found out about the same through a mutual friend. The seller gave us a range of sales price estimates he had gotten from realtors. We offered 3% less than the midpoint of that range "as is" and waived the appraisal contingency. He accepted that offer. it is possible we overpaid a bit (we got no proof of the realtor's predictions) but we generally thought the range he gave us was reasonable based on the (many) homes we had seen and we were buying into a very tight real estate market and had to be moved in by the start of the school year. our alternative was to rent for a year, which would have cost us about $50K, so we were OK overpaying by about $50K (I think we overpaid by less than that - and regardless the house appreciated $200K in the next few years). In both cases, on some level who has the leverage comes down to what each person's BATNA (best alterative to a negotiated agreement) is. The seller clearly has a pretty good BATNA since it is a tight real estate market. Only you know what your BATNA is. How much do you want this house? |
Anonymous
| Op they’d be crazy to sell it to you without going on the market unless your offer is higher than they think they’ll get. |
Anonymous
| PP here, we definitely negotiated with the tenants. We both pulled comps, haggled a bit. Haggled more when they pushed us to cover some of the closing costs. He can be a real negotiation - but the seller can definitely walk away. |
Anonymous
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Look at the relevant comps and figure out what you are willing to pay. Then make an offer. I wouldn't bother with this both of you writing down a number and then you paying the amount in the middle thing -- that just causes you to low ball and them to high ball the price. I don't know, I am not a big fan of games in negotiation, but YMMV on that.
We went through this when the owner of a home we were renting decided to sell. We wanted the house, but didn't ever get together on price. We didn't think we should spend over 500k or so on the house and the owner insisted on 590k. We were looking at neighborhood comps bearing in mind the condition of the property and the owner was advised by the real estate agent who had handled managing his rentals for him for years. So we were just too far apart. We ended up buying a lot more house two blocks away for 700k, and the owner eventually got his 590k ask (although the house sat on the market for a long time). This was 10 years ago in Falls Church, so YMMV. When we bought the 700k house a couple of blocks away we did it without any realtors -- it was for sale by owner and we saw the sign in the yard and called them and we handled all of it ourselves. It worked out great and we all saved thousands in realtor fees. But DH and I are both lawyers, and the couple that was selling were a lawyer and a CPA -- so we felt like we could handle it. |