OT Advice Needed: Home purchasing and first offers

[Nooch]

Given the sample size of the forum, I figure it's the best place to pose this question...

Found a house the wife and I really like. Unlike most in the area that we've seen, it's one that we wouldn't grow out of for a long time, it's in the best school district in the area, and it's conveniently located.

It's also out of our budget, at the asking price.

So I ask -- how low is too low of an offer to make for a first offer? We have a number that's 14% off asking price, that would open us up (if they came back) to a best and final that's probably 10-12% off asking. Is our 14% number too low, or insulting, to the owner?

Their agent has made it clear that the owner is anxious and eager to move -- he has a home in Florida, he's the original owner, his wife passed away, and they previously had an offer fall through because they couldn't get a mortgage.

The comps justify his price, but I know we just can't get the mortgage with the taxes being what they are.

So how low is too low for an initial offering?

Other bits of information that my wife is hung up on: so far we've only seen about 15 houses, and we're not in a serious rush as we're in a lease that expires in May. So i guess the other question is whether or not it even makes sense to try on this house rather than waiting until march to try and find something.. we started looking now with the intention of seeing what was out there and getting a feel for the areas we're looking. this one just happens to check all of the boxes for us..

[EDS]

How long has the house been on the market?

[93legendti]

You never know. I just made a $30,000 offer on a house listed at $45,000. The seller's agent then asked for a number close to $40,000, as they had a mtg offer at that price. I countered at $31,500.

This summer I bought a house listed @ $39,000 for $30,500.

I don't believe sellers' claims of "insult" or requests for "highest and best". It's business.

You can't buy if you don't make an offer. Make an offer within your ability to buy, that isn't your ceiling, and see what happens.

[Nooch]

Originally Posted by EDS

How long has the house been on the market?

153 days on Zillow

updated the original post to ask more opinions!

[shovelhd]

I would not consider a 14% offer insulting, not in this market.

[TBDSeattle]

Originally Posted by 93legendti

I don't believe sellers' claims of "insult" or requests for "highest and best". It's business.

100% agree

It is up to them to accept or reject the offer. Real estate is not about feelings, it is about pairing a willing buyer and seller.

Motivations:
you = making an offer that you can afford so you can actually buy the house
real estate agent = make a sell at any price so that they get their commission
owner = get as many offers as possible within time constraints, choose the best one

[FlashUNC]

So much of real estate is location dependent, it really depends on the local market. We've got some friends out here who are house hunting in the Oakland Hills, and they might as well not put prices on the listings. The bidding wars are crazy. Even for serious rehab jobs.

Generally, I'd second what was recommended earlier in the thread. Offer what you can in your price range that isn't your max and see where it goes.

[93legendti]

Originally Posted by Nooch

?..
Other bits of information that my wife is hung up on: so far we've only seen about 15 houses, and we're not in a serious rush as we're in a lease that expires in May. So i guess the other question is whether or not it even makes sense to try on this house rather than waiting until march to try and find something.. we started looking now with the intention of seeing what was out there and getting a feel for the areas we're looking. this one just happens to check all of the boxes for us..

Less than a year isn't too early to look. 2 months is too little time to look. In my area, this time of year is better for buyers, as opposed to spring...

People don't want to move during the holidays, so less buyers is better for you...

I would be looking, you can get out of a lease early...

[ariw]

Make the offer, see what happens. If previous deals fell through and the listing is approaching six months, 14 % below asking is fine. Remember, the worst that can happen is that they can say no...

Ari

[mike p]

I wouldn't worry about insulting anyone, they can accept, counter, or ignore. If he's had one deal fall through he may be anxious to just be done with it. What can it hurt to try?
I once had a realtor tell me she wouldn't write up an offer that low, I told her no problem I'll find someone that will. She changed her mind in a hurry and I got it! They didn't even counter they just accepted! "You miss 100% of the shots you don't take".

Mike

[veloduffer]

Do you have the budget nailed down to include repairs? Don't stretch without including a good cushion, which could mean a lower down payment. One storm could cause a major repair, like a roof repair etc.

If you are comfortable with the budget, then make an offer. Some times it helps if the owner knows that you are a new family trying to get a start. Lots of times homes are like heirlooms with lots of memories, and sellers may take less money to see it passed on to someone they like.

[93legendti]

As another example of what can happen:

This summer I also bid on a $40,000 house, they countered my $31,500 offer at $34,000. I walked away. After a deal fell thru they came back and asked if I would pay $31,000. I agreed.

None of these houses were on the market as long as the one you're looking at.


I would also offer this based upon my experiences: More consideration goes into a buyer's offer than a listing price. In other words, a listing price isn't usually written in stone, or even with ink.

[Nooch]

Originally Posted by 93legendti

As another example of what can happen:

This summer I also bid on a $40,000 house, they countered my $31,500 offer at $34,000. I walked away. After a deal fell thru they came back and asked if I would pay $31,000. I agreed.

None of these houses were on the market as long as the one you're looking at.

Man, I wish Michigan prices were New York prices, LOL.

[Nooch]

And as far as the lease, though? I mean, assuming a 90 day closing (which has us moving in the middle of January/February, depending on how things go), that leave 3-4 months on the lease term. The landlord hasn't been the greatest (complained after a few weeks of us living here about noise -- we were vacuuming on Christmas Eve, and just the other day asked if I could try and keep my 2 year old from running around the house in the morning because it wakes their two year old up... landlord occupied two family house, we're on top).

I don't have it in the budget to float both places for three months, unfortunately.. Assuming best case scenario that they accept our offer.

[VTCaraco]

Granted it was 17 years ago, but we were very frank...
"We like the house a lot and here's our offer". We didn't divulge too much, but the seller responded with a gesture of a counter-offer and an affirmation that they'd really like to sell it to us. I feel like we both walked away feeling like we had been treated respectfully and both received fair consideration. We were around 13% below asking, which was after a few price-drops had already occurred, and settled at about 11% below asking (eventual price was around 75% of original asking after 11 months or so on the market).
We were novices and young, but it still felt like it was handled in the "right way" from a civility point of view. What's interesting was the fact that the realtor said that the sellers had walked away from a higher offer about a month earlier because those folks had accompanied their offer with a justification of the discount rather than affirming that they liked the house. The explanation that the seller and realtor had for us was that they felt like we were looking at it as a "home" and not a business decision.