I don't quite understand all of these comments about staying away from a home that you interested in if it has an obviously low listing price. Do your homework (or have your highly paid agent do it for you) and find out what you are willing to pay that isn't too much above it's current "value." It's pretty simple. Offer what you think it's worth. If you think it's worth 50k less than asking, offer that. If it's grossly underpriced, offer what you think is reasonable and you are comfortable with and not a penny more. Don't get caught up in the marketing tactics of the seller and/or listing agent. It's all just a game!

pearsonsnutgoodie: That's quite a story. So if I understand, you offered some good money for a house in the pit of hell and you were turned down?! Did you ever find out if someone bought the place and if so for how much?

This isn't exactly a similar story, but I have to share it anyway because 7 years later I still can't believe my offer was not accepted...Back in the day, I saw a cute little house in the Bayview, on Palou near 3rd, but on the "better side" of 3rd Street. This house was next door to a crack house, and after the crack house came a place called "Fort Apache", via a sign saying such precariously attached to the structure. The whole thing was surrounded by chain link fencing, junk in the yard, barbed wire on the roof, etc. Anyway, back to the cute little house..the garage had been taken out to add an inlaw apartment. The need to rely on street parking was a considerable disadvantage at the time, as will become obvious momentarily. During the open house, I was the only person who looked at the property. Why? Because a CAR HAD BEEN SET ON FIRE IN FRONT OF THE HOUSE THE NIGHT BEFORE. It was still actually smoldering. Obviously, anyone else who wanted to look at the property drove by and kept on driving. If I could have, I would have offered asking, but given the scenario, and that I was the only offer -- I figured I had a chance with the offer I could make, even though it was low. Nope.

thanks,curious. that makes more sense.

A prospective buyer can request an inspection at any time in the process. Only if a copy is provided to the seller does it become part of the disclosure package. The seller may need to disclose the fact that an inspection was made, but if the seller does not have a copy, it is not part of the disclosure package.

Sellers' agents may not like a request for an inspection, but there is no legal impediment.

Request the opportunity to inspect and don't provide a copy to the seller unless they reimburse you the cost of the inspection.

tracey, i logged in twice to post the following, but each time i got distracted and forgot..

re the home inspections before submitting an offer..this is how i understood what i was told:

a buyer may not do a home inspection before making a bid because any kind of home inspection report paid for by *any* party...prospective buyer or seller...automatically becomes part of the disclosure package by law.

have i misunderstood? suppose i liked the cragmont property(as an example), can i order for a home inspection even before making a bid?

if so, that would be brilliant. it would take a lot of anxiety out of the picture and lesser number of contingencies.

Toady: Seems like my work is done -- because you have kindly done it for me! Thank you for your fascinating data analysis.

Leigh: My advice is don't try to play the market. Decide how much you want to spend, find a house you love that meets your budget, make an offer and stick to your guns. If you are outbid take the attitude that someone paid more than you were willing to pay and look for the next great house that comes along. For it will, it will...

I hate the guessing-game nature of this all. There's a house on the market that I want right now -- but will I be stupid to pay at or over asking if things will all be different in three months?

Of course there's no real knowable answer to that . . .

Just a follow-up on the spring inventory roll out. After cleaning up the data, Redfin shows 116 current listings in Berkeley; 45 of those, almost 39%, have come on the market in the last two weeks. The median asking price for these new listings is $795K.

That's a lot of really expensive real estate.

David has a nice rundown in the comments section of the Weekly News Round-Up post relating median household income to EB home prices. Plus, we know that fewer people are qualifying for loans. Let's revisit the subject of whether or not Berkeley home prices are falling in a couple of months.

I agree that North Berkeley list prices still aren't dipping, but spring inventory is just now coming on the market. I think we'll have to see what happens once the market gets going full swing.

I disagree that that this particular seller's tactics will bear fruit. There's a pretty strong correlation between DOM and sale price as a percentage of list. Looking at March 2008 sales, nothing that was on the market for more than three weeks went for over asking, and list prices for that sample range from $499K to $1.275 million, so it's not just the lower end.

And with all the data easily accessible on the web, it's pretty much impossible to hide how long you've been trying to sell your house.

I still don't think there is a reasonable explanation for having a low asking price, then not countering an overbid, and pulling off the market and re-listing for 30k over the overbid. No aspect of that seems smart. Is there all of a sudden a whole new crop of buyers who are going to be more interested because the asking price is higher? The owners must not be on any time horizon for selling, if they are they really are not playing the game very well.

I do think djt market evaluation for N. Berkeley seems correct, that is what we are seeing too. I am still amazed at the amount of 2 and 1's that are asking 750k-800k, that seems like a big price for not too much space.

I will be interested to see what 1518 MLK closes for as well, I am surprised to hear it was looking at going well over asking.

That's what I keep saying -- "Somehow Berkeley hasn't gotten the recession memo yet!"

obviously, i am fluent in typo too..so in my post above, it was supposed to be 'thrashing'..not 'trashing'. normally, i wouldnt correct all of my butter finger mistakes(too many), but i dont want anything in this thread refered to as 'trash' even in typo...afterall, this is like a classroom to me..:)

djt said: "I don’t think the N. Berkeley market is sagging as much as people here hope it is. In the 1.5 million plus arena, yes. In the 700k to 1.1 million range, no, at least not yet. And, the asking price has nothing to do with the value of the house. It is part of a search that results in people coming to look."

djt, thanks for your insight. its very enlightening. i wish i had been part of such a discussion earlier. bear with me for trashing this subject, but i am sorta new with this.

if people stick a low asking price to get people to come and look...and if they want to instigate a bidding war, arent they actually pushing people into buying something that is priced beyond their comfort range anyways? i mean, if someone is searching for a property at or below 800k, how can they even consider a 850 or 900k tag? i am thinking that this is the exact same behaviour that started the housing crash. house lust is like that...its a throbbing little weakness we all share. honestly, i was somewhat tempted to give what they wanted. but then i thought..WHY?

how different is this from mortgage brokers who tried to sell loans to people who couldnt afford it in the first place? except of course, potential buyers can be pigheaded and walk away here while one is somewhat wedded to the mortgage broker like ball and chain.

hypothetically speaking, what if half a dozen buyers bid under and at asking price? perhaps, people dont bid enough to give the sellers the true picture. yes, a house worth between 800k-850k can sell at 1m. all it needs is one person who thinks that he needs it so badly that 1m is worth paying. but how long did it sit in the market? how many people bid on it? these are more indicative of the market situation rather than the lone fact that it sold over or at asking.

last night, i was ruminating and it suddenly hit me..this is a buyers market, but the buyers realise it yet!

DJT: Thank you for your insights. I think a lot of us will be watching that Marin property carefully following this enjoyable exchange of comments and views. I'm also glad you brought up the slide zone factor. For those of you who want to explore this further, perhaps before contemplating an offer on a house, visit http://akropp.com/index.htm.

Leigh: I saw 1167 Oxford a couple of months ago. At the time the listing agent said two offers had just fallen through. I quite liked the house -- it has a huge studio on the first floor on the back with an unusual vaulted ceiling. No fireplace in the living room if I recall. I'm not sure why it's yo-yoing on and off the market.

To Tracy and Catsjellicle. I only mention that because language is specific and I hold myself up to a high ethical standard. I wanted to clarify the ethics issue. However I completely agree that this seller is not only putting off potential buyers but not in touch with reality. Or they are in a position of not needing to sell. It happens people decide they will test the market and then when they don't get what they want the ego enters into the equation. I refer to an NPR interview that reposted on my blog. I have to admit to seeing this link in a Redfin post. Cats your education will serve you well somewhere, just don't expect to work within the bounds of logical reason in the N. Berk RE market. http://www.kaakeproperties.com...

While we're talking about North Berkeley (and by the way, I agree with djt -- sure seems that North Berkeley homes, for the most part, go quickly, and for substantially over asking -- maybe that will change/is changing, but I still find it pretty shocking), do any of you know what is the story with 1167 Oxford? It was on, then off, then on again, then off, and now it's back on for a higher asking price. All very odd.

djt,

interesting, so thats why that home on eunice keeps dropping in price? i knew there must have been an explanation why those houses are not moving. they're awfully nice inside/out (with the exception of some roof work and strange interior mildew smell).

I don't mean to hog the board here, but another factor you need to consider is whether the home is in a slide zone. Alan Kropp's website shows slide zones. All those houses for sale on Glen/Eunice are in a slide zone. There is a several cm per year slide zone around Keith. I avoid those since insurance policies typically don't cover earth movement. The homes in those areas are not discounted enough to take a total loss on the home. Corona Ct - each house looks like a fun house. And in the late 80's a hillside gave way there and a house slid down the hill and was destroyed. Look how bumpy the street is!

There, I've divulged my secrets to successful real estate purchasing. With the market panic over, don't buy a troublesome property (which sold with no discount in 2005/6) unless you plan to sell in a panicked market.

I don't think the N. Berkeley market is sagging as much as people here hope it is. In the 1.5 million plus arena, yes. In the 700k to 1.1 million range, no, at least not yet. And, the asking price has nothing to do with the value of the house. It is part of a search that results in people coming to look. There was no way that the owner of 1946 marin was ever going to let that go for $799. No way. I don't bother bidding on those for that reason. That place will go for between 875 and 925k. There are many factors that are knocking the supports out from under prices - economy, confidence, loan qualification, quantity of homes for sale, and the most interesting thing I've heard from my agent recently is that I am no longer the only person who considers earthquake safety and energy efficiency.

I need to spend little enough that I can do both.

Finally, on that FSBO at 1518 MLK, I looked at that house as did my wife and I knew it would sell for more than 1.05 million. In fact, the seller wanted to sell to us and would have for 1.2 million. Illegal to share other bids, but in the FSBO world, it is a free for all. Too expensive and not energy retrofitted. Too many rooms, too many staircases, too dark, small kitchen - too much money for what it was.

Marsh: It was very interesting to hear your story. I think you have nailed the issue on the head -- there is an incredible emotional bond between a homeowner and their home. Even when they are in the process of selling it, they often find it difficult to make rational, unemotional decisions about it. (Why should it matter, for instance, who buys it? It shouldn't, but I know from experience that it does.)

to philip kaake: unethical isnt the word i would use..if there were multiple offers and the home was overbid, it would probably move me to consider a higher price. when 799k is hard to attract juicy offers, i dont understand how they can expect 849k? it doesnt come to economic theory, but i am questioning the logic of it.

perhaps it is because of such bidding wars and instigations to spark bidding wars that the market conditions became artifically plumped up. and economic theory is precious, mate. it better be..i got to justify my education somehow!...:)

Marsh: Yes, perception is taking a little time to catch up with reality in many sellers' minds. I too would find it hard to reconcile myself to a much deflated asking price if I was putting my home on the market now and looking back at what it might have fetched two years ago. Oh well. C'est la vie.

Philip: Maybe unethical was not quite the right word. Because of course a seller isn't obliged to accept any offer. But you must agree that to refuse an offer that is over the asking price is unusual if not unorthodox. It certainly leaves a bad taste in the mouth for potential buyers.

Tracy & Catsjellicle, not accepting an offer at asking price is not unethical (it may be foolish considering the market) the seller is under no obligation to accept any offer. A broker could make a case that they earned their commission if a full price offer is made. It goes back to the post regarding the Berkeley housing market beginning to crack. In North Berkeley it is common to see homes bid 100k over. No amount of economic theory plays into the rationale for this. Sellers have been conditioned to this being the normal course of business so they were probably expecting it. The good agents know whats going on in the market and are advising their clients as such. If they do not take their advice then it is plain arrogance. The fact of the matter is the market has shifted and now they must face a different reality.

My husband and I went through something similar, though not quite as egregious on the part of the seller. Really more of a story about greedy (or just plain crazy) sellers.

We put in an offer on a Belmont house that had been on the market for about 6 months in 2007, and was relisted in early 08. When it was first on the market, sellers discounted the price gradually, about $40K, then relisted it almost $60K lower than the initial asking price. After visiting during a sparsely attended open house, my husband and I could see why they were having trouble selling--not a lot of updates, some work needed (though mostly aesthetic), and it was being listed as a 3 br, when it was really only a 2br.

So, we put in an offer 10% lower than the asking price--leaving some room for us to negotiate and do the necessary repairs. The seller's agent initially acted completely insulted by the offer, insisting that they had a previous offer of asking price, but buyer couldn't get financing. After some consideration, the seller reluctantly agreed to come down on the purchase price another $50K, but no lower. Based on the market and the condition of the house, my husband and I couldn't justify raising our offer to meet their counter.

So far it seems we made a good decision--the house has now been on the market for another 3 months, and despite holding open houses nearly every weekend, it doesn't seem they've gotten any other interest.

It's a shame that sellers can't disassociate their emotions from this a bit. Between taxes, mortgage payments and other costs, they're continuing to put money into the house that they're not going to recoup. I think if they listed at the $50K discount they offered us they might actually get some interest, but perhaps they've scared off too many buyers with their dishonest listing of the number of bedrooms.

It seems to me it's going to take a lot of similar situations to bring the market on the peninsula down--at some point, savvy sellers are going to realize that they can't get the same $$ for their house now that they could last summer, and those houses are going to sell, while houses that sit at exorbitant prices will do just that--sit. But it's a shame for all involved that we need to slog through all this just to buy/sell real estate.

$849k for a house on busy Marin, you have got to be kidding! Houses on Marin typically take longer to move and at lower prices than other houses in the Thousand Oaks area. I'm really surprised they turned down an asking bid of $799k. If someone actually purchases this house for $849k, then that broken record just keeps on playing.. "a sucker is born every minute... a sucker is born every minute..."

Colin: Touche!

Catsjellicle: Interesting that your experience mirrors mine. I too was told the house was attracting lots of interest evidenced by many disclosure packets being out. Then there were apparently several possible bidders. Then there were just two. You can't help but wondering if it's all part of the hype.

You can have an inspection before putting in an offer. It's quite common. I have done it twice so it must be true!

tracey, she was very patient with me. she must think i am crazy tho! all this theory and economics in the bay area?...aaahfooey! the whole thing was a tad wonky a few days before the offer. they said there were eight disclosures sent out. and then they said there were only three sent out. after a while, we were the only offer. then it became two. then it became just us. then they extended the hours to accept bids and finally there were two. so, we were scrambling, rethinking and wondering if we should add a bigger chunk, but we decided we wont..and that we'd just let go and see where it falls. but we certainly didnt want to add another 50k as there were design aspects we wanted to build/add to the house to suit our lifestyle. things go smoothly or they dont..and the former is more natural and meant to be...

colin: now i know!! i just assumed that sellers price their properties with a 'minimum acceptable price'. and the spoils of a bidding war...as in anything over advertised asking price...is a bonus to them. what happened here was that their own asking price was unacceptable to them. i wasnt aware that this is not at all uncommon in the bay area real estate as this is our first time bidding on a property. while we didnt wildly overbid(and would have never overbid by 50k), we did offer their asking price + a smidgen extra to ensure that we were on the other side of the asking price.

gfw, there can be no home inspection until the offer has been accepted. even if we had sunk in costs, is it even worth it?

Tracey, the fact that "cool logic often flies out of the window" is precisely why "bidding war" listings should be avoided in this market:- that is exactly what the seller is hoping will transpire in the psyche of potential buyers. And although you're obviously right that you're not going to live with the seller, you just as obviously do have to deal with them to complete a purchase.

Catsjellicle: Well now I know you're a she -- makes it less awkward; all those he/shes were getting annoying. I love the fact that you subjected your agent to lectures on the Phillips curve and stagflation -- keep 'em on their toes I say!

Colin: While I agree in principle that one could try to identify "bid up" prices and then avoid them, I think the reality is if you see a house you very much want to make your home, such cool logic often flies out the window. And in some ways the personality of the seller is immaterial -- after all you're not going to live with them -- as long as you stick to your guns and don't concede on anything you feel strongly about.

GWF: Interesting idea. I suspect Catsjellicle just wants to move on though.

You could probably get them to reimburse your costs of inspection, etc. by threatening to take them to court and demanding specific performance.

We had the same thing happen with our house (and actually chose to negotiate with the seller since it was within the range we were willing to pay--in retrospect not something we would've done had we known quite how deep the crash would be!) In our case the seller was also "disappointed"--this was at the start of last summer's credit crunch so several bidders had dropped out at the last moment--and gave us the option of meeting the "desired" price or leaving the house on the market to see if higher offers came in. We met the seller partway largely because we were thoroughly exhausted after being outbid on a number of great houses over the course of a year....so a bird in the hand was worth something to us. In this market I would never advise doing this, though. I expect we could have gotten our place at (or even below!) asking had we been willing to wait the seller out.

If a house has had a sale in recent years, it's often pretty easy to extrapolate from the prior sales price and spot properties that are deliberately priced low in an attempt to spark a bidding war. Personally I avoid them like the plague not only because I don't want to get in a bidding war in this market, but also because they often tell me something about the mentality of the seller.

hey tracey..:) thanks for the encouragement. i am not upset about losing the house as i believe that houses choose their owners as well...someone else was meant to live there..its a really nice home and it just wasnt meant for us..however, what shook me was the expectation even in this market and since this was the first offer that we have made EVER! on real estate here, the logic behind it all is a bit little confusing.

i am not going to get into the details, but turns out something interesting happened yesterday which convinced my husband that we were not going to place a higher bid until we hear from the sellers. it was certainly not at all a 50k plus increase in our bid, but better than the 'lets keep one foot on the other side of the asking price' bid. all in all, no regrets and with so much encouragement from this community, its not so bad.

and you were right. bidding wars do occur in this market(i dont remember which thread we touched upon that). i thought you were wrong, but you are a pro! i must also apologise to my poor patient agent who had to endure my lengthy lectures on the phillips curve and stagflation and other boring macroeconomic theory stuff when we first started the search. all that doesnt work in the american real estate market.and best of all, i am learning! its only new the first time!

i have seen the cragmont home..and its gorgeous, but its not for us. we have cats(hence the name) and we need a slightly bigger space. but the cragmont home is going to make someone very proud and very very happy. its a superb designer home.

thanks again for your good thoughts.