'Firm' price real estate- what's that mean?

Discussion in 'Homesteading Questions' started by Jenn, May 13, 2006.

  1. Jenn

    Jenn Well-Known Member Supporter

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    'Firm' price real estate- what's that mean?

    Got word from a man saying he now will only sell a place for $X, firm, for the house plus a large acreage (planted with a tree crop). Previously he was asking $Y, probably fair list price, for the house and a few acres. $X-Y means he values his land at around $5000/acre! (which is out of line from what I can see for the area) (And I can't really afford $X anyway.)

    What's the worst that can happen if I make him an offer of what I can afford and think it's worth? I suppose he'll be mad I even asked to look at the house? Or is this just a clear message he's happy to stay put unless he meets an imbecile with money to squander and I should only look at the house to get the 'sour grapes' consolation (hopefully) of seeing we probably wouldn't want it for other reasons anyway?
     
  2. mysticokra

    mysticokra Well-Known Member

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    It's posturing. By stating a firm price he's basically saying he's reserving the right to storm off in a huff when you offer him something lower.
    So what. The worst he can do is say no.

    But, here's a tactic with a "firm offer" guy. Say something along the lines of "I assume when you way that your price is firm, that what you really want is a fair valuation for the property. Is that correct?" (Wait forever for an answer.) When he says "yes" reply, "So, if I can find a way that will let us both achieve our goals, mine being owing the property at a price I can afford and you getting a fair valuation, would you be open to discussing the matter?"

    If he says "no" you're done. Go on to something else.
    But anything else means that it's "shopping list time". Draw up a long list of features that you have noted about the property and put a value on them.
    Total it up and see if you can still afford it. If it is greater than or equal to his asking price and you can afford it, buy it.

    But assuming it is less than his price begin the discussion on each item.
    At some point you will wear him down. If not,

    YOU MUST THEN BE PREPARED TO WALK AWAY FROM THE DEAL.
    It is at walking away time that he really decides how badly he wants to sell it.
     

  3. Jenn

    Jenn Well-Known Member Supporter

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    Thanks mystic! Brilliant! Then I can say or later write to him 'your house is worth about $Y and your acres with crop are worth $3000/ (or whatever), wooded ones $2500/ based on these sources, and that totals $Z which I would be willing to pay, and make now to you as an offer."
     
  4. Wolf mom

    Wolf mom Well-Known Member

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    I'd suggest that if there's going to be a mortgage on the property, it doesn't matter what he wants - it's what it'll appraise for. :shrug:
     
  5. uncle Will in In.

    uncle Will in In. Well-Known Member Supporter

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    There are many people who put property up for sale just to see if someone is goofy enough to pay what they ask. They aren't really interested in selling the place unless the price they get is sky high. I know people who put their place up for sale not too long after they buy it. They set a price that will line their pockets, and don't sell until they get it. It may take two or three years or possibly never, but they usualy get it unloaded.
    It's like the advice old horse traders used to give the newcomers. No mater what the horses are worth, never trade unless you get some boot.
    Fits in with, "A fool and his money are soon parted!"
     
  6. Obser

    Obser "Mobile Homesteaders"

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    Jenn, a "firm" price on anything tells me that the seller wants me to THINK they will not negotiate price -- and that is ALL it means. When "money is on the table" they may be quite willing to negotiate -- or they may not -- 50-50 I'd say (or maybe 60-40 in favor of negotiation in my real estate buying experience).

    People often price their property higher than the market justifies. Sometimes someone comes along who is willing to pay the price (for whatever reason). Most often, however, overpriced property languishes on the market until prices in the general area rise enough to bring the price into line with reality OR the owner gets tired of waiting and decides to accept a realistic offer.

    Yours could be that offer. You have nothing to lose by making an intelligent offer (just be careful about where the "earnest money" goes). If the sellers get upset, that is their problem, not yours.

    Remember always, take off the rose colored glasses. Any property you consider is NOT the last or necessarily the best that will be available. Establish in your mind the maximum price you are willing to pay and DON'T deviate from that decision.

    Another approach used by some derives from the old business adage, "You set the price, I set the terms". I have purchased overpriced property by offering the seller's full asking price -- on my terms, which might include owner financing with low down and low interest over long term.

    This let inflation reduce the value of the dollars I paid over several years. It also allowed time for real estate prices in the area to climb during the term of the mortgage (while I had little money invested). The net effect was the same as if I had purchased the property at a realistic price, BUT the seller thinks they got a great price (which would have been true if they had received cash).

    Of course, some of the latter is a bit speculative, depending upon real estate prices locally (which may be in flux right now and possibly headed down), and upon interest and inflation rates and trends.
     
  7. swamp man

    swamp man Well-Known Member

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    Mysticokra is right on,and Wolf Mom brings up a very valid point,as well.I wouldn't worry a bit about making what you feel is a reasonable offer,even if the seller get's irritated.With almost any real estate deal,you run into tons of tire kickers before you complete a transaction.If the seller doesn't understand this,it aint your fault
    As for the tree crop,are we talkin' about fruiting trees,timber,or just firewood?How many trees,what kind of trees,and maturity can make a big difference in land value,and it can also make none,at all.Personally,I'd place no value whatsoever on freshly planted trees,as they are fairly inexpensive to plant yourself,and aint bringing anything to the party yet.I'd ask for an appraisal,and go from there.Like the other posters said,be prepared to walk away.
    Good luck.
     
  8. MarleneS

    MarleneS Well-Known Member

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    So much for the idea that when someone says the list price for their property is firm meaning that they do not have a great deal of time nor desire to waste reading offers from people who wish to wheel and deal.

    Marlene
     
  9. Shadow

    Shadow Well-Known Member

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    We have sold and bought several dozen pieces of property over the past years. When property is hot and the market is going fast we base our thinking on its worth it buy it. If we are selling and we always do our research and know what it will appraise for and what banks will loan on it we set a reasonable price and when we say firm that means don't waste our time or yours. If you think the property is way out of line and you don't think the people have to sale go on to the next property. If you can't afford the price go tothe next property. Right now we have a fifty acre plot that we are in the process of having the house removed. When it is vacant we will put it up for sale it appraised for 110,000 we will ask 100,000 thats a fair price and its FIRM. Now would we consider financing options, trades, sure but we are expecting to get our value.
     
  10. Jenn

    Jenn Well-Known Member Supporter

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    S & M- I would guess they might have had (this time or previously) too much bother from people asking if they'd sell for a lot less, since I think they've been on the market (and have changed ads and what they are selling- just house, +/- part farm, now larger part or whole farm, etc) for a while. And firm may indeed mean that if I offer less that they will not even respond.

    However if I like the place but feel that I'd be a sucker to pay their price I may risk their wrath and offer- nothing ventured nothing gained- and the advice from all of you is helpful.

    Sw the tree crop is several years along so if I like the place I'll have the difficult (FSBO but my realtor may not know ag anyway) task of deciding if it IS worth the asking price, or what. And whether the true ag value is worth it TO ME since I want a house with land not a full time job farming is another issue altogether. Reading some extension stuff says the crop can net $300/acre/year but I assume that means not counting paying the farmer for his/her labor. At $300/acre earnings that counts one acre is worth $10,000 in the bank to me but not if I do 20 hours of work per each acre to get that each year- at only $5/ hr for my labor then it's only worth $7000 in the bank, lot less if I value my labor higher. Guess I can make him show me his farm accounts if the trees are actually cropping yet.
     
  11. Unregistered

    Unregistered Well-Known Member

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    Maybe firm means different things to different people. When I say firm, whether on an egg or a house, that means I have set the price I want. Any other offers and the conservation is over. Don't waste my time or yours.
     
  12. Bluecreekrog

    Bluecreekrog Well-Known Member

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    Might also have it listed as firm to discourage a lot of low ball offers.
     
  13. CountryBeth

    CountryBeth Well-Known Member

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    Why don't you just look at the place first (sounds like you haven't)? Looking at it will at least give you an idea if it's even worth considering, THEN consider the price?
     
  14. texican

    texican Well-Known Member

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    Jenn, I see you're in England, and assume the land your looking at is in England also. If you were in the States, I'd warn you about relativistic land prices... what land hereabouts goes for is a fraction of what land in CA or FL goes for... a neighbor had their property for sale for several years, at twice the going price for land... no local wanted it at that price, and the adjoining neighbors thought they'd pick it up sooner or later, once the owners realized it was too high... Well, a Californian was visiting relatives, saw that it was for sale, and picked it up with 'pocket cash'... Painted it, cleaned the fencerows, spiffed it up a little, flipped it to another Californian, and the current owner thinks they stole the place... So what you think is high, may be low to someone else, from a different part of the country...

    What kind of trees? are on the place? I take it nut crops of some sort? Hazelnut? 300$/acre sounds good, depending on non-labor inputs needed for production. I have over a hundred acres of plantation, but the only time there's a payday is when the trees are harvested... :Bawling:

    My advice....for what it's worth... do you like the land? Have you wandered around on it? Does the land call out to you? Do you get the warm fuzzies when you see it? Are there any axe-murderer neighbors? These are the things I'd be thinking about! Price is important, but if everything else fell into place...well, I'd seriously consider buying it...
     
  15. Jennifer L.

    Jennifer L. Well-Known Member Supporter

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    Firm to me means firm. You look at the place, and if you want it, you pay the asking price. Yes, you can offer less, but it can't be much less or you'll just be wasting time. The people selling have reasons for the price they are asking, and not all of it may be actual "value" of the land. In this case, you have a tree crop, and you probably can't value that land next to other land in the neighborhood since the trees go with it. Remember, a tree crop is a long time crop. There's a lot of money in the form of growing time already on the place.

    Jennifer
     
  16. Jenn

    Jenn Well-Known Member Supporter

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    Tex- I'm moving to AL and that's where the property is.

    I think firm may mean they'll say no to anything lower, or that they think I may not have the money or anywhere near the money so hope to avoid wasted time, and also that if I think they are over local values (diff with crop etc to decide) that may well be true but they still won't accept a lower bid because they'd rather wait (and maybe never sell) than sell for any less.

    The market value of anything is that at which it actually sells (buyer and seller agree the price), not the listed price or offered price or even the sales or list price of similar or identical things. I've certainly learned that as a contractor over here.

    CBeth I will look the place over- it might be worth twice the price to me, who knows.