Has the person that inherited the house had it appraised? Do they know you're interested? Maybe you could negotiate the purchase without it going on the market and without anyone having to pay a commission.

Yes, they know I'm interested, but they are using a family friend as their realtor (so there is no way to cut out the commission). They have not yet set a price, and they will not until they get through the probate process.

There is a home that sold down the street last fall on a larger lot, with another bathroom, and a finished basement that was almost completely updated (new flooring, granite, the HGTV works). So I'm curious about how much condition impacts housing price. As it's family it's a tricky situation, but I won't overpay just because it belonged to a relative.

I agree with pkpk.

By the way, it seems like asking for trouble that the agent is to be a family member. OTOH, it's out of your hands to alter this aspect perhaps.

It sounds like "condition" in this case is mostly cosmetic. I completely updated a large home for sale for less than $15,000 which did not include many hours of work for myself. Every surface painted, mostly new floors, new tile, regrouting, new shower glass, new appliances, new hardware, lighting, etc. So it's not that expensive to bring a 90s home up to date if the structure and mechanicals are good. I would not expect a big discount. Get your own appraisal done if you really want it.

Thanks all for the feedback. I think the fact that many family members believe the house is worth the same as the house down the street (with a finished basement and extra bathroom) is going to be an issue. But, in general I'm pretty interested as I'm checking out other homes (as the relatives home may be more trouble than it's worth) and I've noticed that the homes that have nicer finishes are often 30-40k more than the homes that are functional but not upgraded (and these homes are in the 150-250k, so not high priced in my Midwest city). I was always under the impression that nicer finishes resulted in a faster sale, not a higher sales price, but isn't what I'm seeing these days.

I'm in a sellers market, but it's not a hot market.

There is no standard amount for this. Sold comparable homes in the area have to be looked at to determine a value for updates. If a house has a new kitchen that cost 40k it doesn't mean the identical house with an old kitchen will be worth 40k less. I suggest you pay for an appraisal ( usually a few hundred dollars)' and if you are happy with the number, make your relative an offer before it goes on the market. You relative may not realize the realtor is not needed at that point.

People often overprice their homes. It is natural. I am also in the midwest, and watch the market pretty closely in the same price range ($150 to about $300K) and sometimes it seems like finishes do make a house much more expensive than the neighbors. But those are not like homes to the one you are looking at. You have to look at homes that sold that are in similar condition and same number of beds/baths, similar square footage, etc...

Although a house may be worth what a buyer is willing to spend on it. Is there hope that you can negotiate with the family member who is selling it without destroying your relationship?

Sometimes it just comes down to what the place is worth to you in that condition vs. what it is worth to other buyers. When we purchased our house, which needed work and updating, we knew what items we could DIY to save money. For other tasks, my husband was able to work with contractors he knew through his job, and was able to get more for less money than what the comparable retail/residential price would have been for most homeowners. These advantages put our bid in a stronger position than offers that would have had to allowed for more expensive repairs.

I don't plan on aggressively negotiating. If I feel that the price is reasonable I'll negotiate, but if it's not I'll walk away. I'd like the house, but I am not so emotionally attached to the house that I would buy it regardless of price. And, if the seller feels that she can get more on the open market I don't have an issue with that.

My question is more general in nature though. For example, I went to an open house this weekend for a house that was priced at 185k. It was in good condition, but did need new bathrooms and new kitchen appliances. Yet it was priced between 35-40k more than other houses in the area. Although, I'm not sure how much that has to do with the fact that the realtor didn't seem very competent (I've never met a realtor who didn't know the basics of the house including the age of the roof, etc.).

Keep in mind that the open house home had a higher asking price, but that is no guarantee that they'll get that.

In my market (small town in Midwest), excluding maintenance issues like a new roof or bad plumbing, updated vs. not updated is around a $20/sf difference. That's a very rough rule of thumb, because there are obviously varying degrees of updatedness, but that's a ballpark.

I usually look at sold comps for comparable homes, per sf. So if the home isn't updated, I look at what non updated homes have been selling for per sf that are in same area and close to same size. If all I can find are updated, I use the price and subtract needed repairs and divide by sf . Then I apply that to the home I am looking at.

I'll be interested to see how my realtor prices my house. I've invested quite a bit of money in prepping it for sale (new flooring through the majority of the house, hardwoods refinished, and new gutters), so I will be interested if that increases my homes price or just makes it sell quicker.

Very dated mechanical, electrical or plumbing issues may in some cases be considered deferred maintenance, as will old windows that are on the verge of leaking, peeling paint, rusty faucets, etc.----whether they work or not. Discounts for condition depend on your market area, but I have seen up to thirty percent discounts for a very dated house, because the "functional age" is considered incomparable to the newer and/or more modernized homes.

Most people think their houses are worth more than they are, and whoever said there is not a one-to-one ratio of investment to price is correct. An updated kitchen might be worth $10k to $15k, while a brand new kitchen might be worth $25k, depending on the price range of the homes it is being compared to as well as the market conditions at the time of sale.

Unfortunately, anecdotal numbers are not that helpful because every area is so different.

So a bit of an update. The relatives house is now up for sale. It's listed at 250K, and it is being sold as is (so the roof, gutters, and plumbing are not and will not be repaired or replaced). The last house that sold on the street was in October of 2015, and it sold for 270K (it was about 1000 sq ft larger, it had a finished basement with family room and non-conforming bedroom, and another full bathroom). I won't be buying the house, as I think it's overpriced, but I will be interested to see how quickly it sells to see how much condition really impacted the sales price.

Have you at least told them what your offer would be? Because if it sits long enough, it would be disappointing if they ended up selling to somebody ELSE who put in a lowball offer.

Yes I'd let them know what you're willing to pay for the house. Or contact the agent, let the agent know you're related and tell him/her your final price and to let you know if someone else comes along first.

Yes, I've told them what my best price is and what I expect in terms of repairs -- through my realtor. They are not interested in doing repairs at all, and I won't buy a house that needs an immediate roof replacement. So we are at an impasse. Mostly at this point I'm curious to see how quickly it sells and if it sells for the price they want. If for no other to get a better sense of how the market is behaving for this types of "as-is" properties.

I'm curious why you wouldn't buy the house if you had to replace the roof as opposed to them replacing it?

Just reduce the price you're willing to pay for the house by the price that it would cost to replace the roof. It's not like you'd be up there hauling shingles around. The only effort on your side is calling a roofing company.

I can't afford a 20K outlay of cash, which is the estimated cost of replacing the roof. All my money (aside from an emergency fund) is tied up in my deposit and closing costs. I don't mind buying a house that needs cosmetic work, I can live with ugly and save up and do things as I go. However, I cannot afford something as critical as a roof to be actively leaking.

I understand other people have large sums of money laying around, but sadly I do not.

I guess I was picturing my house that only cost 5 grand to re-roof. I can see why 20 grand would be much harder to come up with.

Can't you ask for cash back at closing to pay for the roof (and possibly other repairs of other issues that had been revealed in the inspection? Then you could use that cash back from the sale to have the repairs done. In the end, if the roof needs replacing someone has to do it. Either the seller will replace it and add that into the cost of the home, or they could deduct that amount from the price. A third option is what I mentioned above---see if you can get cash back at closing so that you will have the necessary funds to pay for the new roof.

Lenders will not hold cash back at closing for repairs anymore. Not since about 2008 here.

The condition of the home is a very important part in determining value so it's important to know exactly what work is needed, the extent and the costs. Plumbing can be a few hundred dollars to a few thousand depending on what needs to be done. A roof replacement can be expensive, as much as $10,000. When we price a home that needs a new roof, we make an allowance on price (reduce the price) to reflect that.

So, get some professionals in there to price out all the work and you will have a better idea.

I just wanted to provide an update as there has been a new development. The estate has decided that they will replace the roof (they probably realized that it would be tough to sell a house with roof that is actively leaking). However, to recover part of the costs for replacing the roof they are increasing their sales price by 10K. In addition, I've also learned that the deck is rotten and needs to be replaced.

I'm no longer interested, as the house is too expensive for me, and I think the price is a little ridiculous. But, I'm very curious to see how quickly the house sells. If for no other reason to see if perhaps my assumption about what the house is worth is completely off the mark.

So many great thoughts in this conversation, that I had to jump in. The price is dependent on many things. The most recently comparable sold homes in the area is the most important, then the factors in the home. Does it need a lot of updating? What will it costs? A professional can give you all that information. I think the biggest problem is that it is in probate. You need to let that process run it's course....it can take time. Find a local contractor, realtor and designer to help with the specifics of this home. they can best direct you.