Do you tell a seller how much their home is worth?

Question

If a homeowner wants to sell her home and she says the house is worth $80,000, but other homes in the neighborhood have sold for much more, do you tell her the real price?

Russell Brazil · Answer

I think there is no such thing as buying below market price.  If the houses in the area are selling at $80,000...that is the market value of those properties. That is not the market value of every house in the area.  If the house is in a certain condition, that changes the value of the property. If it is in a distressed situation, that changes the market value of a property. If it is being bought through a private sale that changes the value of the property.

It takes 2 people to create a market. So you as the buyer, and the seller are creating a market for the property.  If you turn around and sell it 2 days later to someone else, that is then those two individuals creating a market. The market price has changed, just the same way the market price for a stock will change with time.

You can add value to a property to change it's market value. You can improve it. You can bring it to a buyer who is willing to pay more for etc.

Sarah Ziehr · Answer

As a broker, I would have a fiduciary duty to tell the truth. And I wouldn't be able to sleep at night if I lied to people like that.

PS. What goes around, comes around.

Shanequa J. · Answer

How do other investors get those slam dunk deals when they say they got it for 60 cents or less on the dollar?

Mike Cumbie · Answer

Hi @Shanequa J.,

Yes

Shanequa J. · Answer

The question I asked did not happen to me. I wish it did happen. I would do the right thing though. I usually encounter the complete opposite.

Roland Paicely · Answer

It sounds like she is telling you the value of the house.  She didn't ask you the value.  If she is happy with $80K.  What's the problem?  If that number works for you then it sounds like you have a deal.  Sellers will always want a different price than yours.  Many times it is a lot higher than what you have in mind.  When a buyer and seller agrees to a deal.  It shouldn't matter what anyone else thinks.

Mike Cumbie · Answer

heh i guess I was just envisioning the following scenario:"Hello Mrs Johnson how are you""Oh come in dear""Have some tea""Thank you""Oh gee we bought this house in 1973 or was it 74?, Oh I forget. We got it for 15 thousand dollars" "John added the garage and the second floor back in oh gee had to be 1993 it was right after he built the guest house in the back. he updated the kitchen and all 4 bathrooms 2 years ago before he died, he was handy. I figure it has to be worth around 80 thousand now. I mean that 1/2 acre vacant lot in the back sold for 65K and ours is a full acre"

JD Martin · Answer

Rarely are you getting perfect property for 60 cents on the dollar. Things are discounted for a reason, houses included, and every once in a while the discount is because someone didn't know they had an original copy of the Constitution hidden behind a $2 3-D Poster. Otherwise, it is because the house is a foreclosure and the bank just wants out; the house is beat all to hell and needs remodeled; the neighborhood is declining or already a war zone; the city is going to build a nuclear amusement park next door; ETC.

I generally buy the houses that are beat all to hell and need remodeled. That's where I make my money. Once in a while I get lucky and pick something up that is perfect, or near so, because of an odd-ball situation. One house was a court-ordered trustee sale and the judge wanted it gone pronto, and I was the first person to show up with cash. That was a nice house that didn't need much. Otherwise, there's usually a decent amount of work to be done, I do the work (or have it done), rent it out and benefit from the increased value of the work.

Real estate is a hard field to get into if you don't have skills, connections, or deep pockets. So many people ask how to make their first million when they have none of the above. The best answer is to cultivate one or more of those skills, and then parlay that into worthwhile investments. If you don't know how to swing a hammer, canoodle with investors, contractors, agents, or other people who are always looking for a good (partner, researcher, whatever). If you already work a ton of hours, put your focus into building up some resources.

Oh, and to answer your question: I don't tell sellers anything. I make offers on houses. Unless someone was slaughtered in the house, or it's built on top of a sink hole, I don't really care why they're selling nor what they think it is worth.

Sean Cole · Answer

If you're a licensed real estate agent, you have a duty to inform the seller.If you're unlicensed, you should probably ethically tell her, but you've got to make that choice yourself.

Do you tell a seller how much their home is worth?

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