A question for the real estate agents.

[Big Cuddly Bear]

My wife and I are preparing a bid for a new home. The previous owner paid $637,000 in 2006 - which was at the height of the housing price boom in my area. They are asking $599,000 for it now. It has been on the market since August 2010, with no offers ( so we were told by our agent ).

Our agent has recommended a bid of $540K, which we know won't be accepted, though comps are not that far off for the area. My concern is that that $540K might get the sellers upset, and make them angry enough to not want to negotiate.

Our agents said that since the place has had no offers so far, the sellers will be glad, at least, that someone has made an offer, and be most likely, happy to negotiate.

I sold a 2nd house I owned in 2009. I paid $253K and sold for $238K. I owned it for 4 years. It was rough taking a $15K loss in 4 years after putting $10K in improvements.... a total net lost of $25K.... sure, it hurt, but it was a relief to finally sell it. Though I admit I got a little angry when someone offered $213K.....

Anyway, point being, do you think $540K would be insulting, or would it be a place to open dialog if it were your house?

 

[deegack]

If that's what the house is worth that's what its worth. Don't worry about what they will think about you. You don't want to overpay for a house and if your getting a mortgage you won't be able to get an appraisal for an amount over fair market value.

We will probably lose $50k if we sell our house next year like planned. We dumped 100k into it remodeling most of which we will not see.

 

[sweet angel]

Very rarely is the first bid the final bid. If they're motivated, they'll negotiate.

 

[The Mystery Machine]

My wife and I are preparing a bid for a new home. The previous owner paid $637,000 in 2006 - which was at the height of the housing price boom in my area. They are asking $599,000 for it now. It has been on the market since August 2010, with no offers ( so we were told by our agent ).

Our agent has recommended a bid of $540K, which we know won't be accepted, though comps are not that far off for the area. My concern is that that $540K might get the sellers upset, and make them angry enough to not want to negotiate.

Our agents said that since the place has had no offers so far, the sellers will be glad, at least, that someone has made an offer, and be most likely, happy to negotiate.

I sold a 2nd house I owned in 2009. I paid $253K and sold for $238K. I owned it for 4 years. It was rough taking a $15K loss in 4 years after putting $10K in improvements.... a total net lost of $25K.... sure, it hurt, but it was a relief to finally sell it. Though I admit I got a little angry when someone offered $213K.....

Anyway, point being, do you think $540K would be insulting, or would it be a place to open dialog if it were your house?

Not an agent however what do you think it will appraise for?

If it comes in under your accepted amount are you willingly to cough up the cash to cover the gap?

Go with what your agent suggests and if they boot you, then you get booted. If they REALLY want out of the house they WILL negotiate.

Now they could sit on it because the market will start up again in Feb. I guess it depends how much you want to gamble really and if you can afford another market drop.

 

[ameraumi]

I would start my offer at about 10% lower than the asking price. If your agent has pulled comps to compare selling prices of other houses in the area use that as a tool.

I have a house for sale now and I am hoping for an offer. I am already going to take a hit on improvements that were made (new windows and floors - $5k there) and I know the house is going to sell for about $5-10K less than what we paid for it. (much lower COL here)

 

[bellarella]

I would start my offer at about 10% lower than the asking price. If your agent has pulled comps to compare selling prices of other houses in the area use that as a tool.

I would not even think about what percentage of the asking price you are offering. The house is what the house is worth. This often has very little relation to what the seller thinks it is worth.

Don't worry about offending the current owner. If you bid is in line with comps, then that sounds like the right bid. If it is higher than them and there isn't a justification for why this house should sell for more than the comps, I would lower your offer.

If the current owner is offended, that is their problem. If they won't deal with you, then you just need to walk away. You don't want to pay more than a house is actually worth. It's easy to get emotionally attached to homes, but try to resist the urge.

 

[tvguy]

The comps, and how much you are willing to spend for it are all the matters.
This is a business deal, not a popularity contest.

There are a lot of strange things happening in real estate right now. We had someone on our street reject an offer $35,000 higher than another, because the higher priced offer came from someone needing a mortgage, and the lower offer was cash. They didn't want to deal with all the hoops they would have to jump through with a lender.

And a co-worker is selling short, and her lender exercised their option to declined an offer $20,000 over the listing price the lender agreed to. No reason was given. If they agreed to the price, why aren't they letting the sale go through?

 

[tlbwriter]

If the current owner is offended, that is their problem. If they won't deal with you, then you just need to walk away. You don't want to pay more than a house is actually worth.

Exactly. People worry so much about sellers being "offended," but why would you offer more than a house is worth simply to encourage the sellers to negotiate (which could only go up)?

 

[Lisa loves Pooh]

I am not a real estate agent--but we did buy a home this year that took a significant hit in value.

My thoughts when we were looking...

Foreclosures were easier than short sales/regular sales as banks have no emotional attachments. We had much better bargaining power (multiple bids--I think we bid on FOUR homes!) with someone who was ready to dump the property versus someone still attached to the home.

The home's original value meant nothing to us--it doesn't matter what it used to be worth. That isn't an excuse to insult a homeowner, ever! If they are realtor listed, then there is something behind the number they came up to sell the home. Now--they may have listed it high....but they had someone helping determine that value, whether or not it is real.

LISTING TIME--meant a lot....the homes condition meant a lot....

The home we got, for the area...had been listed a month and wasn't moving. It had major cosmetic issues on the interior that I felt strongly were affecting it being able to sell. We got our bid in which we thought was a very fair offer (I think we offered $10K less on a home in the low $300s). Evidently they didn't like that offer as they had another offer, so we walked. We had no interest in being in a bidding war as that hadn't worked out for us. We offered a fair price that was as much as we could afford.

Well it turned out that offer was from someone trying to "take advantage" of the situation. They had offered an insulting offer. Now--had we not offered, the bank might have played--but they realized that they had a decent offer that they let walk. After they turned down the other guy, they contacted our realtor to see if we were still interested. Let us just say that it benefitted us in negotiations. We didn't get what we originally offered, but they nudged it a couple of bucks and then gave us closing costs.

So don't be insulting--even in a buyers market, folks will be insulted. You can use their situation to your advantage without insulting them.

Has your realtor pulled comps to justify the $540 offer? Certainly, their selling agent will be pulling comps to know if they should tell you to take a hike. You can't negotiate if you don't have facts about what is moving and not moving in the area.

For us--we knew we had to paint the interior--it was FILTHY and beyond what a magic eraser could do. So that was part of our negotiation--we had to save cash to do that and any repairs that came up on inspection.

You can use the home's condition to your advantage. But justify why you are making an offer.

And yes--you can use the home's lack of being sold to your advantage--


I don't think that we on the DISboards can offer you a fair answer without knowing the homes condition and what comps are going for in that area.

ETA: Our home did appraise for more than the sales price--

 

[Big Cuddly Bear]

LLP.

I think that this home is in excellent condition. We went through it 3x in the last 10 days, and I still can't see anything wrong with it.... though I know there will be if we move in, as sometimes there are thing you just never know about until you live there.

We must have looked at 25 houses in the last several months, and there was never a house that EVERYBODY thought was a great choice UNTIL THIS ONE. We respected the opinions of our kids, even.

We had it narrowed down to 2 choices, and the other home was $60K less as a starting point. We then said, well, if we did $60K in upgrades and work to the home, which home would we prefer? And it was still the one I was talking about in the OP.

As far as places to live, I am pretty easygoing. I could have easily seen myself being happy in about 15 of the 25 homes we saw. But this house just feels "right".... and I would love to see the whole family agree on, and enjoy the house that everybody loved.

 

[kirstenb1]

Prices in most of Va have really taken a tumble. There's a house in our neighborhood that sold for 600k at the height of the market. It is for sale now, and I think they'll be lucky to hit 450. And they added a detached 2 story 2 car garage, giving them a total of 5 car garage. This market is just dreadful!!

Look at recent comps and go from there.

 

[rie'smom]

When DH and I looked were looking for a house, we found one with the asking price of 210000(this was 1986). We offered 140000. They countered at 170000 and we bought it.
I'd offer what you're comfortable with and the sellers will either counter or say no.
One homeowner I know was offered 275000 on her 320000 asking price. She told the potential buyer, "Come back when you're serious." The buyer walked off. The house stayed on the market for 2 more years and sold for $240000. There's a saying " Your first offer may be your best offer", hopefully your seller will feel that way.

 

[Lisa loves Pooh]

LLP.

I think that this home is in excellent condition. We went through it 3x in the last 10 days, and I still can't see anything wrong with it.... though I know there will be if we move in, as sometimes there are thing you just never know about until you live there.

We must have looked at 25 houses in the last several months, and there was never a house that EVERYBODY thought was a great choice UNTIL THIS ONE. We respected the opinions of our kids, even.

We had it narrowed down to 2 choices, and the other home was $60K less as a starting point. We then said, well, if we did $60K in upgrades and work to the home, which home would we prefer? And it was still the one I was talking about in the OP.

As far as places to live, I am pretty easygoing. I could have easily seen myself being happy in about 15 of the 25 homes we saw. But this house just feels "right".... and I would love to see the whole family agree on, and enjoy the house that everybody loved.

That is the other thing to keep in mind--if they know you love it that much, then negotiations are in their favor.

We decided on our own bids and used our realtor to let us know if the bid was good or not. We did lots of research and were able to draw our own conclusions and not once did our realtor tell us we were bidding too much.

Additionally--the poster above just posted about Northern VA real estate. That is where we bought.

The one thing--the real estate tumbled, but if properties are listed for fair market value, then there is wheeling and dealing of buyers. We bid on 4 homes total--and 3 of the 4 were bidding wars and the one we got--was going to be a bidding war until the seller realized the other offer was terrible. ETA: One of the homes--we bid for asking price plus closing costs. We were one of two final bids in consideration--the other bid netted the same outcome, but on paper, they offered a higher price, but no closing costs.

It doesn't seem you will have the problem with the house you like since it has sat unsold since August. Again--that is in your favor.

The gamble is--if you bid too low but you love the house so much--would YOU be upset if the seller didn't want to deal with you at all? That should tell you if your offer is too low.


When you say comps are not too far off of the $540--how much is not too far off?

Are you asking for any additional money--closing costs for example?

 

[Big Cuddly Bear]

Well, homes vary in size widely in the area, but looking at comps, we figure that this how is about $30K more than what it should be. But who knows how nice the other homes are inside. This one is pretty spectacular, in our opinion.... lots of upgrades, and we even like all the colors, so we won't even have to paint - except for one room which was obviously used as nursery at one point.

We're not asking for anything else as we just want to pay a decent price.


A few things we wanted are already in the home and staying.....

1. a 6 six seat home theater - with stadium seating - 2 chairs per row

2. invisible fence

3. a garden sprinkler system - which I never would have cared about before, but last year we had little rain, and it ruined our whole yard.

Yeah, "I" would be upset if they were offended and just didn't want to negotiate. That really was why I posted this thread. But we're taking the advice of our agent and giving an opening bid of $540K. She's supposed to know best, right?

 

[Lisa loves Pooh]

Well, homes vary in size widely in the area, but looking at comps, we figure that this how is about $30K more than what it should be. But who knows how nice the other homes are inside. This one is pretty spectacular, in our opinion.... lots of upgrades, and we even like all the colors, so we won't even have to paint - except for one room which was obviously used as nursery at one point.

We're not asking for anything else as we just want to pay a decent price.


A few things we wanted are already in the home and staying.....

1. a 6 six seat home theater - with stadium seating - 2 chairs per row

2. invisible fence

3. a garden sprinkler system - which I never would have cared about before, but last year we had little rain, and it ruined our whole yard.

Yeah, "I" would be upset if they were offended and just didn't want to negotiate. That really was why I posted this thread. But we're taking the advice of our agent and giving an opening bid of $540K. She's supposed to know best, right?

So realtor says offer $49K less and you think $30K less......

meet in the middle? Offer $39,500 less? ($19K gap divided by 2) as long as comps support it.

They could be "overdone" for their neighborhood which perhaps is why realtor is suggesting a lower offer than what you feel is fair.

 

[The Mystery Machine]

Well, homes vary in size widely in the area, but looking at comps, we figure that this how is about $30K more than what it should be. But who knows how nice the other homes are inside. This one is pretty spectacular, in our opinion.... lots of upgrades, and we even like all the colors, so we won't even have to paint - except for one room which was obviously used as nursery at one point.

We're not asking for anything else as we just want to pay a decent price.


A few things we wanted are already in the home and staying.....

1. a 6 six seat home theater - with stadium seating - 2 chairs per row

2. invisible fence

3. a garden sprinkler system - which I never would have cared about before, but last year we had little rain, and it ruined our whole yard.

Yeah, "I" would be upset if they were offended and just didn't want to negotiate. That really was why I posted this thread. But we're taking the advice of our agent and giving an opening bid of $540K. She's supposed to know best, right?

Let's put it this way, I would consider it unusual for a realtor to go very low because let's face it their salary is tied to the house sale.

If you think it is 30K off and your realtor is below that you still might be overpaying. That is something to think about.

Plus you don't have the inspection yet. How old is the flooring, roof and furnace/AC? You might find that you have to sink money into it and thus your "price" is now going to go up and now you have overpaid for the house.

Just something to think about.

 

[tvguy]

Plus you don't have the inspection yet. How old is the flooring, roof and furnace/AC? You might find that you have to sink money into it and thus your "price" is now going to go up and now you have overpaid for the house.
.

I thought it was standard practice for an purchase offer to specify that any defects found during an inspection are the sellers responsiblity to fix at their cost. If they refuse, the purchaser can walk away without penalty.

That clause has been in every purchase offer I have made, and received.

When we sold my MIL's house after she passed away, the buyer wanted specific changes made to a remodel because he said it did not meet code, as well as some repairs made to dry rot. Because it was a probate sale, and we had never lived in the house, we were exempt from dislosure laws. We countered that we would repair the dry rot( the law required it actually), but we had no knowledge of how the remodel was done, and that he might want to contact the person who did the work to find out regarding whether it met code. Oh, did I mention the buyer was the one who did the remodel for my MIL? Our counter offer was immediately accepted.

 

[Big Cuddly Bear]

When DH and I looked were looking for a house, we found one with the asking price of 210000(this was 1986). We offered 140000. They countered at 170000 and we bought it.
I'd offer what you're comfortable with and the sellers will either counter or say no.
One homeowner I know was offered 275000 on her 320000 asking price. She told the potential buyer, "Come back when you're serious." The buyer walked off. The house stayed on the market for 2 more years and sold for $240000. There's a saying " Your first offer may be your best offer", hopefully your seller will feel that way.

Well, I have my own story... I offered 190K to a lady across the street for her home. She listed it at 210. She also HAD TO BE MOVED IN to her condo by a certain date or face penalties.... she turned me down... I bought the other home I mentioned. Her house sold 3 months later for 174K.

 

[Big Cuddly Bear]

Let's put it this way, I would consider it unusual for a realtor to go very low because let's face it their salary is tied to the house sale.

If you think it is 30K off and your realtor is below that you still might be overpaying. That is something to think about.

Plus you don't have the inspection yet. How old is the flooring, roof and furnace/AC? You might find that you have to sink money into it and thus your "price" is now going to go up and now you have overpaid for the house.

Just something to think about.

The whole house is only 11 years old, so most should be fine. At least I would hope.

 

[tlbwriter]

I thought it was standard practice for an purchase offer to specify that any defects found during an inspection are the sellers responsiblity to fix at their cost. If they refuse, the purchaser can walk away without penalty.

That clause has been in every purchase offer I have made, and received.

We used a different clause, which I believe is more common in my area - our offer was contingent on a satisfactory inspection. The sellers were not given the option to lock in our offer by making their own repairs, because we'd rather have them done on our own (sellers have an incentive to get them done cheap and not necessarily well). So if a house needed $5000 worth of repairs, rather than have the sellers do it, we'd lower our offer by $5000 and explain why. Or, since the inspection was not satisfactory, we had the option to walk away and keep our earnest money.

BTW, to the OP... my house is 11 years old and most things are still working fine, but in the last year we've had to replace the worn-out motor in the dishwasher and replace the water heater (interestingly, our neighbors, whose house is the same age, had the same issues in the last year). This house is at an age where things *may* begin to need repair, so have it inspected thoroughly.