UPDATE: Help with an offer pls . . .

DH and I found a house - at LAST - that we can agree on. We think the house was inherited and fixed up quickly - there are renovations and new paint and finished floors, but they seem to be done imperfectly, but it seems like the sellers want to get a premium for the work nonetheless. The house is move-in, but the renovations will need attention in the future. In any event, the house is presently listed at $439K, which seems like a fair asking price to start, and I want our first offer to be $375K. The house is in Western nassau, if that matters. Does this seem like a realistic first offer? Any advice?

ETA: is there any other info you might need to offer insight? Thanks - we are new to this!

Update: We figured that the house is a flip - it was purchased 3 months ago at $320K and a good friend of ours who is a contractor confirmed the work is shoddy and that the kitchen probably cost around $5K to update, save the appliances. Does this change anything?

Message edited 2/16/2011 2:30:11 PM.

Re: How's this offer?

if you think $439K is a reasonable asking price, than $375K seems low to me.

What are similar houses selling for?

Re: Help with an offer pls . . .

Re: Help with an offer pls . . .

I think it's fine. JMO but when we were looking we were giving a good 15% lower offers than asking. The house we got we got 10% below asking...We did buy in the dead of winter and at a very slow time but, I don't think the market is back fully and I think esp if they're looking for a premium on shoddy work, I think as a STARTING offer you're fine

Re: Help with an offer pls . . .

Posted by LovesMike

Posted by -Lisa-

if you think $439K is a reasonable asking price, then $375K seems low to me.

What are similar houses selling for?

Thanks - I am desperate for feedback! I think $439 is realistic and reasonable as a starting point, but I think that since it is a flip of sorts, and the work that was done will have to be re-done properly, I would want to start low and work our way up.

There are two area sales from the past 6 months that I could find . . . One was asking $469 and sold for $460 and the other was asking $439 and sold for $410. I'd love to keep it under 4 or at 4. . .

Message edited 2/14/2011 12:52:38 PM.

Re: Help with an offer pls . . .

Re: Help with an offer pls . . .

You said you looked at comps from the "area." Are you looking at comps from same style homes in the same school district and neighborhood? That's important for the comps to be truly comparable. Also, the more recent, the better. It's best to look back 3 to 4 months only, if possible.

Keep in mind when looking at comps that things like a garage, finished basement, lot size, central air, upgrades to kitchens, baths, roofs, heating systems, etc. all add value.

It's hard to know whether a seller will consider a lower offer, because it all depends on the seller's motivation. Do they NEED to sell, or are they just testing the market to see if they can get a certain price? Also, a seller's response to an offer is often influenced by how long the home's been on the market, how much activity there's been, etc. Unfortunately, a buyer usually isn't privy to such information before making an offer.

When responding to an offer, a seller may accept it, counter it, or just reject it outright. If a seller rejects your offer, you can always come back with a higher bid, but sometimes a seller won't entertain another offer from a buyer who has come in too low the first time (because they are insulted, etc.). So there's always a risk of that when you make a low offer.

A good agent can often help get an offer accepted by highlighting other desirable characteristics of a buyer (financial qualifications, ability to close quickly, etc.) and make an emotional appeal to the seller as well (point out that the buyer loves the home, wants to raise a family there, etc.). But there has to be SOME rationale for the price you offer. It helps to have good comps to back it up.

How did you get to the $375K number? Is it completely arbitrary. Whether you are working with or without an agent, someone is going to have to justify why you are coming in so low. It sounds like your only complaint is that the painting and some cosmetic work was done imperfectly, but that is not going to justify coming in $60K under asking, in my opinion.

If it's an affordability issue, then I'd say go ahead and offer that price and see if you get lucky. But if you can afford more, and you really want the house and think it's worth the asking price, then I'd say to make the best offer you can afford. And by the way, I don't think "worth the asking price" is always a matter of looking at comps and determining fair market value. An overpriced home may be worth it to you personally, because of factors such as location, features and benefits, etc. If you plan to stay long-term and are not concerned about resale value in the near future, sometimes fmv is less of an issue, you know?

Hope this helps!

Lots of luck,
Christine

Re: Help with an offer pls . . .

Re: Help with an offer pls . . .

We always bid low, no matter how fairly priced we thought the house was. the worse that can happen they don't come back with anything and you throw another offer at them

Always play ball and see what they come back at, you never know how bad they want to sell.

Re: Help with an offer pls . . .

Re: Help with an offer pls . . .

if I feel like a house is priced fair, I would offer 10% below asking and then meet in the middle.

if I think its over priced, 15% and then hope to meet at 10% off asking.

Re: Help with an offer pls . . .

Re: Help with an offer pls . . .

Re: Help with an offer pls . . .

Re: Help with an offer pls . . .

I bid drastically lower when I bought my place..no insults...we just haggled. It's the way it is now...owners understand.

Are you pre approved for a loan and have good credit?

Add that in there. Sellers want people whom they think will get the loan and work with you!

Re: Help with an offer pls . . .

Just to play devil's advocate here, perhaps sellers should not be insulted by a low offer, but the reality is that many are. And you can't always come back with another bid. Sellers will sometimes not only refuse to hear from those buyers again, but they don't want to hear from the AGENT who presented the buyer's offer, even if they have other interested clients. Again, it may seem extreme, but it happens, so educated buyers should be aware that it can happen. So if you have a serious interest in a house, it is often better to offer in the ballpark of what you think is realistic, rather than start artificially low to leave room for negotiation.

Again, it all boils down to the sellers' motivation to move, and also emotional investment in a house. Many sellers I deal with have lived in their homes for many years, raised children there, etc. So aside from being their biggest financial asset, sellers' homes often have huge emotional value to them that may elevate the worth of their home far beyond market value in their eyes. Obviously, this is not the case with an investor or a builder, but many sellers on the market today are older couples and retirees looking to downsize, move to warmer climates, etc. And in that case, it's not always "just business" with them.

Also, as I said, a home is often a sellers' biggest financial asset, so while you want to get the most for your money, I often hear sellers saying they don't want to "give the house away." A good listing agent should be able to bring their seller in line with the realities of the market, but some sellers are really stubborn.

I don't dissuade anyone from making an offer, because as many have pointed out, you just never know. But a good negotiator should always understand the other side's point of view to better formulate their approach and have a better chance of success.

I really think that if you are making a low offer, it is to the buyer's benefit to be able to say "here's why we are offering x" (and then point out repairs that need to be made, the smaller than average lot size, the fact that the basement's not finished, there's no garage -- whatever). It gets you much further than just lobbing out a number.

It also sometimes helps to write a letter to the sellers explaining what you love about their home, and why you want to live there. I have seen sellers turn down silightly higher offers to take an offer from a buyer they just "liked" better.

Re: Help with an offer pls . . .

I def think thats way too low, I would offer 400 if you really want the house...have you looked up houses in the area?

Re: UPDATE: Help with an offer pls . . .

Here's the update, also at top:

Update: We figured that the house is a flip - it was purchased 3 months ago at $320K and a good friend of ours who is a contractor confirmed the work is shoddy and that the kitchen probably cost around $5K to update, save the appliances. Does this change anything?

Re: UPDATE: Help with an offer pls . . .

Re: UPDATE: Help with an offer pls . . .

Completely agree

Re: UPDATE: Help with an offer pls . . .

I agree. If you are having doubts now, I would move on. There is a LOT of inventory on the market, so you shouldn't be settling or overlooking problems, esp. for a house that is at the top of your price range. I am sure you will find something great!

Re: UPDATE: Help with an offer pls . . .

Re: UPDATE: Help with an offer pls . . .

Re: UPDATE: Help with an offer pls . . .

Posted by pickles16

Posted by ave1024

Posted by Century 21 Dallow - Christine Braun

Just to play devil's advocate here, perhaps sellers should not be insulted by a low offer, but the reality is that many are. And you can't always come back with another bid. Sellers will sometimes not only refuse to hear from those buyers again, but they don't want to hear from the AGENT who presented the buyer's offer, even if they have other interested clients. Again, it may seem extreme, but it happens, so educated buyers should be aware that it can happen. So if you have a serious interest in a house, it is often better to offer in the ballpark of what you think is realistic, rather than start artificially low to leave room for negotiation.

That would be a REALLY stupid move on the part of a seller, and frankly would not be reason for me to not come in with a low offer.

There are plenty of houses for sale. If a seller wants to feel "insulted"... go right ahead and feel insulted while I move on to the next house. 9 times out of 10, the listing price of the said house will drop anyways.

Why would I start at a realistic "what i think the house will sell for" number. That is foolish. You start low based on comps because frankly you don't know what a seller's real intentions for selling are. You don't want to sell yourself short.

Re: UPDATE: Help with an offer pls . . .

Posted by Beth

Posted by pickles16

Posted by ave1024

Posted by Century 21 Dallow - Christine Braun

Just to play devil's advocate here, perhaps sellers should not be insulted by a low offer, but the reality is that many are. And you can't always come back with another bid. Sellers will sometimes not only refuse to hear from those buyers again, but they don't want to hear from the AGENT who presented the buyer's offer, even if they have other interested clients. Again, it may seem extreme, but it happens, so educated buyers should be aware that it can happen. So if you have a serious interest in a house, it is often better to offer in the ballpark of what you think is realistic, rather than start artificially low to leave room for negotiation.

That would be a REALLY stupid move on the part of a seller, and frankly would not be reason for me to not come in with a low offer.

There are plenty of houses for sale. If a seller wants to feel "insulted"... go right ahead and feel insulted while I move on to the next house. 9 times out of 10, the listing price of the said house will drop anyways.

Why would I start at a realistic "what i think the house will sell for" number. That is foolish. You start low based on comps because frankly you don't know what a seller's real intentions for selling are. You don't want to sell yourself short.

seriously...in this market foolish and shame on their agent that would allow them to do this- they don't have the sellers best interest in mind