Opinion on price of second home

gibby2015July 26, 2014

We have a weekend lake home and are thinking of buying a different one for a bunch of reasons I won't get into. Our current place is in a high demand area on a very desirable lake. One of the places we are considering is quite lovely but is farther away from the "mainstream" area (an hour drive). That is part of the appeal for us but not appealing to the masses.

The property has been on and off the market three times and has now been on the market a total of over a year. I think they've lowered the price by about 15% over the course of the three listings. This time around it's now been on for two months. It's a very nice home these people built and have meticulously cared for so I can see how they might have an inflated sense of its value.

Our realtor has mentioned that the market in general hasn't completely rebounded around here and it's common for buyers to offer 20% less than the asking price. In this case that would be over 100K less than they're asking. I can't quite get my head around making an offer that "low" but I also don't want to overpay. It's very difficult to get comps for this property because there just aren't many other similar homes on this lake and values can be quite different on different lakes. There are few if any other homes this nice on this lake. Most people willing to spend that much money want to be in the midst of all the other people willing to spend that much.

I will say that I've been getting alerts on the listings for the area surrounding our current place for the last year and it isn't unheard of for someone to drop their price by $75k-$100k in one fell swoop but it still blows my mind. So do you think it's reasonable to make an offer that low and that sellers wouldn't think you're out of your mind?

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If it is 20%, it is 20%. 100K sounds like a lot of money, but you are paying for a more expensive property to start with. To me 20% seems like a high "discount", but if that is what has been happening there on a regular basis, then ... why did you hire a REA? (They know the market best! (we hope))

    Bookmark   July 26, 2014 at 11:03AM
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My friend just dropped her price about $470K, which was around 9%, but this is the Los Angeles area! She still might be a tiny bit overpriced.

I have no problem lowballing a property. You have nothing to lose, specially if the house has been on the market a while. But I would be worried about buying the best house in a neighborhood. Also if it has taken this long to sell, it will probably follow the same pattern when you decide to sell it.

    Bookmark   July 26, 2014 at 1:37PM
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Ya that would be a concern being the highest priced place in the area but this would be the kind of situation where they carry us out some day. Of course things don't always go as planned so I don't want to overpay in the event we did need to sell before we croak for some reason.

    Bookmark   July 26, 2014 at 10:35PM
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Well I've now found out they've had it on and off the market for over five years and have lowered the price over $200K. Not going to rush into anything as I think it could still be way over priced as there just isn't much of a market for a home this expensive in this relatively "remote" location. We would definitely have to die there as we'd never be able to sell it.

    Bookmark   July 28, 2014 at 3:50PM
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"We would definitely have to die there as we'd never be able to sell it."

That is not true. You could sell it. You just might not make any "money" on it (ie, it isn't an investment).

Are you buying it to be an investment?

    Bookmark   July 28, 2014 at 8:04PM
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No it's not an investment. If I broke even I'd be satisfied. The problem is figuring out what the market value of the place is.

    Bookmark   July 28, 2014 at 8:09PM
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Make the offer, you have nothing to lose. Why would you over pay because people have unrealistic expectations?


    Bookmark   July 29, 2014 at 11:55PM
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I wouldn't overpay. The question is what is overpayment and what isn't. Still working on figuring that out.

    Bookmark   July 30, 2014 at 12:00AM
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