This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
After telling the world that assuming your personal financial conditions allow for it, the time is ripe for a home purchase, I started to actively look about a month ago. The process has been an excellent way to experience the highs and lows of the real estate market.
We found a smart and savvy agent, whose greatest asset was that she had entered the real estate market during a persistent period of weakness. She started our first outing by asking what we were looking for and then she said, "I'm going to spend the first half of the day showing you where the market is, so you can refine your search."
We quickly realized that no amount of on-line research can compare with physically walking through a home. After further narrowing our parameters, we found a few excellent options. As someone who was in the business of executing transactions on a daily basis, here's where the process got interesting.
One afternoon, we saw a house that we liked. While there, the owner's agent said something that made me stop in my tracks. "We've gotten a lot of interest in the house, so the owner is considering RAISING the price." I looked at him and said, "Did it occur to you that you're finally getting action on the house because it's within striking distance of market conditions?" This is the moment when we should have walked away, but we didn't.
Here's the seller's history of the house:
•1/2009: House listed at an over-the-top, bull market high price
•4/2009: Price reduced by 30%
•9/2009: Price reduced by 3.5%
The closest comp that I could find was 15% lower than the most recent price. Sure, the comp wasn't perfect, but it's what the appraiser would use, so why not roll with it?
Our opening bid on the house was a big enough number that the seller knew we were serious. Seller then countered with a drop of 3.85% from his offer. We increased our bid to within 12% of seller's asking price, which was a little bit higher than the nearest comp. Here comes the moment of maximum insanity: seller INCREASES his counter by $5,000.
"We're done," I said to our agent. She agreed and we have since moved on to other options. This must be the very definition of how not to sell a house. The big take away: as soon as you understand that the seller is unmotivated and/or crazy, walk away.
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