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#31
10-19-2014, 03:56 PM
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Drew, an offer is an offer, obviously the house is languishing at 5 months and still on the market. This one may seem perfect, but like the perfect bike that gets away, there will be another. Make the offer and fill us in. Buying a house is not a party, it's been 7 years since I was in your shoes, and I'm still "hungover" from the experience.
__________________
Make mine lugged. Last edited by binxnyrwarrsoul; 10-19-2014 at 04:03 PM. 
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#32
10-19-2014, 04:02 PM
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I closed on a house this month that I made an offer on in late August. I was not looking to buy a house, but the owners dropped the price $100,000 on a house in a market I am an expert on. I figured the owners would not want to move off the new price, but I took off another $50,000 and took off my commission. This house needs a remodel and my wife is an expert at remodeling houses and I made it a totally unemotional decision. The Seller came back at full price and I was told there were a lot of buyers coming back to look at the house. I said fine, but I was holding firm on my price and two days later it was mine. Jeff
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#33
10-19-2014, 04:14 PM
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It has been interesting to be in a career (fixed income money management) where bids and offers over various cycles of liquidity are the daily reality of life while also seeing how bids and offers are treated in residential real estate. In either case it's possible to bid (which in real estate is confusingly called an offer) at a level that is unrealistic to the point of being annoying, but such bids are not really insults as much as probes that have more or less meaning to the people making them. Being insulted is up to the receiver and their personality and, frankly, their lack of experience in receiving bids since they may only get 5 in a lifetime, compared to the 50 a day we might get in a fixed income portfolio. Real estate agents like to play on the culture of not giving offense to anybody to scare bidders into starting higher, and some sellers happily play that game too. But really, since the OP knows he is not trying to insult anyone, then his bid is not insulting. Whatever reaction the receiver has is up to him and is irrelevant. However, starting low sets an agenda, and the agenda setter in a negotiation often wins.
There are certainly bids that are so low they are doomed to failure and so a waste of people's time. 25% below the asking price of a normal home sold by a normal seller on the first day it is on the market is very rarely going to work. 6 months in, there is some hope the seller is getting desperate, and while they might reject it based on emotion on day 1, all hope is not lost as that bird in the hand starts to weigh on the mind. Successful low bidders lack emotion and are firm on their bids. They don't bid against themselves (raise their bids without getting some movement from the seller), and they don't worry about insulting. I would think 10% off the price is the best any seller should hope to get on a first bid after that long on the market, and 14% should not be viewed as at all surprising.
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#34
10-19-2014, 06:09 PM
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#35
10-19-2014, 07:14 PM
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Not much to add.
When we looked at houses we offered 10% below asking, expecting to hit about 5% below. One homeowner was insulted when we offered 10% below. They didn't sell the house for something like 5 years, and they actually moved back to the area after they finally sold it and left. The thing with them was that they weren't ready to sell - they built the house, they were moving for some unknown reason (and it seemed they didn't want to move), and they ended up moving right back. So they weren't ready to sell. My first house was listed at 189k (early 90s). It was stretching my budget but I liked it and I thought I could make it work. The real estate agent was the listing agent (so he listed the house and he's working for the owner in that respect) as well as the agent showing me around. On the other hand about 25 years prior to that my dad was his boss, basically told the real estate agent that he wasn't meant for that line of work, and the real estate agent quit his engineering job. He got into real estate and now has a comfortable little empire of rental units at that time in the early 90s. He kept remarking that if my dad hadn't told him straight up that he wasn't cut out to be an engineer he never would have gotten into real estate. He was really happy with his situation and very thankful my dad told him to get out of engineering, a career choice that everyone in his family seemed to think was the only thing to do (dad and brothers were engineers). Anyway, at that time, I asked him what he's suggest I do about the house. I was thinking $180k or something. He told me to offer $160k. That seemed low but I told him to relay that offer to the seller. Seller returned with a $162.5k. I bought the house after double checking that they didn't mean $182.5. When we sold it I think we listed it for $419k and sold it for $397.5. 5% less than asking was our goal so that was fine. We closed about 90 days after the house listed, they put a deposit on it I think 30 or 40 days after listing. Incidentally we used the same guy (the one that worked under my dad) as the listing agent. He said it was rare to be the listing and purchasing agent and then the listing agent again. He even referred us to a real estate agent up here, at our request, so he got a little spiff when we bought our house up here.
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#37
10-19-2014, 09:59 PM
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Laws vary from state to state but in CA. a lessee has the right to provide a substitute lessee to take over his lease provided the second party is as well qualified as the first and it doesn't cost the lessor anything. If it is the same where you live you might not be on the hook for lease payments after you move out even though you have some time left on your lease. Landlords often find this a good deal because they may get a good long-term tenant at no cost to them for ads or commissions.
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#38
10-20-2014, 08:40 AM
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Well, submitted our low offer. Now we wait to hear back!
Thanks for all the advice, guys. We have very firm limits with how much we can and are willing to spend. The problem is, most of the properties in this area that come in asking that amount are likely to require a ton of work, have damp basements, water issues, etc.. So, we're taking a shot and seeing if it sticks!
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bonCourage!cycling
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#39
10-20-2014, 08:50 AM
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Sounds like you're in over your head. The comps reflect a still overpriced market.
__________________
It's not a new bike, it's another bike.
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#40
10-20-2014, 09:06 AM
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#41
10-20-2014, 09:43 AM
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Good luck, Drew. Good advice here!
Don't forget to play your strengths, beyond the financial offer. In this case, your primary strengths are: - You don't NEED this house. You've got time, and a world of other options. You can buy ANY house. They need to sell THIS house. - You can offer them their choice of closing window to accommodate their needs. ASAP? You'll do your best to make that happen. If they want it longer for any reason, you can accommodate that. You can make the transaction easy and painless for them. Your agent should be communicating this for you. In any event, my only piece of advice: if they come back firm on their price or with a counteroffer that doesn't show much give, do NOT get back to them right away with a higher offer. Give it a few days, minimum. Maybe a week. Maybe more. This is where it's critical to have an agent who's working for YOU, not the buyer, who can arbitrate. If you don't have a buyer's agent, then you need to pretend your agent is the seller, and keep your cards close to your chest. Be willing to walk away, and make sure the seller/seller agent realizes that they need to keep you on the hook. It's just a house. There are lots of 'em. JC Quote:
__________________
Enjoy every sandwich. -W. Zevon
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#42
10-20-2014, 10:06 AM
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an important point has been raised by a number of posters:
buyers and their real estate agents don't always have the same self-interests. or put another way, share the same interest in playing hardball. in my experience, many agents are a little too cosy with other agents. after all, in any given market, agents will interact with each other many times across many sales and it's only human nature to not want undue antagonism with colleagues you'll see down the road. that play-nice attitude benefits them, but not necessarily the buyer. with the last house i bought a little over a year ago, i found a buyer's agent who was a pitbull and discovered what i'd been missing working with play-nice agents. the guy i found is one of the least popular (among other agents and brokerages) and most successful brokers in our area. he's very smooth, polished and will go for the jugular for his buyers. not an a-hole but relentless and doesn't mind a few bruised feelings, because he realizes his future depends on making clients happy, not other brokers. my long-winded point is, watch your broker with open eyes. be sure they are fighting for your interests, not some clubby, go-along, get-along broker tea society.
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#43
10-20-2014, 10:28 AM
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The other approach, which takes some serious ovaries--or balls, if you're a guy--is to look at their counteroffer, and, if it's not in sync with reality, go back and offer $2500 less than your first offer, with a 30-day expiration. Then sit back and don't say a thing. If they get a better offer in 30 days, great. But it's October, and they haven't sold it in 150+ days on the market, including the spring/fall sales season.
By November 20th, your offer might make a lot more sense to them than it does today. I've seen it work; not that this approach is for everybody, but...
__________________
Enjoy every sandwich. -W. Zevon
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#44
10-20-2014, 10:29 AM
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freakonomics the 1st book, not sure how valid a source, had a chapter on buyers agents/real estate agents and compared them selling their own houses vs client houses. They almost always got more for their house even if it meant keeping it on the market longer. Not to offend anyone and I think real estate agents serve a purpose and are helpful you just have to understand how they make their living and their motivations. As a buyer it's in their best interest for you to spend more money as they will make more. Human nature would dictate there is little incentive to get you the best deal possible.
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#45
10-20-2014, 11:35 AM
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Sorry, I don't buy it.
I bought a hud house 1 year ago. List was $15,400. My agent suggested an offer of $11,000. I knew the house was seriously underpriced (2nd full bath upstairs - very rare for a bungalow, not to mention new roof) and I didn't want to lose it, so I told him to bid $15,450... $50 over list and I got it. $6000 in rehab costs and I am getting $750/month. Brokers who only seek to benefit themselves won't last. For financed buyers, homes still have have to appraise. Either comps support a price or they do not. Either a house fits your budget, or it doesn't. People are so stupid to be duped by a broker, yet at the same time, smart enough to get the best price for their house. And, who is listing and showing the house?? The home owner? Is his/her time and energy infinite? There is no free lunch. I broker could try telling to me to bid $40k on a $30k, but I wouldn't do it as the returns aren't there and what does it matter to my broker if I spend $120k for 3 homes or $30k for 4 homes?
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