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I have bought and sold about ten or so houses. Each time I sold I never got my asking price and on one sale I had to through in my brand new lawn tractor. When I bought in a good market I always offer 10% less. Sometimes I got the deal and others I negotiated, but I never paid the full asking price. The only exception was the time I bought VA and then I did pay the full asking price because the sellers paid the closing costs. I got out of the housing market just was it went south.
Recently I thought it would be a good time to buy back in and I plan to buy VA.
I also plan to pay the full asking price. I found one home I liked and offered the full price but the seller declined and countered with a price $5k above their asking price. I declined. If I were to buy this house with a conventional mortgage with the market the way it is I would offer 20% less than the asking price and would negotiate to no more than 10-15% less than the asking price. The most the VA will allow a seller to assist is 6%. IMO, the seller would do much better selling VA and paying the 6% while selling at full price than taking a conventional offer at 10% less, or more, than the asking price. Am I missing something? Thanks.
You're missing a lot. Selling pricing have nothing to do with asking price. They have to do with the market. What do the comps of the market look like. If this seller is priced well for the neighborhood, why should he take a 10-15% hit on his asking price? You can't use numbers like that. Everything is about the value.
While I generally agree about market vs asking price ...
...I thin it is a fair assumption that if the OP has done this ten times that is a distinction they are aware of.
In my experience sellers that counter an unacceptable asking price with something more than ask use this as either a way to emotionally respond to offers that offend them OR as a way to attempt to adjust to recent sales activity that they are jealous of.
It is true that the "reasonable offers" are based on a subtle balance between the recently sold comparable properties AND the seller's willingness to concede that these deals are what they must use to set their price regardless of how much they have into the property or similar irrelevant details.
Of course buyers have to live in that world too, and if there is recent sales activity that supports the seller's counter then that must factored.
If the seller is in an irrational / overly emotional place then it is silly to waste time trying to determine " what is in their head"... Funny thing is that I have the same kind of detached from mathematical sameness drive some REO asset disposal people and that is what really boggles my mind -- a person that ought to be driven by just the bottom line of what makes sense for their firm instead getting caught up not in how then reality of the market is setting prices but concerna of making themselves look good to superiors or just overwhelmed with inaction...
Last edited by chet everett; 08-17-2010 at 07:14 AM..
Maybe I read it wrong, but the OP seemed to be saying he made the decision to pay full asking price before he found a house. If that isn't wacky I don't know what is.
If I were to buy this house with a conventional mortgage with the market the way it is I would offer 20% less than the asking price and would negotiate to no more than 10-15% less than the asking price. The most the VA will allow a seller to assist is 6%. IMO, the seller would do much better selling VA and paying the 6% while selling at full price than taking a conventional offer at 10% less, or more, than the asking price. Am I missing something? Thanks.
Maybe I am totally missing something (which wouldn't be the first time). Two questions about this:
1. Do people detemine prior to house hunting what % of asking price they are going to offer before seeing a house?
2. Do people determine what % of asking price to offer based on what kind of mortgage they are taking?
I'm totally missing something too..... with both the buyer and seller.... why would you decide to offer full asking price in this market.... and why would a seller counter by increasing their price by 5% over their asking price? This isn't a seller's market... the last time I checked.
I guess I missed the wacky part of that???? Whats wrong with it?
It's odd to me as well. When the market was good the OP offers 10% under, that would have never worked here, everyone's listing was more like an eBay auction. The asking price was more like the opening bid and you had to beat other people by outbidding them. It was fun to watch the Realty folks get their panties in a bunch when you told them you weren't interested in auctions.
So in contrast, the OP plans on paying the asking price in a bad market, doesn't that sound backwards? If he has bought ten homes, I'm sure he knows what he's doing, we're just waiting to hear the reason for it.
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While I generally agree about market vs asking price ...
