Making an offer on a house question

[kdibattista]

DH and I are thinking about putting in an offer on a home that we both really like. It's listed at $319,000 but has been on the market for several months. I'm just curious how much lower than the asking price would you offer? 6 months ago we would have been offering that (or more) because houses were being sold in a matter of days (if not hours after listing) but it has been pretty slow couple of months around our area for real estate.

Anyway, although the location and taxes are unbelievable, the house needs updating. I don't want to insult them but I want to be fair any they seem pretty anxious to sell.

Just curious what you guys think.

 

[auntpolly]

Try to find out what your market is like. Every place we've moved it's been different. Some areas of the country, every offer would be considered, and in others, 10% less would be insulting and the people won't even counter. In the end, I'd offer what I really think the house is worth to me and see what happens.

 

[jel0511]

I'd offer around 5 - 10% less. If they feel it's insulting and don't even counter, you can always raise your price.

 

[auntpolly]

I just noticed you are in the Philly suburbs. I used to live in Chester County (years ago) and I think I remember that being a little "freer" - people would deal a little more. We offered much less on a couple of houses and ended up getting a better deal on our house because of it.

Here in the Cleveland area -- we offered 20% lower on a house and the people wouldn't even talk to us after that they were so insulted -- stupid thing was, they ended up getting less than that!!!!

 

[vernon]

Personally I'd never be insulted with any offer. If the property hasn't yet sold it would suggest to me they are asking too much for it. A house is worth what someone is prepared to pay for it, they have the option to accept, decline or haggle with the offer. But if yours is the best offer they have received (and it's still a way from where they are asking) then I think they need to rethink their asking price. As someone has said you can always improve your offer at a later date, but if you think they're eager to sell I'd let them sweat a little if they don't move a little after your first offer.

At any case, why are you worried what they think of you? It's unlikely you'll never see them again.

 

[kdibattista]

At any case, why are you worried what they think of you? It's unlikely you'll never see them again.

Oh, I don't care what they would think of me but I care that they would be insulted and therefore not willing to negotiate. Does that make sense?

Thanks everyone!!!!!

 

[jel0511]

Originally posted by kdibattista
Oh, I don't care what they would think of me but I care that they would be insulted and therefore not willing to negotiate. Does that make sense?

Thanks everyone!!!!!

That's impossible. If you truly want the house, even if they are unwilling to negotiate with you, you can always buy the house for asking price. They can not refuse to sell the house if asking price is offered, regardless of previous offers.

 

[CamColt]

When we sold our house our first offer was a lot less than our asking price. We were so excited to get an offer and then crushed to hear what it was. We counter offered with the lowest we could go and still buy our new house(we needed to sell our house fast to get this new house that we loved). We never thought he would go for that amount since it was much higher than his offer. But, he was obviously just playing the game beacuse he did end up buying the house for more than his offer and just a little less than our original asking price.
Good luck! I know this stuff is not easy.

 

[ahutton]

You could take a mathematical approach... Make a list of what needs to be done in your mind and get real prices for those projects, then base your offer on the price, maybe less a small percentage for negotiating room, less the cost of the projects you need done to be happy with the house. After it has been on the market this long I would expect they are willing to consider the offer and negotiate. Having a list of factual prices will only give you support for your position. You can always counter with you would offer additional $ if they completed the projects listed to your satisfaction.

 

[auntpolly]

Originally posted by jel0511
That's impossible. If you truly want the house, even if they are unwilling to negotiate with you, you can always buy the house for asking price. They can not refuse to sell the house if asking price is offered, regardless of previous offers.

No, but then you'll pay too much. If in a market people tend to ask for close to what they hope to get, if you offer much less they won't negotiate. Say someone wants 200,000 for a house. If you offer 180,000, but they still think they can get 200,000, they may not counter. Sure, you can go back and offer the 200,000, but you may have gotten it for 185,000 or 190,000 if you had just had some idea of whether people ask for what they really want, or ask for more than they want, knowing people will want to negotiate. That's why it's important to know what people tend to do in your area. If they tend to negotiate, you'll pay too much if you offer full price. If they ask pretty much what they hope to get and you offer a lot less, you'll start out the bidding wrong.

 

[auntpolly]

Originally posted by CamColt
When we sold our house our first offer was a lot less than our asking price. We were so excited to get an offer and then crushed to hear what it was. We counter offered with the lowest we could go and still buy our new house(we needed to sell our house fast to get this new house that we loved). We never thought he would go for that amount since it was much higher than his offer. But, he was obviously just playing the game beacuse he did end up buying the house for more than his offer and just a little less than our original asking price.

I really think people play the game more on the east coast. I think here in Ohio people are a little more straight forward. If someone asks for 200,000, then they really aren't going to settle for less unless they are desperate, and so people don't tend to make offers that are wildly less.

 

[Nancy]

When we bought our house almost 20 yrs ago the people were asking 78,000.00 for it. We offered 62,000.00. They countered at 70,000.00 we countered at 65,000.00 and got the house. We checked on what houses were selling for in the neighborhood. Most were going for less then what we paid for the house. The house was not worth anywhere close to 78,000.00.

 

[Lisa F]

Originally posted by jel0511
That's impossible. If you truly want the house, even if they are unwilling to negotiate with you, you can always buy the house for asking price. They can not refuse to sell the house if asking price is offered, regardless of previous offers.

That's completely untrue. Until you have a signed contract, the house belongs to the sellers and they can refuse to sell it to you even if you make a full price offer. Now the realtor who represents them may sue them for not going through on THEIR contract since the realtor fulfilled their side by bringing them a buyer but from the seller's POV they do not need to deal with anyone with whom they feel uncomfortable. As a seller, I might be nervous about taking a full price offer from a buyer who had lowballed because I would be concerned about them being able to afford full price. Preapproval letters are a dime a dozen and mean practically nothing and I would only accept the offer with 5-10% in earnest money that I get to keep if the deal falls through, plus I'd be concerned about how the remainder of the transaction would go with people who apparently are clueless as to how to play the game... making a lowball offer and then countering with full price is sort of erratic behavior from a buyer.

As far as making a "lowball" offer, I personally believe in making fair offers. Fair is NOT necessarily full asking price as the house may be overpriced. If you are working with a realtor, have them do a current market analysis for comparable properties in the area... not what their LISTING price is but what they have actually sold for. If there are major repairs that need to be made and the comps don't show then you need to adjust. If it's just cosmetics, it's less of an adjustment. I agree that you should maybe start a little on the low side with the idea that you will go up to a certain point (what you think the house is worth). Arbitrary numbers like 5% below or 10% below mean nothing really... look at the comps. That's what the appraiser for the bank will be looking at as well.

 

[beavismom]

We just sold our house in June. We had an offer that was 90% of asking price in addition to them wanting us to give them $5k for closing and include some items that were excluded from the sale. We didn't even counter.

We had another offer that was 93% of asking price, no other concessions. We negotiated for days and ended up at 97% of asking price, which was what houses in our area were going for. We accepted the offer, but still had some hard feelings since it was like pulling teeth. We had some things that we could have made nicer for the new owners but didn't because of this.

So, my advice is to use your realtors information and advice about what to offer in the area. Make them earn their money. It might save you some aggravation later.

 

[Disney Doll]

You know, my DH is a realtor, and it always amazes me the stories I hear. It also amazes me that people (both buyers and sellers) don't know how to play the game. I'm not saying you have to like the game, but real estate buying/selling is a game, and unless you really know how to play it, someone's going to get hosed!

LisaF gave you about the best advice. Take a look at comparable sales in the area for the last 6-12 months(called "comps" in the real estate business) and see what similar houses in that neighborhood have sold for. If this house needs a lot of work, the pricing should reflect that and if it doesn't, the offers will. Since the house has been on the market for 6 months, my guess is that the house is over-priced and the sellers have yet to come around to that idea. You would be amazed at what people think their house is worth. No matter how many times my DH tells a seller what their house is worth, which is always backed up by facts such as comps, sellers always think their house is worth way more than all the other exact same 3 bedroom 2 1/2 bath colonials within a 5 mile radius. You have sellers who won't entertain a 90% offer(which, BTW, for an opening offer isn't bad) and end up sitting on their house or losing out on whatever they were going to buy on the other end, because their emotional connection to their house has clouded their judgement. A house is a commodity to anyone other than the people who have lived in it, raised their family, made memories etc.

If you are not working with a realtor, then you can research comparable sales prices at town hall. Be very careful if the house you are interested is for sale by owner, because those tend to be overpriced, for the reasons stated above.

When we were first house shopping, we looked at a very cute small 1920's colonial on a street right on the town line (literally, our house was in our town and the houses across the street were in the neighboring bigger city). The house was on the market for $150,000, which was a little high, but not way off for the real estate market at the time, size of house etc. The house did need some work, but noting major...mostly cosmetic. The owners' son was handling the sale of the house, as his parents were elderly, with health issues. Our opening offer was $135,000, and we would have been willing to go up to $145,000 for the house. Well, the son wouldn't entertain our offer. He was insulted, he raged about how if "this house was in Greenwich(a very rich town about 30 minutes away)it would be worth $250,000". Of course, my DH's response was "You're right, and if it was across the street in Bridgeport (the city which my smaller town abuts), it would be worth $90,000". I am sure the son's intentions were pretty good...he was trying to maximize his parents' profit (and probably also his inheritance ), but we ultimately didn't buy that house. He later ended up selling if for $122,000...$13,000 less than we had offered and "insulted" him with!

 

[mudnuri]

when we were looking at houses a few years ago, we used a buyers agent.

We only found 1 house that we wanted to put an offer in on...and what we did was sit down with the agent, and discuss what we thought it needed as for work, etc... We could not find a comparible house - it had 30 acres, was out in the country etc...not a lot of them around. We flat out asked the agent "what do you think we should offer". now mind you this was not the listing agent...this was our agent. he was also a very close personal family friend of DFIL...

In the end, had we made the offer- the house listed at $275,000 and we were going to offer $255,000 with 50K as a contract hold, with a few contigencies. Our house had to sell, and the wood, (10 cords, cut split and stacked) had to be removed by sell date, as we were NOT paying extra for it (which is what they were looking for) or they could leave it and would receive no $$.

24 hours after we discussed this with our agent, he died of an blot clot on the brain. We never did make the offer.

but I hope this helps you.

We are currently thinking of listing ours- and we will price it right where it should be, not high, not low Our house is in a development where they are all the same etc.. I know what others have sold for, and I know what others are listed at that are still sitting on the market 8-10 months later. If priced right, in this area, 3-4 days is all it has taken!

I would never be offended by a low offer, and i might even ASK why they offered so low....?????

Good luck
Brandy

 

[RadioNate]

I think it depends on the area. We took an offer about 5% less than what we were asking. We settled for the least amount we could take and still get out down payment back. We had only lived in our house 18 months. We got offers of 10-15% less and those were all met with flat out rejections because we couldn't afford to sell that house for that low. We priced our house lower than the comps in the area. If you really want the house I wouldn't go more than 5% under asking unless the house if overpriced for the area.

 

[ripleysmom]

The housing market is starting to cool down. The fact that this house has been on the market for 6 months is an example of that. We have 3 houses for sale on our block. A year ago, the sign wouldn't even have hit the front yard before it was sold.

My mother's house has been on the market for 6 months. We have now dropped the price $20K. It needs some work and, while it is a big house, it is too unusual for the area it is in (rural NC).


Check with the agent to see how many times the price has already been dropped, if it hasn't been dropped yet then that 10% might be a good starting point. If it has been dropped, I would find out where it started at and adjust my offer accordingly.

 

[Nancy]

You also have to know if your area is one where asking prices tend to be close to the selling prices. I think the area I live in used to have people who like to bargain hunt! When we bought our house, original asking prices tended to be really high because people liked to dicker over prices. I know the house we sold had the price way higher then we would have sold it for and the realtor set our price. we thought it was too high and she told us not to worry, it would sell for what we wanted it to. The first person to look made an offer and we actually got more then we thought we would,...but we did play the "game" a bit. That seems like what happened around here all the time 20 yrs. ago. Now, the home buying atmosphere has changed...if you over price you won't get too many people even looking (which happened to my SIL....way over priced her house, not even 1 person looked in 6 months)....I think the buyers are more educated about the whole process then they used to be.

 

[Nancy]

double post