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I found a home that I like a lot. The asking price is still a bit high in my opinion, both on what I can afford and the updates that it currently I think it needs.
It's a 4 bed, 2 bath home at 2500 sq ft. Asking price is at $275,000, with the kitchen needing a major renovation (think '80s kitchen from your imagination) and both bathrooms needing an update as well.
The home is reasonable priced for the area but it's been on the market for over a year now. Started off at $350,000 and has slowly lowered is asking price with the most recent listing updated at the end of May.
I was thinking of putting an offer in of around 15-20% lower than current listed pricing. Between renovations and the fact even after the lowering of the listing price, it's still listed for sale 3 months later.
Would this come across as insulting? It doesn't seem like they are in much of a hurry to sell and are ok just waiting it out.
I say the same, make an offer. Maybe they have not had any offers or maybe they have had similar offers and did not want to go that low. You may want to consult an attorney in your area or do a search to see how much similar homes have sold for.
The asking price is still a bit high ... on what I can afford ...
The home is reasonable priced for the area ...
You have several things here. First, the seller doesn't care what you can afford. If you can't afford the house, you shouldn't be buying the house. Also, you said it's reasonably priced for the area, which means it's priced right, but since you can't afford it, you think the seller should sell for less. That's wrong!
The house hasn't sold necessarily because it's a bad house. It hasn't sold because it's become stale because they started way too high. For example, there is a house in my neighborhood where the seller contacted me asking about price. I told her a number, and she chose another agent who listed it $100k higher than my suggested price. It's been on the market about 19 months now, and they are currently listed $53k BELOW my suggested price. Because they started out too greedy, they still haven't been able to sell the house below market because there is now a stigma attached to it and everyone wonders "what's wrong." Nothing wrong, just a greedy seller that will now sell well below value.
Bottom line, offer what you want and see if the seller will accept, but you don't go into an offer as "this is all I can afford" as that doesn't matter whatsoever!
Some sellers might be outraged and will refuse to deal with you even if you come back with a better offer later. Others will send you a message with a counteroffer a tiny bit below asking.
Is your offer justified by comps? If so, maybe your realtor can pass the comps to their realtor who might try to persuade the seller.
Some people feel insulted with anything less than their asking price. Others don't feel insulted if you put in an offer at 25% below their asking price. It just depends.
I'd offer what you feel is fair market value and let the chips fall where they may.
What you can afford is irrelevant to what the house is worth.
Go by the comps and price the house accordingly. If it is worth close to the ask despite needing updating then I'd not offer 10-15% less.
OTOH, as some others have said you can offer what you want and see what the reaction is to the offer. But don't be surprised if they don't counter back or counter at the ask.
The house we now own received an offer - from a realtor for her own use - that was a low-ball offer (12% lower than the ask) and the seller refused to counter. The realtor told me that although she realized it was worth more, she thought she would start low and go up to a price of about 6% less than the ask.
We offered right at 8% below that ask and got it. We did have the advantage that we we waived the financing contingency.
What you can afford is irrelevant to what the house is worth.
Go by the comps and price the house accordingly. If it is worth close to the ask despite needing updating then I'd not offer 10-15% less.
OTOH, as some others have said you can offer what you want and see what the reaction is to the offer. But don't be surprised if they don't counter back or counter at the ask.
The house we now own received an offer - from a realtor for her own use - that was a low-ball offer (12% lower than the ask) and the seller refused to counter. The realtor told me that although she realized it was worth more, she thought she would start low and go up to a price of about 6% less than the ask.
We offered right at 8% below that ask and got it. We did have the advantage that we we waived the financing contingency.
There is nothing to disagree about regarding "going by the comps" and by that I mean that if there are homes that have sold and have similar kitchens that need updating then you ought to ask your buyer's agent to submit those comps to the listing agent so they understand that you are not just picking numbers out of thin air.
OTOH if the comps that have sold typically have had nicely updated kitchens things are much trickier -- what you think might need tens of thousands worth of upgrades the seller might think is not nearly so bad, afterall they are probably cooking in it this very night! That sort of psychology is what causes the seller tp refuses to counter or they counter with something that such a wee bit below current asking price they're saying "I am NOT going to meet you halfway!".
I strongly recommend NOT GETTING HUNG UP on any "percentage below list" and instead trying to logically price out the differences between the house in existing condition AND comps that have been updated -- that might mean that you take a trip to the local home improvement store to confirm that based on the size of the existing kitchen you need $xxxx to bring the kitchen up to the standards of the comps. Of course you run a HUGE RISK that the seller thinks the kitchen "is just fine" and the fact that they've already come down from their listing price might mean they are hoping for only full price offers... If that is the case the best advice is simply to "move on" as such sellers rarely come around to seeing even subsequent offers from the same buyer as other than "an insult".
I recently made an offer on a property that I felt was severely over priced (way over appraised value) for 20% less than the asking price. It was rejected, no counter offer. It has not been on the market that long, we'll see what happens. IMO it is not that attractive to most buyers, too small for a family, too close in town for a vacation home, and it smells like dogs. Also unless you wanted to have a dog property there is a lot of stuff that needs removal/work.
First house we bought, was for about 20% less than asking price, second (land) was 2/3 of asking price.
Any seller who lets ego get in the way of business is an idiot. Insulting or not, cash is cash.
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Mostly solid advice, but be careful...
