Advice on offers

[PinkMartini]

Ok so DH and I have found THE perfect house for us. We went on a walk through last night and I AM IN LOVE :D We've been looking for awhile now and this house is better than anything we've found thus far. Bigger (1750 sq ft compared to 1200 sq ft), newer (built in 1991 compared to 50+ years old) and nice inside... So we have a realtor now and we're pre-approved at the asking price. DH made an appt with the realtor today so that we can make an offer...

However, we've never done this before and when talking with the realtor last night, he cautioned us about making an offer too small as not to offend the sellers. So when we got home last night we got to talking about it and DH wants to offer $10k less than the asking price as well as see if the sellers will pay the closing costs.

What do you guys think? Obviously it depends on other offers they've had/how bad they want to sell/ect but anyone have any advice on the 'right offer?' I definitely don't want to offend them (as the realtor put it, then they wouldn't want to sell to us period) but if we can save some $$$ that'd be great too. Are there any 'rules' when it comes to this stuff? Our realtor did say we're going into a 'buyers market' and the sellers are starting to realize that...

And also, how does offering less affect any repairs that need to be done re: the inspection? Is a seller less likely to agree to repair something if the original offer was less than full asking price?

(Sorry if this is a stupid question, but as I said, we're clueless - we've never done this before)

[andy's di]

When my DH and I bought our first house our Realtor showed us the selling prices of comparable homes in the area. You should definitely ask for this from your real estate agent - they should be able to provide you with this no problem.

Having the selling information will help you determine a good starting offering price. Depending on how you want to approach it some people take into consideration any repairs that maybe needed in their initial offering price, others wait for the inspection results and negotiate down from there.

I have friends who when they saw the house they knew that the plumbing needed to be redone and the addition that had been put on the house was close to collapse, so they took this into consideration when they made their initial offer. When the home inspector came through he found a few more major repairs that needed to be done so they negotiated the price down even further to compensate.

Good luck!

[Jenyfer9]

Like the pp said, you should talk to your Realtor to see what comparable homes in this area have sold for. He/she should have this information for you without asking, but it's important to know.

I think that the things that you can ask for depend on the market that you are in: if you are in a market where things are sitting forever, then I would say that you can ask for more/offer less... because the sellers *might* not have seen an offer yet, and depending on how anxious they are to sell, they might accept some of your conditions/take a lower price.

As far as the after inspection expectations, I think that also depends on how the market is. For example, in our house now, we knew that the sellers had received another offer after ours (later the same day that we put ours in), and so we were very careful not to ask for repairs because they could have easily turned them down and gone with the other seller.

What's tough about all this is that it's all about perception. I mean, when we were selling our old house, we knew about what we wanted for it, and priced the house a bit above that amount so we would have wiggle room. I can't imagine that 10k off of asking price is huge, unless you're talking about a 100k house. But I'm a pretty easy going person, and not easily offended... someone else might be.

[IrishEyes]

When my DH and I bought our first house our Realtor showed us the selling prices of comparable homes in the area. You should definitely ask for this from your real estate agent - they should be able to provide you with this no problem.

Our realtor showed us sales in the area from the past year or so that also indicated: the original list price, the reduced list price (if the price was changed), days on market before offer, and amount of $ given towards closing costs (although it was termed something else). You can see what the trend is in that area.

That helped us see that most houses in the area where we bought were getting full price (if the price was reasonable) and $ at closing or $10K drop in price and no $ at closing.

A new house will have less repairs, I would assume, unless the house was not taken care of. Our house was built in 1995, so not many repairs (though the seller wound up paying around $3K for repairs to the septic system after we had that inspected).

You can request a change in price if an inspection shows chronic issues with the house that will require mucho $, or the seller could elect to fix them.

[lee60657]

First off congrats on finding a home you love! That can be hard to do sometimes esp at the right price point.

I am going through both a sale and a purchase right now so I have perspective from both sides. I agree with the pp that your realtor should provide you with comps in the area so that you have a good idea of what comparable properties are selling for as I am sure the sellers know and are keeping that in mind. For example, a unit in our building sold about 3 months before we put our place on the market - we knew what it sold for and definitely had that in mind when considering the offers we received. The market here is not that great right now, so we were not at all turned away by the offer our buyers originally made which was 29K below asking. We just came back a bit under list and they jumped up - I think everybody likes to test the waters a bit :) But I would not make a really low ball offer esp if the market in your area is doing well - how long has the home been on the market - that can also give you some indication as to where to come in at.

As for repairs...ugh...I am in "credit at closing" hell right now! Really, if something is discovered to be not working or dangerous in anyway during the inspection the sellers should fix this. With our situation we received a 3 page letter requesting credits for things like adjusting a cabinet door and recauliking the spout in one of the bath tubs - there were about 30 other requests along those lines too - I personally would not ask for credits for minor items that occur b/c a place was lived in - in our case it has definitely thrown a wrench into everything.

Sorry for writing a book - good luck!! I hope you get the home:)

[EJM]

I wouldn't look at it as saving money, so much as paying what the house is worth. If you really love the house that much and they have fairly priced it, then I would offer very close to asking. Does the inside need work (beyond making it to your taste) that you could justify a lower offer? IMO, if you ask them to cover closing costs your offer itself needs to be rather strong.

We sold our place for 99% of our ask, but it wasn't on the market yet and was a specific situation. The place we are buying needs a ton of cosmetic work and had been on the market a while. Our agent happened to know the seller's agent, so after a brief discussion to feel out the situation. A couple divorcing and anxious to move on with their lives. We offered 92.5% of ask (which was accepted).

Do you know any background of the homeowners? Why are the moving, are they in a hurry?

[PinkMartini]

Ooooh thanks for the great replies ladies... :) Another piece of background information that might be helpful, the house has been on the market for a LONG time. It was originally priced at $298k and sat for 300+ days. Then they lowered it to $275k and it sat for 100+ days. Then they lowered it again to $259k and it sat for another 100+ days. Now it's down to $239k and as of last night our realtor didn't know how long it's been at that price. They've done 1 pre-sale pest inspection (don't know how long ago) and it was found to have a bit of termite damage. Sellers paid to have that taken care of (new boards on the deck/new support beams/ect)...

What's tough about all this is that it's all about perception. I mean, when we were selling our old house, we knew about what we wanted for it, and priced the house a bit above that amount so we would have wiggle room. I can't imagine that 10k off of asking price is huge, unless you're talking about a 100k house. But I'm a pretty easy going person, and not easily offended... someone else might be.

LoL The house is definitely not $100k... $239,900 is the asking price. So DH was looking at $230k + closing costs.

A new house will have less repairs, I would assume, unless the house was not taken care of. Our house was built in 1995, so not many repairs (though the seller wound up paying around $3K for repairs to the septic system after we had that inspected).

You can request a change in price if an inspection shows chronic issues with the house that will require mucho $, or the seller could elect to fix them.

The house hasn't been lived in for awhile now (probably close to a year) so I'm not sure what repairs need to be done. The house looks to be in great shape though...

As for repairs...ugh...I am in "credit at closing" hell right now! Really, if something is discovered to be not working or dangerous in anyway during the inspection the sellers should fix this. With our situation we received a 3 page letter requesting credits for things like adjusting a cabinet door and recauliking the spout in one of the bath tubs - there were about 30 other requests along those lines too - I personally would not ask for credits for minor items that occur b/c a place was lived in - in our case it has definitely thrown a wrench into everything.

Oh yea, definitely! I've been reading up on other threads about inspections/repairs and I can't believe what people ask to have repaired!

Do you know any background of the homeowners? Why are the moving, are they in a hurry?

We don't know anything about the sellers. The house is vacant and has been for quite awhile (see above remarks re: how long it's been on the market).

[ejs]

I have to ask, where are you in Northern California that a house at that price can sit on the market for almost two years?

I have to say, it would make me a bit nervous that a house has been listed for that long of a time? There has to be a reason. Does it need a lot of repairs? Does it have a bad history? Bad neighborhood? Bad neighbors?

Did your realtor suggest making your offer contingent on your own inspection reports?

[lee60657]

PinkBased on what you said about the house just sitting on the market I think your offer is very very fair. I can't imagine that they would be offended by any offer at this point -if I were them I would just be thrilled to have an offer to consider! Has your realtor given you any insight as to where to start at? With the home we are buying we discussed the highest we were willing to go and made an offer based on that - I think we came in about
about $50K under asking and are paying about $30K under asking - I am horrible at %s, but I know we paid close to 95% of the asking price. Good luck with everything - let us know how it goes.

[PinkMartini]

I have to ask, where are you in Northern California that a house at that price can sit on the market for almost two years?

I have to say, it would make me a bit nervous that a house has been listed for that long of a time? There has to be a reason. Does it need a lot of repairs? Does it have a bad history? Bad neighborhood? Bad neighbors?

Did your realtor suggest making your offer contingent on your own inspection reports?

LoL Our city was rated #1 overpriced place to live in the country (based on wages) 3 years ago...

Yea, that's exactly what DH said, he's a bit worried there's something significant wrong with the house and if our offer is accepted, I guess we'll find out. As far as repairs - nothing we could see outright. The house is only 18 years old (and everything else under $250k is 50+ years old) so I'm not sure. The realtor said he thinks it might because the lot isn't level (it's sloped a bit) is why nobody's bought it yet...

I can't imagine that they would be offended by any offer at this point -if I were them I would just be thrilled to have an offer to consider! Has your realtor given you any insight as to where to start at?

Yea, that's what DH is thinking... When I asked the realtor last night about offers all he said was that it depends on the sellers (obviously) and that we don't want to offend them. I'm guessing when we meet with him tonight we might talk more about it. But I'll definitely ask him for a copy of the houses in the area that are being sold.

[carrie9142]

Definitely look at comps for the neighborhood. This should allow you to get a rough $$/sq. ft. number that you can work with. When we bought our house comps for our neighborhood were about $160/sq ft, but that included houses with finished basements (as in that sq. footage didn't count in the equation). Our seller had priced it around 190/sq ft. Ha!

It sounds like your house has been on the market a long time which will definitely help you! They are probably pretty ready to sell. I would still low ball your offer. Most people aren't going to just walk away from a potential buyer (esp if their house has been on the market for a year!). I would even think about offering lower than 10k (and I say this without knowing your market). You could also be dealing with someone who has had to drop the price twice and might not be willing to go much further down. Pick a $$ you want to end up at, let's say 229k-

-You offer 210k
-They counter at 225k
--You counter with 220k + closing costs.
Done! In a perfect world, of course.

If you do get a deal on the house, you might find that sellers are less willing to make high dollar repairs. And if you find something horribly wrong, and they won't fix it, you can still walk away at that point. Any repair they do cuts into their profit, so not everyone will do them. Esp. if they have to hire someone rather than DIY. After our inspection, we had a list of about 12 things of which our seller about 5 of the easier things plus we got a repair allowance.

[SweetRed]

We were in a very, very similar situation a year and a half ago. Our house, however, had been gutted and added on, but it sat on the market for nearly eight months. When we looked at it and fell in love, we wondered what was wrong with it and we suspected it was the very sloped, wooded lot.

We low-balled a nearly laughable amount, knowing the seller had a "gotta have" price that we were willing to pay if he would just admit it. It worked, and after one round of counteroffers, we got the house for $20K under listing, $55K under original asking. When we had the inspection, the inspector (who we used for a previous inspection and loved) said it was one of the best constructed houses he's seen in a long time.

Since we moved in over a year ago, we've talked to friends and neighbors who all looked at the house when it was on the market. And it was unanimous - the #1 reason it hadn't sold was the lot. Frankly, we love not having to maintain 1/2 of our property, so it's a plus for us.

My point is, if you think you know "what's wrong" with the house, your offer sounds very reasonable. Make it contingent on an inspection (which is probably required for your mortgage anyway) and if anything major shows up, you know it's not meant to be. Good luck!

[PinkMartini]

Well we made an offer! While talking prices we asked the realtor what he thought and he thought we made a solid offer. We're doing 50/50 closing costs as well. Sellers have until 5pm on Sunday to get back to us (accept/counter/deny/tell us they need more time) so I doubt I'll be sleeping much the next 2 days.

[ejs]

Well we made an offer! While talking prices we asked the realtor what he thought and he thought we made a solid offer. We're doing 50/50 closing costs as well. Sellers have until 5pm on Sunday to get back to us (accept/counter/deny/tell us they need more time) so I doubt I'll be sleeping much the next 2 days.

Did the realtor show you comps for the area?

[PinkMartini]

Yea, nothing on that street had sold since Aug of last year. And it sold after 47 days at $5k under asking. Prior to that we're talking 2005 and all the houses went at full asking price (which was definitely when the market up here was on the rise)...

Pretty much the same thing in the neighborhood as well. 1 house has sold in the last 4 months at $8k under asking (but it was less sq ft than we're looking at).