Offer Tactics
I saw a post here at one point where someone said that when they see a listed property they are interested in, they make a full price offer to get their foot in and then negotiate the price based on an inspection. Anyone else use this approach? Seems like a good way to go when homes are flying off the market.
I do the inspection personally, to my satisfaction, and make an offer based on that inspection, with NO contingencies except financing(if needed), possibly termite, clear title, and basic legalities.
IMO, if you make it clear you won't play the seller, your deal is clearer. Inspection negotiatiing means the seller has to sell the house twice. Recognizing that fact, most sellers, especially with realtor representation will inflate the price for petty repairs from greedy buyers.
You either like the property and location, or you don't.
Honest behavior is its own reward.
Inspection is good for the buyer to know what is being sold. Abusing inspection opportunities to nickle and dime the seller, which is rampant, gives the process a bad name.
All IMO.
[addsig]
I have been in the real estate business many years. I am not a home inspector but have the experience to be one; it is amazing how fast you learn when a mistake costs big money. When I am selling a house subject to a home inspection I am ok with making repairs or price adjustments based on a fair inspection. I do have a problem with dishonest or inexperienced inspectors. If an inspector blows my sale unfairly so be it; I will not fight it. However that inspector and buyer are forever finished in ever doing business with me in the future; and I will warn all my friends about the inspector and buyer. Using an inspector to get a lower price is not a good idea. I stop that tactic by giving the buyer only a couple of days to get a home inspection. That way the house is only off the market a couple of days if the inspector blows the deal. Honesty is still the best policy. Your reputation is important.
I'm not looking to unfairly lower a buy price with an inflated inspection. I do inspections myself. I'm just intrigued by the idea of making a full price offer right away to get a foot hold on the property and then negotiating the price from there rather than taking the time to view a property, inspect it and then make an offer while other offers could be coming in.
In my experience, although limited, to offer full price and then barter, the seller has every right to draw the line and say take it or leave it. Since I have inspected my investment properties before, I would recommend doing an initial look and make the offer based on that look. If an inspection is done at a later date, then give the owner some options as to how to correct findings uncovered with the inspection. Another avenue is write in the contract an allowance for repairs based on the future inspection. That way the seller knows that a limit is set and unless something unusual is uncovered, basically the seller knows the bottom line. Just my 2 cents.
I am in favor of inspections. If they find an unknown problem they can save the seller from a potential lawsuit from an unhappy buyer after the sale. I only know that the use of inspections to renegotiate will not work with me. I do not consider a house sold until all contingencies have been met; ie mortgage commitment ,home inspections, etc. If in my mind I do not consider the house sold until all the contingencies are met, I am not stressed out or disappointed if the deal falls apart. If a buyer tied up my house under contract for six weeks and then hammered it with a home inspection I would not be in a negotiating mood. Sellers hate it when people find fault with their homes; they take it personally. How much do you think they will negotiate if you anger them? Sellers are more likely to disagree with the inspector and sell to someone else. This is just my opinion for what it is worth....I better do something productive now...good luck.
All I can say is turn the tables around and set yourself as the seller how would you feel about being bombarded with buyers exactly like yourself with no intentions of making good faith offers, only tying up your property and wasting your time one after another?
Everyone seems to be missing the point here. First of all, I have never used this approach. Secondly, I am not advocating tying up properties that one does not intend to purchase. Just looking to see how others deal with the offer process.
I find it much more straight forward and a better tactic to start low then slowly work up if needed rather than the other way around.
[addsig]
Greetings kfran1234,
I realize you’re not using this approach to "get your foot in the door." But as The-Rehabinator pointed out, if you look at the overall "concept" from the seller’s point of view, it could easily be perceived as a bit deceptive or manipulative – which wouldn’t bode well in any negotiations.
I have a property that I’m getting ready to sell now, and the first thing I did was have a professional inspection done myself -- the results of which are all included in my disclosure statement. I also have detailed cost estimates for repairs (not disclosed). So before anyone offers anything, I know exactly what needs to be done and what it would cost. And any potential buyer has the opportunity to do the same.
As the seller in this case, I'm trying to avoid exactly the types of tactics you bring up in your original post . I also don’t want to waste my time or anyone else’s.
Just my 2 cents
Everyone has made some extremely valid points here. Inspections work on the psyche of both buyer and seller. I do my own inspections, but wether you do them yourself or hire someone, here is what I recommend.
1. Make an offer on the property for what you feel is appropriate. Your offer shoud be based on YOU knowing that an inspection will uncover lots of little cheapo insignificant items that need to be fixed or replaced. Don't sweat the insignificant stuff cause there will likely be lots of it.
2. Make your offer "contingent on inspenction". Make it a go-no go deal and don't re-negotiate the price. If you are ok with all the little stuff the inspector uncovers, go ahead with the deal. If he finds something major like a cracked foundation, serious termite damage, scads of mold or anything else unacceptable to you, back out of the deal and get your earnest money back.
The key here is it's best in most cases not to renegotiate. Like a previous poster said, "either you want the property or you dont". Expect to find lots of little things wrong and if that's all you find, then you want the property.... deal done. If you find something major and unexpected, then you don't want the property... walk away.
Maybe after everyone (buyer and seller) has had time to digest a serious flaw in the property... say a few weeks and you decide you still want the property but at a lower price to compensate for the serious flaw, you can always try submitting a new contract .
i. you can always go up in price but not always down. i feel you can pi$$-off the seller if you bid higher then keep going down in price........km