Expert: Dennis Herman - 4/26/2009

Question
QUESTION: I am going to view a house today and it has been on the market for a very long time, about a year or more.  I also know that is was up for auction two weeks ago and apparently there is a problem or something because it's still on the market.  What does that mean and what kind of an offer should I make if the starting bid should have been $23,000.  I know the house is not worth that but somewhere around $42,000.  Where do I start without offending the owner?  If you could please respond asap as I got out of bed to post this question and I want some expert advice. Thanks in advance.

ANSWER: i really find it hard to give professional advise on a property I have not viewed.  As a matter of fact this is part of our ethics code.  We must first view properties before entering into negotiations.  

As a buyer you can work with a local real estate agent fro free.  In most states you have a choice to enter into an agreement with an agent who can represent you.  Our ethics code will not allow us to place our interests above those of the client.

Compare the property to others in the area.  An agent can supply you with a report showing sold and active units in the area.  You may also wish to tour other properties.  

Don't worry too much about insulting a seller.  If it is bank owned it is a business to them.  I am sure they have seen worse.  The important fact is, most of the great bargains are bought up quickly.  Investors are walking around with cash buying, remodeling and still selling properties at bargain prices.  You would be lucky to successfully compete with these professionals for a good property.  Better move fast.

As you said, the property has been on the market for a year.  I would suspect a dozen investors have been through and passed.  There may be something they see that you are missing.  I would use an inspection contingency on this property.



---------- FOLLOW-UP ----------

QUESTION: As you mentioned that there might be something that they see that I am not seeing, well the property has a waterfront view.  However, across from the resaca, is a city cemetery.  If you were to just stand and enjoy the resaca, you could not help seeing all across the resaca and there it is-- a cemetery.  It doesn't bother me, but I might have a hard time convincing my husband.  As to the neighborhood, it's a well-established one(1950).  It is very peaceful and most of the people are either retired or pretty close to it.  Of course, I would get a home inspection as the house in the basement shows some signs of termites.  Are these a big problem?

Answer
Thank you for the follow up question.  You are asking the wrong person about termites.  Out of 50+ sales I have only seen 1 request for a termite inspection on Wisconsin.  The weather is too cold for them little critters up here.  

The major concerns up here are usually the basement and the roof.  This is where it can cost you the most money.  I can see how termites may also be a concern.  

Location is a personal choice.  As a general rule of thumb people pay less for a home near rail roads and expressways.  There are usually a lot of buyers looking for these properties because of the lower prices.  I'm not sure a cemetery is a major concern for most people.  Water front property and a water view is $$$$.  Worth some money.  

I would have an agent run a report for you showing the sale prices of 3 years ago for homes the same size.  That may give you an idea of future value.  How much into the future us anyone's guess.

Happy hunting.  Let me know how it turns out.