Negotiating the price of a house (neighborhood, purchase, prices)

[sablebaby]

Originally Posted by nitram

Every house or property I've bought in the Phoenix Metro area for the past 40 years, I've low balled everyone of them and got some smokin deals. Low ballin will get the honest price from a seller who is really motivated to sell. There is no such thing as an insult to any offer. It's what you're willing to pay.

If you believe this, then you'd be VERY surprised of how personal people get with their homes. It may be what YOUR willing to pay, but that doesn't mean THEY don't get insulted. They think they know what their house is worth (right or wrong) and they usually don't want somebody telling them otherwise. You just haven't been on the other side of the deal.

Don't get me wrong, lowballing CAN most definitely get you a great deal. I know someone who does it all the time and for the most part gets what she wants. I know she does insult others during the process (she's pretty blunt).

[63ragtop]

To reiterate what someone said earlier, a lot of it can depend on where the seller is at. I was looking at a house for sale recently and we could tell by the records that the seller was asking about 40K more than he had into it (sort of a guess based on his loan and the improvements that were made). We felt the property was worth about $90K less than the asking price and we would have started even lower so we didn't even bother making an offer since I can't see someone having to bring in $50K just to close.

There were a couple other houses where the house was totally paid off so we knew the sellers had room to negotiate and to come down from their 2004-2005 dream values.

[Axiom]

My answer is it depends. Helpful?

I agree that you really need to look at recent neighborhood sales to determine if the house is priced fairly to begin with.

Example: I just looked at a CMA on 6 houses. They are all semi-custom, so a few differences here and there and of course some have been upgraded more than others. But all are the same builder, very close in size, similar floor plans, same neighborhood, etc.

Asking prices range from $598,000 up to $775,000

If you go by average price per sq ft of recently sold homes in the neighborhood (not the be all, end all of course - but helpful) the $598 folks are already well under market value and the $775 folks are still in dreamland (they started out at $899,900 btw)

I'd low ball the $775 folks without a 2nd thought. I wouldn't do it to the $598 folks.

Yes, it's a buyers market. Yes, a house is only worth what a buyer is willing to pay. But there has to be some shred of reality involved in the transaction.

Honestly I think part of the reason so many sellers are still overpricing their houses is because they know no matter what they ask, they are not likely to get a full price offer in this market. Too many buyers have the mentality that if they don't get a big chunk off the asking price, or all kinds of things thrown in, they have not gotten a good deal.

[nitram]

If you're knowledgeable in negotiating you can make some great deals by lowballing. As I said before if the seller is motivated and is realistic in wanting to sell you can get a good deal. Too many people are attached to their house emotionally and think it's worth more than what it actually is.
I purchased a home last Sept. The house was listed for $395,000 and I low balled it at $249,000 to see what the real reason was for selling and also a reality check for the seller. I offered a cash sale and to close in 30 days as an incentive. We did 2 offers and counter offers.The next day we agreed on a sales price of $293,000. That's a $102,000 savings/reduction. The sellers were so happy, they had already made another commitment for another place and were so happy to get this house sold. They moved out the next week and offered to buy us dinner.
The moral of the story is, if you're a good negotiator and very diplomatic, you're not going to insult a true seller and both of you will walk away with a good deal. Just do your homework.

[EugeneBKLYN]

I've seen houses in South Dakota for 17,000. In a town called 'Wood'. Population: 66.

Lol.

[EugeneBKLYN]

Originally Posted by CodyW

In this market - People might be desperate enough to take an offer like that.

Our house has been on the market for about 330 days now, and we would bend on our price. Surely, not a hundred thousand, but, then, there are people who are much more desperate than we are.

Why exactly are people selling their home at bargain prices and why isn't anybody buying? Phoenix is booming with newcomers, isn't it?

[sheena]

Originally Posted by EugeneBKLYN

Why exactly are people selling their home at bargain prices and why isn't anybody buying? Phoenix is booming with newcomers, isn't it?

Supply and demand and the supply is more than the demand. Their is a large supply due to investors dumping, plus people that are selling to salvage the over inflated equity and some people can't afford the exotic mortgages they got into.

[Ponderosa]

Sales rates are about the same as before the boom. There is still a lot of excess though from the artificial demand created by investors. People are still coming and as long as the economy doesn't tank, the excess inventory will eventually sell and supply and demand will re-equilibrate. Most estimates are for late this year or early next, but who really knows?

What amazes me is that the contruction is still going on pretty heatedly. Not like in 2004/05, but every subdivision I drive by has new houses actively being built.

[nitram]

The Phoenix area is selling around 20,000+ homes every month. There are buyers. There are over 45,000 homes for sale too. Those that are selling are realistically priced and the sellers are motivated to sell. Those on the market for any length of time are either overpriced or there is something wrong with the house or neighborhood.

[Axiom]

Originally Posted by EugeneBKLYN

Why exactly are people selling their home at bargain prices and why isn't anybody buying? Phoenix is booming with newcomers, isn't it?

People are still buying, but I think a huge part of the puzzle that is not mentioned as often as the sub-prime mess, investors, folks who are upside-down and such is new construction.

A lot of builders have far more inventory than they would like and they're offering some tempting incentives right now. it's tough for the average joe to compete.

There was not a single sale in our immediate neighborhood last month, despite the fact that it is normally a highly sought after location with plenty to choose from right now. Yes, some of those houses are way overpriced, but there are also bargains to be had.

On the other hand our realtor called the sales office of one of the new home developments not too far away (well, it would be too far for me - it'd add 20 minutes easy to almost any commute... unless you work in the middle of nowhere) They had 30 sales just last month.

There is a 20 month supply of homes on the market in our neighborhood right now. There are some very nice, well priced homes that have been sitting for months. Of course we're also talking higher price ranges for the most part and higher priced homes always take longer to sell, but especially in this market.

So I'd have to disagree that a house on the market for any length of time is overpriced or has something wrong. There is just flat out too much inventory, resulting in a much longer time on the market than normal, even for well priced homes.