# How to bid on a house?



## scorpion_ca (Nov 3, 2014)

My sister is looking for a house in Calgary. The asking price was $348,900 but the city of Calgary assessment value is $364k. At first, they offered $340k with inspection and financing conditions but it didn't work. So, the realtor asked them to increase the price to $350k that is above the asking price. However, they did not get the house for $350k price. Couple of questions - 

- How to bid on a house?
- How to determine the market/real value of the house?
- How to negotiate price?

Don't have any idea. This is the first time we are in real state market. Any suggestion would be highly appreciated.


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## none (Jan 15, 2013)

There is always another house. Wait it out and offer 330K in a few months.


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## Just a Guy (Mar 27, 2012)

It's really very simple.

1) know what you can afford.
2) figure out what is the most you're willing to pay
2a) Make sure #2 is lower than #1
3) ignore everything else. Other values you're presented with, your realtor who wants to get paid, your emotions which say you "really, really, really love the house and there will never be another one like it...".
4) offer less than #2 so you have some room to go up
5) be prepared to walk away if it goes above #2, despite all the pressure you'll get from things listed in #3. 

There are lots of houses out there, I never get into bidding wars. I often buy well below market. No house is ever perfect, even when custom build, you'll want to make changes. Realtors will put pressure on you and use all sorts of tricks to get you to spend more than you should (yes, there are exceptions, but these guys get paid on commission). 

Any "assessed values" are meaningless. They are just a guess as to what the price should be, the *only* time you know what a property is worth is the day someone hands you a cheque for it. If you paid $500k for that house, when it was listed at $350, it doesn't make that house worth $500k, it means you were stupid and overpaid. It's unlikely you'll be able to sell it for $500k, but the tax department would likely assess it at $500k because the sales data supports it. I've bought many properties which have sat on the market for months at really low prices. I've fixed them up, then asked the banks to finance them. Often the appraisal comes in at 50-100% higher than what I paid, which I truly don't believe. Yes, I've improved the property, but no one was willing to buy the property at half price before...but it's in the bank's best interest to appraise high so that they can lend more money. I usually appeal the tax appraisal, stating the purchase price as proof they assessed too high. It's in my best interest to get that number down, so I pay less taxes. Often I've got a tax assessment which is 50% of a mortgage assessment on the same property. The numbers are meaningless.

People who can't control their emotions will overpay, and probably regret it later.


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## kcowan (Jul 1, 2010)

We bought a house in London for 21% below asking price. It had sat on the market without a bid. It was a marriage breakup and settlement was due in 2 weeks. The realtor refused to present the offer until I said I would find one that would.

Fixed it up during the 2.5 years we lived there and sold it the same day for 45% more, even though that was above the highest price sold in the neighborhood.


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## fraser (May 15, 2010)

Assessment values in Calgary are often higher than market. Do not be fooled/misled by this. We owned a home in Calgary for 13 years...the assessed value was always higher than market value.


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## Just a Guy (Mar 27, 2012)

There are some towns and cities where they purposely assess all places high, it's to avoid appeals. As taxes are based on values relative to your neighbour, it doesn't make you pay more in theory. Of course, if you just appeal, with no comparables, they say "well others in the area are higher, so if you appeal we'll raise your value". When I appeal I make sure I've got a list of similar properties which have recently sold for less.

It's all a game, stacked against you usually.


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## CalgaryPotato (Mar 7, 2015)

Assessment values right now are based on valuations from last summer, last summer the market in Calgary was in a major bubble which has since burst. Most houses in Calgary are worth less than their assessment value right now. (A year ago most houses were worth more than their assessment value)

Also right now Calgary values are really hard to figure out, because even though houses have dropped they haven't dropped that much, but there are a ton of houses on the market. It's a big game of chicken right now, a lot of people wanting to sell but not quite desperate enough to lower much, and a lot of people who want to buy at a discount rate. I think there are a lot of really low ball offer right now. I'm actually quite surprised to see such a firm rejection of an offer within 10K of the listing price.

All you can do, is look at comparables, in the same or similar areas that have sold recently to try and figure out market values. It could be a wide range right now though. 

But a lot of people undersell houses and a lot of people oversell houses. Don't always assume you have to go 10K lower to get a good price. Look at a lot of houses, and you'll begin to learn what you are looking for and what a good price for it is.


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## scorpion_ca (Nov 3, 2014)

Just a Guy said:


> People who can't control their emotions will overpay, and probably regret it later.


I totally agree with you.


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## scorpion_ca (Nov 3, 2014)

fraser said:


> Assessment values in Calgary are often higher than market. Do not be fooled/misled by this. We owned a home in Calgary for 13 years...the assessed value was always higher than market value.


The assessment values of most of the houses on that area are higher than the asking prices. We offered $1,100 more than asking price, which was less than assessed value though we didn't get the house.


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## OurBigFatWallet (Jan 20, 2014)

- How to bid on a house? Don't. Bidding is almost always based on emotion and you'll regret overpaying if you "win".
- How to determine the market/real value of the house? Look at comparables in the area that have sold (not just listed) in the past few months
- How to negotiate price? Buy based on what you can afford and don't go above that amount. For affordability forget what your bank says - they'll lend you more than you should be spending


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## scorpion_ca (Nov 3, 2014)

OurBigFatWallet said:


> For affordability forget what your bank says - they'll lend you more than you should be spending


Yup, approved mortgage amount is $450K....bank wants us to be their slave


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## dogcom (May 23, 2009)

You may also be looking at the wrong time of the year when many want to close and move before the new school year starts. Also people will be going on summer vacations and would like to do their house hunting and buying during the spring. 

Next do you think we are going to see a big upturn in oil and the economy coming real soon? I don't think there is any rush from this so waiting and letting the deals come to you makes more sense.


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## nobleea (Oct 11, 2013)

dogcom said:


> You may also be looking at the wrong time of the year when many want to close and move before the new school year starts. Also people will be going on summer vacations and would like to do their house hunting and buying during the spring.
> 
> Next do you think we are going to see a big upturn in oil and the economy coming real soon? I don't think there is any rush from this so waiting and letting the deals come to you makes more sense.


Best time to be a buyer is November/December. Here is a chart for Edmonton, but Calgary will see the same seasonal trends.
http://edmontonrealestateblog.com/files/2015/02/AveragePricePerSquareFoot1.png
You'll pay on average 5% less if you buy then, rather than in the summer.


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## dogcom (May 23, 2009)

Sounds about right to me, so waiting sounds like a great idea. You will also find better deals for cars in November as well as dealers try to clear their lots for year end and making more way for the newer models.


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