When making an offer...

Do you think when you sell it should matter? Or will you hope to get a similar increase in price? That is actually a very modest increase compared to a lot of other places. In Bburg I see all sorts of 100% increases over a few years.

1. seller's cost is irrelevant to current market value
2. if you raise it with them you might offend them

Could be a reason it appreciated other than renovation work- it could be in a hot neighborhood (that level of appreciation even off the 2008 peak would not be unusual in Williamsburg or Cobble Hill); it could be the building raised its revenue/lowered maintenance on a factor that is sustainable.

Your concern is not what seller paid but how the price compares to recent sales and others on the market. If it's higher than recent sales and offerings on the market, it probably won't sell at asking. If it's priced at market, then it's a reasonable price, regardless of what the seller paid or what renovation they did or did not do.

It is a small building so there are few recent sales in the building. It is still $400 a sq foot more than the most recent sale that was larger and had outdoor space.

What building is this in?

tbw - we have a similar situation; saw this place http://streeteasy.com/building/87-east-2-street-manhattan/5d over the weekend, and it was really nice but way above psf versus most of the sales in the area. It is one of the best one bedrooms we have seen, and we do like the neighborhood, so the real question is whether we should care about "comparables" from the perspective of units sold in the same building (but not remodeled, no views, etc) or from the perspective of other one bedrooms we have seen in downtown Manhattan. We would hate to overpay, but at the same time we have seen enough one bedrooms with multiple problems, and this one really appeals to us.

Think about this way... What if they paid $1.4 million and listed it at $1.2 million. Would you consider what they paid and adjust your offer upwards? What they paid should have zero bearing on your offer or the amount you would be willing to buy a property for.

yeah but you can understand why OP wants to resolve to the price paid in 2008. Answer is to have a 2nd analysis to understand why Seller got that price or why that was the market in 2008.

Past purchase price (greater that 6-9 months) is irrelevant in determining market price today.
Peaches go for about $3.49/pound today because it's the end of the winter and they come from South America. By mid summer peaches from Jersey will be more juicy and delicious at $1.29/pound. What happened is supply and demand.
Focus on the here and now.
Price today only depends on the MOST recent comparisons.
The better the comparisons the more accurate the valuation.
The key is to recognize appropriate valuations on desired properties so that you can pull the trigger fast with sane reasonable counter offers that lead to a final sale.
Appropriately priced properties remain on the market for very short periods of time. Under priced properties get a lot of attention and can lead to bidding wars. This is a common RE strategy under certain market conditions. Over priced properties remain on the market until the price is adjusted accordingly.

While I agree with everyone that its today's markets and recent comps that matter, its also true that there may more room for negotiation with a seller who bought years ago and stands to make a huge profit regardless of whether the price is $25k or so higher or lower versus someone who bought at the top of the market and is hoping to at least break even. On the other hand, from what I'm hearing about current market conditions any "room for negotiations" is likely to be a small one with demand so high relative to inventory in most areas/segments.

NativeRestless, are you saying that peeps in this town who bought, back in the day, at peanut prices are much more willing to take a lower price today than actual market value just because they're making so much money it really doesn't matter? Do old people sell cheap because they know they don't have long to live and don't need much money?
I just did a street easy search of Fantasy Land and got zero hits.

>>its also true that there may more room for negotiation with a seller who bought years ago and stands to make a huge profit regardless of whether the price is $25k or so higher or lower<<

Disagree. Many folks who've been holding a long time have an over-inflated idea of what their apartment is worth.

Also, someone who bought years ago may have an apartment in need of updating. When you live in a place, you get used to the flaws and don't see them. Many owners will remember spending a lot on renovation back when they moved in. Later, they want to call it "renovated" even though they did it 20 years ago.