House: asking vs offered Price (Pittsburgh: mortgages, how much, neighborhoods)

[wilhal]

Hi All,

How's the housing market situation now in Pittsburgh? Do you have any recommendation whether we should over or underbid the asking price when we make an offer to buy a house? Of course, this is a general question since we don't even know which house we want to buy.

(we'll be house-hunting this weekend in/around Shadyside, Squirrel Hill, Point Breeze)

thanks!
-Will

[hempfield mania]

In the PGH area in the current market, underbid. Have a buyer's agent working for you and they can steer you in the right direction but, they'll most likely say underbid and just tell you by how much. They can pull the comps. from the area and see how long any house you are interested in has been on the market and how long the comps. sat on the market. Each situation is different though. Personally, I'd start off offering 7.5-10% below asking price if the house has been on the market any appreciable time and hasn't had a recent price drop. Otherwise, if it is a new listing or had a recent price drop, etc., I'd probably go in 5-7.5% less than asking.

[BrianTH]

Don't overbid unless you think there is an actual bidding war going on. That can happen, but it isn't the norm here.

As for underbidding--it also isn't the norm here to overprice the listing by a certain fixed percentage or amount, but I think you are usually safe if you are only underbidding something like 5% or so. If you really think it is overpriced more than that, you can bid lower and make your case, but there is some risk of just getting a flat "no" at that point.

[Bong477]

Underbid for sure. The worst that happens in they say no or make a counter offer. Even if they say no, you can always offer another bid... if someone refuses to sell to you because they are so insulted by your first offer, its probably not someone you want to work with anyway so screw em... you'll be able to find another property to buy.

[ferraris]

its probably not someone you want to work with anyway so screw em... you'll be able to find another property to buy.

That sounds like a tip for salary negotiation, not home buying. Sure, you may not want to deal with them; but you might want to live in their house!

[BrianTH]

A little good faith on both sides is desirable. The buyer wants to be confident the disclosures are complete and so forth, and the seller wants to make sure the buyer isn't going to flake, fail to get financing, and so forth. A buyer who bids something completely unreasonable doesn't inspire a lot of confidence.

The other problem is that if you start way too low and they just say "no", then if you come back in a second round with a more reasonable bid, you are actually in a weaker position than if you had just started with the more reasonable bid in the first place.

So on the buying side, I wouldn't mechanically bid lower by a certain amount. Instead I would make a good faith effort to come up with a reasonable range, then offer something on the lower side of that range.

[SlurmsMcKenzie]

I would agree with the underbid strategy but would underbid less in a neighborhood like Shadyside or Squirrel Hill since these are desirable neighborhoods that have held their value pretty well. I purchased a house in Squirrel Hill a few years back (in the midst of the nationwide housing collapse) and found that sellers were less likely to accept a significantly low bid than elsewhere in the city.

[Copanut]

Do some research and see what the house last sold for. It's possible that the owner might take a much lower price just to move on. My best advice is to always look at vacant homes, someone is paying two mortgages and looking to sell ASAP.

[fleetiebelle]

OP, are you not working with a realtor? Mine was invaluable in answering questions like this.

[Bong477]

I didn't mean to suggest making unreasonable offers. Decide what you think the house is worth, then offer a bit less. The person selling the house most likely decided what the house is worth and is asking a bit more.