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Posted On: 10/19/2016

Question: We recently bid on a property and offered substantially less than the seller wanted. The problem is not the house and it's really not the sale price, it's our local market. We live in an area where homes often are for sale for months if not years. One local home – a very nice house – has actually been for sale for five years. Our worry is that if we buy at today’s market price, then down the road we will be stuck with either a home that does not sell or a house that sells at a big discount. Either way we lose. Is this thinking unreasonable?

Answer: Nobody wants to pay more than they should for a house. When looking at home prices you have to consider the recent sale of like properties in the same neighborhood.

In your situation, you're looking into the future of a market that does not yet exist. It's possible that it might resemble today's situation, but it's also possible that things will change. Maybe five or ten years down the road homes in your area will sell instantly and for premium prices. Or maybe not.

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The real question you're raising concerns the issue of risk. Like stocks and bonds, real estate is a commodity. Prices go up or down. You want to limit your downside exposure and that's not unreasonable, however there's always risk. There's a risk if you buy and values go down and there's also a risk if you don't buy – prices could move higher or interest rates might rise.

The odds are very good that homes in your neighborhood are already discounted. The evidence is simply that quick sales are not the norm. What you're seeking is a further discount.

Is an additional discount justified? There's no way to know. If the property continues to be for sale at the current price, then the case for a discount grows. Alternatively, if the owner quickly sells at the list price or something close, then he or she does not have to bargain with you, the matter is settled.

In this situation you would be wise to remain on good terms with the seller and the seller's broker. There's a very good chance that a quick sale will not take place in a slow market. If that turns out to be the case, then maybe both buyer and seller can sit down and talk about a middle ground, a deal where the price comes down but perhaps not as much as you want.

Should you take such an offer? That's up to you, but any discount should offset at least some of your worries regarding future market trends, lower your down payment requirement, and reduce your monthly ownership costs. Such a combination of benefits may ease some of the concerns you feel.

Peter G. Miller is author of "The Common-Sense Mortgage," (Kindle 2016). Have a question? Please write to peter@ctwfeatures.com.

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