Making an offer - What is a good starting point with price?

berelain72 · Joined: 23 Aug 2005 Posts: 2

We have found a home we are interested in, it has recently been lowered from $169,900 to $149,900. It has been on the market for awhile now (The trees in the picture have no leaves!)

We have our mortgage approval, the home is unoccupied, and I was wondering what a fair offer would be. The market where we are moving has slowed down a LOT (My parents have had their home on the market since May and have had 2 people look) So I am confident there is no other interest in this home. The agent said they would contact us if anyone else looked and was interested.

Is taking of 10% a lot? Would making an offer of $135,000 be an insult? I ahve never bought a house before, so I dont know if there is protocall when making offers?

We are hoping to make an offer, let the seller know we have our approval and are just waiting on clear inspections, and we want a 30 day close.

David · Joined: 19 May 2004 Posts: 703

Usually 3%-5% would be closer to an acceptable range. It would be helpful to find out if other people are competing for the house. If the price was just lowered recently, there pay be other interested parties in which case they might laugh at your price.

capnmorgan5555 · Joined: 29 Jan 2005 Posts: 29

Not sure about your market, but in mine it seems like more and more sellers are "offended" if you make too low of an offer and will refuse to counter your offer or even work with you. If they just recently dropped the price $20k and you come in another $15k or so lower chances are you will offend the seller. Will they counter your offer? If the house is vacant, it's been on the marked for awhile and they have already lowered the price I would think they would counter back, but I would expect it wouldn't be too much lower than what they have already lowered it to.

If this house is listed by a Realtor then the Realtor probably did this client a serious disservice listing the house that high. Obviously, the market wouldn't bear that price. What does your research say the house is worth? Does it need a bunch of work? If it is now very competitively priced or even below market price if I was your agent I would hate to see you lose it by trying to go too low.

Hope this helps.

berelain72 · Joined: 23 Aug 2005 Posts: 2

Thanks. This house has been completely updated and is in move in condition. (It is a 1900 farmhouse, so typical dirt basement, etc.) I think the biggest problem with it selling is that it only has one bathroom downstairs (Its a 2 level home) and that across the street is a low income housing apartment building. My mom did a check with the town office and the police department about the area and calls to it, and it seems like a fairly quiet, older neighborhood.

We would pay $140,000 for it, but dont want to start there and have them come back with a counter offer.

Is it common to suibmit a solid offer? Say we offer $140,000 but tell them that is our highest offer and we wont consider a counter?

I know that no one else is interested in this home, the agent we are working with (and also the listing agent) have said they will let us know if there is other interest.

chow · Posted: Wed Aug 24, 2005 2:20 pm Post subject:

What area are you in, and who approved your loan? Meet my Evile Twin:

The honest chow-who talks too much.

my concern: "I know that no one else is interested in this home, the agent we are working with (and also the listing agent) have said they will let us know if there is other interest."

They have a responsibility to the seller. Once a "Relitter" plays both sides of the fence, and no activity, and they will let you know if there is any other interest? I think thats skating on the fine line of "ethical." What are they hoping for-a bidding war, where they can get the best price? Working with still another buyer?

Reason I ask is, If someone comes to me for a loan, with a situation like this, I have my pocket full of honest appraisers, who will tell me what the market has done in recent months. Here is the double edged sword per se....

A home is worth what the buyer is willing to pay. The appraiser, hired by the Loan Officer, and who is approved with the lender we select, goes out and does a market opinion. They gather information on like and same properties, then put the information on a grid, and factor in the different areas. Age, # of rooms, levels, Baths, basement. If this is a home that isn't like many other homes around it-it becomes a challenge, and more weight is given to updates, Professional Opinion and knowlege of facts-found by the appraiser. If the home is over priced, you will need to come up with the difference, or the seller will need to ammend the purchase agreement and come down to the appriased value.

The driving force on a purchase, is what is the buyer willing to pay, and can the appraiser find that value?

I'll be the first to admit, I have walked into a few homes as a LO, to take an application, was a leary of the value, and my appraiser told me to throw the lap top back in the trunk and go home.

(When you spend enough time educating them, they begin to educate you-on what a good deal is, and what isn't. I would ask your LO who gave you the approval, if this is something you can pay a pre comp for.)

You can pay an appraiser to do a pre comp for you. If you decide to buy it, they will most likely give you credit towards the full blown appraisal to send to the lender. I've had more deals like this, in the recent months-than I care to admit. because the seller thought the place was a golden egg, the buyer wanted the home-but the appriaser just couldn't find the comps. Don't use any appraiser your Loan Officer is not used to working with. You want the best value, and there hasn't been any activity. The golden rule of RE investing is to Buy Smart, Buy Low. :wink: