I've Found A REO That I'd Like To Make My Primary, When Making An Offer(m)
How much below asking price is not offensive? Let me give a little bit of extra info:
4bd 3.5ba Colonial in good neighborhood. The asking price is 220,000. Now I love the house, I saw no damage what-so-ever. The only thing is the bathrooms are dated and the family room has an odd kind od layout. It has an elevated fireplace and a built in bookcase right next to it. There really is no place for a T.V because if you place it at the wall directly across from the patio doors you'll have a glare. Those are about the only reasons I can think of as to why this house hasn't sold. It's been on the market since September and at a higher price. I can imagine the bank is really anxious to be rid of it because they are offering a $1500.00 bonus to the selling agent. How much should I offer on this property? How much would you offer? I want to make my offer Monday.
Any help would be greatly appreciated.
quinn
As far as not being ofensive and making a seller feeling insulted I have on occasion accompanied my offer with a letter justifying the expenses I would have in bringing the property up to the neighborhood standards and reselling costs and I think it was accepted well and helped get the property
Hi quinn,
I have a simply phrase "If you are not embarrassed of your first offer it's to high"
You can always go up but it's difficult to go down!
75 to 80% is a good deal, but 85% is not bad.
[addsig]
I am assuming that this REO is listed with a Realtor, if this is so, find your own Realtor who will represent you (a buyers agent) and ask them to pull the comps for the area. A buyers agent represents you only and not the seller. Discuss with your agent after looking at the comps about what a fair offer would be. It is a buyers agents duty to help you obtain the property you are interested in at a fair price. You can also get estimates of what you think it will cost to update the baths and the family room and use that figure to help with determining your offer. It really is difficult for someone who isn't familiar with the area you are dealing with to help you determine an offer price. Sometimes banks get over zealous in their pricing and grossly overprice a listing and wait months before lowering the price. I sell real estate in PA and there are 2 main reasons why any home doesn't sell, price and location. If the location is good and properties generally sell well there, then the price is off. And this could mean the house just isn't as up to date as the others that have sold around it recently and so a price adjustment is in order. Remember it is always better to own a so-so house in a great neighborhood than to own the best house in a less desirable neighborhood. But you might want to think about starting at the $190,000 - $200,000 range. Unless the comps show a much different price range or if you know that you are up against other bidders. If you are up against other bidders, I recommend submitting your highest and best offer rather than playing the counter offer back and forth numerous times. Also make sure you have your pre approval letter/or pof , ready to go when you make the offer
Thanks for the reply, I was thinking that starting about 85% below asking price was decent but if it's been on the market for so long, how aggressive low is too aggressively low?
quinn
Maybe I'm confused, you said you want to offer 85% below the asking price so you are going to offer $33,000? Yes, I would consider that agresssively low, but go ahead the worst they can do is say no. In all likelihood the bank will not accept, but you can always come up in price, again as long as they don't get another offer for more at the same time, in which case they probably won't even consider yours.
Sorry about the confusion, I'm thinking of offering 85% of the asking price like maybe $187,000.
Has anyone offered 80% and gotten that accepted? It just seems that to offer 176,000 would get me laughed at when the asking price is 220,000. %176,000 would be 80% of the asking price. I'm going to try, like previously suggested, I can always offer higher just not lower.
quinn
Not necessarily, a 175,000 - 180,000 offer is not uncommon. I have buyers put offers in at this level frequently and they usually will come to terms. The bank will probably counter your first offer, but so what, if you can negotiate something that works for you, since this is the house you want to live in yourself, go for it. I would not be embarrassed to put an offer like this in. In fact I had people who were about to do the same for a property here that is listed at $144,000, the bank will do a short sale at a significant reduction. The house is only 4 years old sits on 4 acres and needs flooring in the greatroom and bathrooms and some trim work and it would be comparable to homes that are listed for 180,000 - 190,000. But they got cold feet and backed out even though this is the house they want they can't look beyond the initial expense of the work that needs done. So go for the house you want and Good Luck.
thanx for the advice. We'll do our offer Monday. We've already mentally moved in.
quinn
Hi quinn,
Two thing: Like Johnmichael said, it is harder to reduce your offer than it is to increase it. I would go in at the lowest offer imaginable and work my way up from there. The worst the bank can do is reject it outright and unless I am mistaken, you can come right back with another offer. Since it has been on the market for a while, there aren't likely to be other buyers that you will be competing with so it seems that you have time.
Secondly, From your posts, I get the impression that you are already emotionally attached and this is definitely not a good place to be for negotiating. I am no expert, but I have read that it is not a good idea to get too attached to any one property, there are others where that came from. I would set the price that I am willing to pay (NOT a price that will not be laughed at) and if they won't accept it, walk on to the next deal or home in this case.
My 2 cents. Good Luck.
JS
Quinn -
A couple of thoughts for you.
You are talking through this as an emotionally involved home buyer does. This may be an impediment to what you are trying to accomplish.
Question - what do you want out of the deal? Do you want THIS house at the best price you can get? Or do you want a GREAT price on a house in a general category of homes?
The reason I ask this is that the more attached you are to THIS HOUSE, the less strength you have in the negotiation. And consequently the more you'll pay. PERIOD.
If you are trying to get a great deal on a house in this general class of homes, then your offer should have NOT ONE %$#$#^$ thing to do with the asking price! Period. You should determine what makes business sense, allows for a profit , and offer that amount or slightly less. And negotiate with that as your max price.
I don't get the feeling that this is the case. You already are attached to THIS house.. In that case, you're going to pay closer to retail, since you insist on thinking like a retail buyer. Just please remember that a bank is not a normal seller. They work more on the basis of what they need to clean off of their books (or not). Unlike a normal seller, this one deal will not make them or break them. They (along with the listing agent who represents their interest) will bleed all of the money out of you that they can get for the place. For heaven's sake DO NOT tell ANYONE what you have told us all here. That you love the place, and all of that. Especially not the bank's agent NOR YOUR AGENT. Don't you think that they'll talk?? You're fooling yourself if you think that it doesn't happen!
Offer what you this is a just and reasonable price for the place, but on the lower end of the range. Insist that the offer be sent to the bank and replied to in writing. Many times the opposing agent is just playing you along, trying see how high you'll go. The offer never even is submitted to the bank until you've may your "highest and best " offer. Then they'll still try to push you higher. Backing up your offer with evidence makes sense - especially if it involves problems with the house. In this case, it may not make sense, since you say it's in awesome shape. If you are really after the place, then make sure that they counter - and sak for it in writing. DON'T just do it verbally with the agent.
Just some thoughts,
Jeff
Thanx everyone for the replies, I'll of course use what you've all given me, I always do.
Jblackwell, I know it sounds like I've attached myself to the property, but believe me, if I can't get it at a price I feel is a good price for me, I can and will walk. I've read enough here to know that regardless of the property, you never get attached. I like the property but there are and will be others if this one doesn't pan out. I'm still learning about different things in investing and acquiring properties but over-anxious I am not. I make sound decisions not based on emotion, I also like to get as much info as possible to make that decision. I like to have tried and trust methods that I can use to base decisions on. I get that and much more from this board.
The idea to get the banks response in writing is a good one. I'll definitely do that.
Thanks guys(gals included
quinn