Dumbing down the price

[RedSoxMark]

Originally Posted by ProLogic

How much is too much when negotiating a home price? I've heard people say that offering 15% less is way too much.

Pro,
When making an offer, don't focus on the asking price (or offering a certain percentage off of that). It's completely irrelevant. Do you homework and figure out the current market value, based on closed comparables. Then, base your offer on where you want to end up, related to that.

Good Luck!
Mark

[skeating]

The economy in the US is becoming shakey to say the least. We would all do well to respect this and try not to destroy the real estate market by using greedy tactics. It is one thing to offer a reasonable price for property based on the market value, and another to go after the property with greed thinking only of ourself. Treat one another with respect whether buying or selling. The mortage companies have already created a nightmare which will take years to clean up.

[Shazam72]

Originally Posted by skeating

The economy in the US is becoming shakey to say the least. We would all do well to respect this and try not to destroy the real estate market by using greedy tactics. It is one thing to offer a reasonable price for property based on the market value, and another to go after the property with greed thinking only of ourself. Treat one another with respect whether buying or selling. The mortage companies have already created a nightmare which will take years to clean up.

I would agree, but capitalism doesn't work that way.

When I purchase a car, do you think about the dealer who's selling it to you, his/her spouse and/or kids?

Don't let emotions cloud your judgment. I find it odd that people should suggest that emotion be involved when negotiating a price on a house. Also, "market value" changes and you can't price fix an asset, try as you may.

The real estate market won't get destroyed by bottom feeders. Everything returns to equilibrium at some point. Likewise, money isn't destroyed. It simply transfers from one party to another.

[Shazam72]

Originally Posted by younglisa7

My dh and I are cash buyers, no inspections, close it within 1 week if it has a clear title. There is absolutely no emotion involved- it's just business. If you don't like the offer just say no- we don't counter.

Two years ago we offered 350K on a 599k house-they said no. It just sold 2 months ago for 370 but they had at least 20k in carrying costs plus a slightly higher commission.

Last year we offered 350k on a 459k house. They said no and 13mo. later it is still on the market for 349k and can't sell.

We always check the tax records. I want to know what has sold, the condition and location of the homes, and what their mortgage is. I'm not here to clean up the mess people got themselves into. We only offer what we think the house is worth. If you don't like it you can keep paying the bills. Right now in our area we think the homes are worth the 2001-2003 levels and no more.

If you have that much cash, perhaps you should deposit it in something that'll generate income such as a high yielding dividend very stable equity (utility/mining stocks come to mind) or a CD (100K limit on FDIC though ), and use the income to pay rent for a house while you sit the market out? There are some utility stocks that pay 8-15% dividend yields and their price hardly moves. They're boring for speculators but total cash cows.

Depending on the area you're in, you may find a tremendous bargain waiting just another year or so, especially if you don't need a mortgage and can pluck one quickly from a seller who wants to do a short sale. Not that this should be a directly motivator, but you'd be doing them a favor too by not having them foreclose.

[CouponJack]

Originally Posted by RedSoxMark

Pro,
When making an offer, don't focus on the asking price (or offering a certain percentage off of that). It's completely irrelevant. Do you homework and figure out the current market value, based on closed comparables. Then, base your offer on where you want to end up, related to that.

Good Luck!
Mark

The problem is in many markets homes are not even selling at or near "closed comparables". Buyers in many cases are still waiting for the record amounts of inventory to subside and for home prices to get more in line w/average incomes.

Buyers in many cases have the upper hand because homes are sitting longer, sellers are getting more and more desperate as their DOM increases.

There is nothing wrong w/going lower than comparibles because more times than not, a seller is desperate for "any offer" in today's market.

[North_Raleigh_Guy]

Originally Posted by CouponJack

The problem is in many markets homes are not even selling at or near "closed comparables". Buyers in many cases are still waiting for the record amounts of inventory to subside and for home prices to get more in line w/average incomes.

I'm sure that is true in some places. I think people get into trouble (not saying you, just people in general) when they assume it for all places. For example, while I do think the market has slowed to some degree here in my area of North Raleigh in NC, homes in my area are still selling (and going to close) at or near "closed comparables". Are you finding it to be different in your neck of the woods down in Charlotte?

Like I said, things here in my area of N. Raleigh are a bit slower than they were last year and DOM is longer in some cases, but comps are still the best way to go in my immediate local market. I guess YMMV.

[CouponJack]

Originally Posted by North_Raleigh_Guy

I'm sure that is true in some places. I think people get into trouble (not saying you, just people in general) when they assume it for all places. For example, while I do think the market has slowed to some degree here in my area of North Raleigh in NC, homes in my area are still selling (and going to close) at or near "closed comparables". Are you finding it to be different in your neck of the woods down in Charlotte?

Like I said, things here in my area of N. Raleigh are a bit slower than they were last year and DOM is longer in some cases, but comps are still the best way to go in my immediate local market. I guess YMMV.

North Raleigh Guy, In my neck of the woods (Charlotte), its truly a "buyers" market. Beazer has closed shop here because the market has slowed considerably. Local builders (ryan, bonterra, ryland) are laying off salespeople, proj mgrs, etc left and right. There are major reductions in price from resales and new construction is extremely slow.

However, if you listen to the "media", you're being spoon fed the information that Charlotte is "doing well". Tell that to the local builders and people who are trying to sell their homes....I'm sure they'll have a different take... I'm sitting put for many, many years, but to be honest, I don't know when/if my subdivision will be completed....its that bad.

Charlotte was "late to the party" so to speak, but now they are feeling the full effects of the slowdown. This market is heavily dependent on transplants. If people in NY, CA, NJ can't sell their homes, they can't move here because the 2 mortgages will choke them. Only when the "bubble" markets start to recover will markets like mine start to improve again. We were late to the party and we'll be late to the funeral so to speak.

[RedSoxMark]

Originally Posted by CouponJack

The problem is in many markets homes are not even selling at or near "closed comparables". Buyers in many cases are still waiting for the record amounts of inventory to subside and for home prices to get more in line w/average incomes.

Buyers in many cases have the upper hand because homes are sitting longer, sellers are getting more and more desperate as their DOM increases.

There is nothing wrong w/going lower than comparibles because more times than not, a seller is desperate for "any offer" in today's market.

I wasn't suggesting trying to find an "absolute market value", as someone else suggested (which I understand is impossible to determine), nor paying current "market value", instead of less than that.

I was merely suggesting to use actual sold prices as a better tool for determining YOUR OWN offer/top price on a particular property, rather than basing it on the listing price, which was the original question.

None of that, including quantifying the current market, as it relates to recent sales or the near/distance future, nor seller motivations (which, if known, can be used to extract a lower price), is an exact science. However, if you have a suggestion of why using comps as part of your homework is not better the using the listing price as a guide, I'd like to hear it

[younglisa7]

Originally Posted by Shazam72

If you have that much cash, perhaps you should deposit it in something that'll generate income such as a high yielding dividend very stable equity (utility/mining stocks come to mind) or a CD (100K limit on FDIC though ), and use the income to pay rent for a house while you sit the market out? There are some utility stocks that pay 8-15% dividend yields and their price hardly moves. They're boring for speculators but total cash cows.

Depending on the area you're in, you may find a tremendous bargain waiting just another year or so, especially if you don't need a mortgage and can pluck one quickly from a seller who wants to do a short sale. Not that this should be a directly motivator, but you'd be doing them a favor too by not having them foreclose.

Who says I want a house. My dh and I fulltime in our motorhome and travel the country. We also own land in TN and we can build anytime. Why would I stay in one place?

[willdufauve]

Not every market is the same and not every person's situation is the same.

When I sold the $250k house a few years ago, I put $142k profit in my pocket and downsized to a fixer-upper. I put the $142k in my Euro account in Ireland at 7% interest. I'm making more money on the collapse of the US dollar against the Euro than anything else I do.

I fixed the fixer-upper and now I want to sell it. Volume is down in my area but prices are slightly up. I can rent it at a 20% profit or, frankly, I can even walk away from it if it doesn't sell. But as far as giving some shark a sweet deal, that isn't going to happen under any circumstances.