Putting an offer on a house?

[ckret01]

My BFi and I are starting to look at houses. We found one that we like and were thinking of putting a bid on it. Someone told me that you always go lower but how low? A frined of mine said to go 20% lower than the asking price...but that sounds crazy. This is my first time ever doing this so I am a little unsure. Any suggestions

 

[froglady]

It depends upon the market, the value of the house, and the price of the house. If it's a million dollar house, and you offer 800,000 they might go for it. If it's a 100,000 house, and you offer 80,000 I doubt they'll accept it, and may be insulted.

However, if you know that similar houses in the neighborhood are selling for much less, go for it.

Also, the length of time on the market, and extenuating circumstances will have an affect. (divorce, transfer, death, etc)

 

[Bob Slydell]

I guess it depends on the market, but if you're in a market where most homes sell for below listing price, I'd offer an amount equal to twice the amount off list price you want to pay.

For example, if the house is listed at $250,000 and you'd like to pay $237,000, offer $225,000 and hope they come back with a counteroffer of the $237,000.

It also depends on how willing you are to lose the property, because if the sellers receive a better offer in the meantime, your lower offer is going to get flat out rejected and you'll lose the house.

 

[dcgrumpy]

It really depends on the market. When we were house hunting two years ago all of the houses in the area were selling really quickly right around asking price, some higher. We were shocked to get ours at 6% below asking price. Actually it was 12% below the original asking price.

 

[The Mystery Machine]

Go to Realtor.com. Look up all houses for sale in your area. Go look at them & compare. Do your homework.

Is the house "move-in" ready? In other words can you take money off the asking for needed repairs, such as flooring, roofing,hot water heater, air conditioning, heating units, etc...
That is where the asking price will get shot down from.

Of course if you are in a "hot, hot, hot" area, then may not have wiggle room.
Also season is gearing up to go full force. Seller might be more flexible now in Jan. than in Feb, Mar, Apr. Those 3 months are tougher to go in asking low.

 

[Marianne0310]

Does your realtor think the house is priced correctly? If the house comps with the market value of recent sales in the area I wouldn't take the chance bidding less than the asking price. On our first open house we had three bids, all the pretty much the same price. We choose the one that had no contingencies and pre-approval from the bank.

 

[kpm76]

I agree with the other posters...it depends on the market, the neighborhood and the condition of the house. We actually overbid by a few thousand dollars on our house because there was soooo much activity on it at the Open House and even the next day when we looked at it again. It served us well because we got it and there were multiple offers....the house was in great shape and the neighborhood was really nice....so, I guess there is no real answer to your question because there are too many variables...

 

[jenks0718]

I am a realtor and the above posts are pretty much right on target. Check to see how long the house has been on the market. If it is a newer listing then generally if you go too low they will just say that they havent been for sale long enough and wait for a higher bid. Other times there may be more then one offer and if you come in too low then you lose out. I tell my clients that if you love the house and we investigate and see that it is priced fairly then why try to go in so low?

Some people have this 20% discount thing. I had one woman who was relocating from Manhattan to NJ and she lost 7 bids because of this. She was SO LOW on her offers that the owner wouldnt even counter her back. I tried to give her advice, but she said that realtors inflate their listings by at least that.

Most homes in my area go at or higher then what they are listed for.

 

[barkley]

def. depends on the market and what you are bringing to the table.

if you are coming in preapproved, no contingincies (beyond the normal house inspection, mortgage approval) and want a normal escrow period you will fare better than if you low-ball and have nothing to make it appealing.

in our housing market the bulk of houses have gone for well over asking price for the past few years (bidding wars). now it's cooling down but you could find the exact same model house in the same development for 30,000.00 more than another. some do it because they paid the high end prices, some do it because they have upgrades that may not be apparant to the naked eye (enhanced wiring, upgraded plumbing, better drainage and landscape features). a good realtor will be able to clue you in on weather an asking price is fair.

look at comps for similar houses in the same area-look at what a particular house offers then guage your offer on that. many people who have not bought homes in years, or not in a particular housing market that is a "sellers" are not aware of the changes in the bidding process (in a buyers market low-balling is fairly normal, however there are not many areas of the country that have buyer's markets right now).

 

[puffkin]

I agree with the previous posters.

When we sold our house, the market was hot, we were in the right neighborhood, house was the right size and condition. We had our house on the market 5 days, had 4 offers to choose from. If someone would have come in 20% lower, we would have laughed at that. All our offers were asking or slightly higher.

My parents sold their house a few months later. Different neighborhood, larger house, house wasn't in as good of condition. Their house sold in a little over two months. They too would not have considered an offer 20% under. However, they might have counter offered had that been the case.

Do your research and talk to your realtor.

 

[rt2dz]

My BFi and I are starting to look at houses. We found one that we like and were thinking of putting a bid on it. Someone told me that you always go lower but how low? A frined of mine said to go 20% lower than the asking price...but that sounds crazy. This is my first time ever doing this so I am a little unsure. Any suggestions

I can't really help you a whole lot. My advice is that you use a good realator and yield to his/her advice--that is what they are there for. Now, making sure you have a good realator is the real issue.

Howver, slightly OT I noticed you said BF not DH. Even if you are planning on getting married, if you won't be the day you close on the house--have the contract read "tenants in common". It will save you much hassel & heartbreak (and money) if you ever were to split up. It is just a lot more complicated if you are not married and don't have that little phrase.

 

[palmtreegirl]

I agree with your friend, start low, that way you'll know you got the best deal. They'll probably counter and you could go back and forth a few times even, I wouldn't worry for a second about them feeling insulted.

I guess it depends on the market, but if you're in a market where most homes sell for below listing price, I'd offer an amount equal to twice the amount off list price you want to pay.

For example, if the house is listed at $250,000 and you'd like to pay $237,000, offer $225,000 and hope they come back with a counteroffer of the $237,000.

That's great advice.

 

[Carl]

If it is a boyfriend and you don't get married, and then separate, how will you decide who gets the house? I've always wondered about these situations, since I've seen on TV courts that there is no protection by the law of this type of problem.

 

[rt2dz]

If it is a boyfriend and you don't get married, and then separate, how will you decide who gets the house? I've always wondered about these situations, since I've seen on TV courts that there is no protection by the law of this type of problem.

That is what that tenants in common clause is for.

 

[cats mom]

So much depends on your local market and your situation. It's tough to give a hard and fast answer.

When we were in the market (about 6 years ago) we offered several thousand below the asking price on our house. It was actually priced well to begin with, but we knew the seller wanted out quickly, and we were pre-approved with no contingencies. We got a good deal... the appraisal came in above the selling price. But the market was faily sluggish then.

Fast forward to late last year. DH's brother moved to our same general area. They offered several thousand above the asking price on their house. Their understanding was that before the appraiser would come back with an amount as high as they offered, the sellers had to provide documentation of improvements to the property. He felt the price was high. But it was a hot market and homes were selling in a matter of days, if they had offered any less, they would not have gotten the house. The seller had several back-up offers, all at or above his asking price.

Just do your homework and check out neighborhood comps carefully.

Good Luck with the home purchase!

 

[ckret01]

Thank you all so mush for the great advice. I meant to say he is my fiance, but when I typed the acronym it came out wrong . We are planning to get married in 2007 and want to buy a house before that. We will still have to go by tenants in common clause probably b/c we will not be married by then.

The house is in a good neighborhood but the house itself isn't really like the rest of them in the neighborhood. It's not as nice I should say. There does need a decent amount of work. We are trying to decide on whether or not to bid on it. I like it but not in love with it. It has certain things such as an inground pool, fireplace etc. that I love. But there are things I don't love about it but can still picture myself living there.

We are pre-approved from our bank and also have a decent amount of money to put down on the house so we are good there.

My fiance is now saying he might want to look into a modular home so that everything is new instead of getting the one we are looking at.

I am so torn and undecided and b/c I am feeling this way I am afraid to jump into anything but then again I don't want to regret any decisions and miss out on anything.

 

[The Mystery Machine]

The house is in a good neighborhood but the house itself isn't really like the rest of them in the neighborhood. It's not as nice I should say. There does need a decent amount of work. We are trying to decide on whether or not to bid on it. I like it but not in love with it.

Well...now you are talking. I hate that you said it isn't like any of the other houses. That really stinks and can make or break you when it comes to Real Estate. Danger of overpaying here, you are right to really think about the offer to put forth.

How long has it been on the market? What repairs?
If it needs MAJOR repairs you can justify your asking price if you come in low.
IMHO houses that are neglected have hidden costs and will cost you alot in the end.
I would have to love a house to put that kind of energy & $$$ forth on a house.

 

[hmp2z]

My advice would be to get a buyer's agent. They work for you, for free (split the commission with the seller's agent i.e. realtor, so it comes out of the seller's pocket). We did research & found out that realtors are legally obligated to tell the seller who hired them how much your best offer is, which isn't much help at all, if you're negotiating! The buyer's agent is obligated only to you, and is legally not allowed to disclose to the seller how high you're willing to go. Buyer's agents don't take sellers as clients, only buyers, so they don't have the dual loyalties.
It sounds too good to be true, but we did research & used one to buy our land in FL this summer. The buyer's agent was worth every penny we didn't have to pay her - she smoothed our way on EVERYTHING, and we knew that she always had our best interests at heart & wasn't out to just set a deal that gave the seller the best price.
There's a national organization that the reputable agents belong to; I forgot what it is called, but maybe someone else knows, or you could Google it.
Cheers!
Heather W