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Well, we're underway. We found a house that we love and want to buy. It was originally listed at over $1 million (not sure exactly how much), I think last April. It was most recently reduced to $980K in December. (This house is in Hawaii, and will accommodate three small families in comfort.)
I don't think there were any offers, prior to ours, but I'm not sure.
We are well-qualified and will have a > 20% downpayment. If we buy, we want to close quickly (as is normal there). We hope to get the property for $900K.
We offered $820K (on advice of our agent, who suggested that it was not unreasonable to make a "ridiculously low"offer, given the present market), they have now countered at $950.
Where do we go now? Should we take our time, to "make them squirm"? Should we come up a little, or a lot? I am thinking if we offer $875, they'll know we're serious, and probably come down a bit more. Then we can offer $900 and hopefully they'll take it.
I don't know ANYTHING about negotiating! Please help me. I don't want to ********** up.
Your agent should have tried to develop feel for the sellers motivation by talking to the other agent. Sometimes he can and sometimes he can't. It depends on how good a negotiator the other agent is.
Your agent is the best person to give you advice at this time. You and he should be discussing this and come up with a negotiating strategy. That's what you're paying him for.
First of all, your not paying your buyers agent, the listing agent is. I just needed to clarify that. But also, if hes a good agent, he will want to get you the best deal possible, so you will refer him to all of your other rich friends.
The best thing you can do in negotiations, you have already done. You know the top price you are willing to pay, 900k. I would recomend slowly offering more and more to the sellers, until they either accept, or until you get to 900k. If they dont accept that, walk away. Your buyers agent was right, in this market you should be able to get a good deal, so find a seller who will negotiate to where you want to be.
Always know your BATNA (best alternative to a negotiated agreement)... is your best alternative to walk away? If you don't know what your BATNA is, be careful!! For some clients, they "want THAT house" so their BATNA is to cave.... and not take the risk. Only you will know how much pain you are willing to take. Once you have that figured out... go for it with your agent.
Thank you, those of you who have answered (so quickly!). I am asking here because my sister is actually in Hawaii, dealing with our agent, and we are stuck here in NY communicating with her long-distance. So, I thought that while I'm sitting here with nothing else to do (regarding the house purchase), I'd seek some second (third, etc.) opinions!
You are right, about the BATNA. Our alternatives, in order, are: get the property for $900 or less; perhaps offer a LITTLE more (up to 915, maybe) if we can get some concession(s) (don't know what they would offer, but we have some ideas); walk away. There are other properties out there that will work for us. So we're in a fairly strong position, I think. I'm going to look at the records today and see if the seller has a mortgage (i.e., what it is costing her in interest every month it doesn't sell).
You have the choice of doing several rounds of negotiating, or asking the agent to tell them that in order to save time you would like to offer your best price. If they can accept that, you have a deal, and if not then you have to move on. If you use the latter technique, then I would suggest that you insist that your agent meet with the seller and their agent in person, so s/he can discuss this offer in person so that it's presented in a very nice way.
The seller can refuse this meeting, but neither agent can. You can give your agent the instruction in writing so he can present that to the sellers agent. If the seller refuses, then ask your agent to get a signature stating that the seller refuses. That is just in case your agent doesn't want to go face to face and lies to you. That has happened.
So many agents are prone to just fax an offer to the other agent and say "see what you can do". This is not negotiating at all. It's a time saver for a lazy agent and is the reason many deals aren't made that could be made.
If you go through the negotiating rounds, then I would suggest that you give the seller 48 hours. That draws the negotiation out and gives them plenty of time to think about it. That can work in this market if they aren't getting other offers. In the meantime you can be looking at other properties. Your agent can convey that to the sellers agent.
Much of this depends on the negotiating skills of your agent, and that's why in my other post I said that you need to be working out a strategy with your agent.
I'm going to look at the records today and see if the seller has a mortgage (i.e., what it is costing her in interest every month it doesn't sell).
Where the heck is your agent in this deal? It sounds like you have made an offer on a home and do not know the seller's motivation and what other comparable homes in the area are selling for.
All this should be a part of a well honed stategy to buy this house and I am not getting a warm /fuzzy, here.
While your agent is going to get paid out of the proceeds of the sale, your agent has a fiduciary responsibility to represent your best interests.
Is your agent perhaps also the listing agent for this property?
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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I like to recommend that people make their best and final offer after round one. If you can go to 900, do so and let them know it's your best and final offer. Tell your agent you want to start looking at other alternative houses, that way he/she can tell the listing agent other properties are in play.
Inching up to a number in the middle seems like a waste of everyones time to me.
No, she's not the listing agent. I really can't assess first-hand what the agent is doing or not doing, what her strategy or negotiation skills are, etc., because she's 6,000 miles away.
You see, part of the problem is communication - my sister is dealing directly with the agent in Hawaii, while the rest of us buyers are 6,000 miles away in NY. Some things are conveyed by the agent to my sister, and my sister either doesn't recognize the importance or doesn't convey them to us, here in NY. Sometimes the agent will tell her something and she will forget the answer by the time we ask sis. She has a very demanding job and is a single mom of a difficult teenager, so it is sometimes tough for her to be on top of her game in this process also. We are conveying our questions to sis, who is then talking to the agent. There is a time lag (we are up while they are asleep and vice versa), and things are often lost in the communication process.
For all I know the agent DOES know about the sales history of the house, the seller's motivation, etc., but either my sister has not asked about those things or, more likely, has simply not conveyed that information to us. The agent has obtained information of that sort for other properties we were looking at. Also, sis is a very independent person and has probably conveyed, implicitly, to the agent that SHE wants to be in control, perhaps tending to put the agent off from offering too much advice. It's just her personality, there's not much I can do about it (except talk to her, lot of good that will do).
There really aren't any homes in the area that are truly comparable. This is an odd property, and it's a fairly small market (the entire island has only 60,000 inhabitants!). We do know the market in general has come down quite a bit over the past year.
Well, we're underway. We found a house that we love and want to buy. It was originally listed at over $1 million (not sure exactly how much), I think last April. It was most recently reduced to $980K in December. (This house is in Hawaii, and will accommodate three small families in comfort.)
I don't think there were any offers, prior to ours, but I'm not sure.
We are well-qualified and will have a > 20% downpayment. If we buy, we want to close quickly (as is normal there). We hope to get the property for $900K.
We offered $820K (on advice of our agent, who suggested that it was not unreasonable to make a "ridiculously low"offer, given the present market), they have now countered at $950.
Where do we go now? Should we take our time, to "make them squirm"? Should we come up a little, or a lot? I am thinking if we offer $875, they'll know we're serious, and probably come down a bit more. Then we can offer $900 and hopefully they'll take it.
I don't know ANYTHING about negotiating! Please help me. I don't want to ********** up.
One thing to find out, are you dealing with a home owner, or a bank repo office?
I'm finding that banks have already priced their properties agressivly and they are not budging much. Example, in 3 offers with a bank, I got them down 1% on a property. They simply are not budging much.
If your dealing with a home owner, it would do you well to try to figure out whats owned on the property. You do this by looking up the recorder of deeds office and prothonitory's office in the county where the property is located, and research any mortgages on the property. While its not always accurate, you can guess at whats owned, and determine if they are trying to profit from the sale, or if they are trying to break even. If your trying to get the property for $900K, and they owe $950K.. it'll be difficult.
Keep us updated, going through the same things here.
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