if most of the houses we like are 15% more than what we want to spend... (square footage, foreclosures)

[sterlinggirl]

Originally Posted by TexasHorseLady

You can't just pick a number that you'd like to pay and expect a positive result. You have to have comps - real comps, that are very similar in size, condition, age, features - that support your lowball offer. And you have to hope (or know) that the seller's agent hasn't provided them with comps that support their asking price.

I disagree. Just tell the seller that you have X number of dollars to spend, and ask them if they would consider selling it for that much. Its polite to say that you wish you could offer more, but thats as far as you really need to go.

As a buyer, you don't need to grovel at their feet and justify your offer. Either they'll take it or they wont, and it never hurts to ask.

[Reader123]

There have been some helpful comments, thanks! I went through the three houses we like best & thoroughly looked at comps. It's really a small market & nothing seems to be selling, so it was challenging, but a helpful exercise. It's hard to look at the 2 houses that have sold and call them a trend one way or another.

Our three choices are:
House A- listed at 700..found 2 comps in the last 4 months, one house sold for 705, one for 620. There was also a foreclosure that sold for 477 (no way to know how bad a shape it was in).

House B- listed at 700...3 comps- sold for 640k, 600k and 600k. However, House B has a bigger lot than the comps & I couldn't find any similar sized lots that sold to compare.

House C-listed at 800 (this is the fantasy house, bigger and newer, so just had to check)-no comps in the last 3 months, one sold in July for 825


Anyway, that little exercise made me think House B might be in reach. Thanks for the pointers!

[stevep]

Since they're in the same neighborhood, why does House A have different comps than House B? Is one a lot newer or significantly larger than House B?

Another piece of the puzzle that you want to look at is the homes currently on the market. Have they been lowering their prices or taking them off the market after the listing expires. If there are numerous "comparable" homes on the market and all have been lowering their prices, there's a better chance that you can negotiate a lower price on the house that you like. On the flip side, if there's only 1 or 2 comparable homes and neither has lowered their price, you might not have as much negotiating room with the house you like. You also want to look at how long the house you like has been on the market and if they've lowered the price (and how recently). Each seller will be different on how low they will go... it all depends on their motivation and situation.

[TexasHorseLady]

Originally Posted by stevep

Since they're in the same neighborhood, why does House A have different comps than House B? Is one a lot newer or significantly larger than House B?

Another piece of the puzzle that you want to look at is the homes currently on the market. Have they been lowering their prices or taking them off the market after the listing expires. If there are numerous "comparable" homes on the market and all have been lowering their prices, there's a better chance that you can negotiate a lower price on the house that you like. On the flip side, if there's only 1 or 2 comparable homes and neither has lowered their price, you might not have as much negotiating room with the house you like. You also want to look at how long the house you like has been on the market and if they've lowered the price (and how recently). Each seller will be different on how low they will go... it all depends on their motivation and situation.

This is one of those "other things" that I should have been more explicit about - thanks for bringing it up!

Yes, comps includes not just houses on the market and houses sold, but houses that didn't sell (expireds, withdrawns). You need to see what people are asking for their houses, what people having been paying for those houses, and what people won't pay, in order to get complete comps.

[Mjames]

Originally Posted by Reader123

There have been some helpful comments, thanks! I went through the three houses we like best & thoroughly looked at comps. It's really a small market & nothing seems to be selling, so it was challenging, but a helpful exercise. It's hard to look at the 2 houses that have sold and call them a trend one way or another.

Our three choices are:
House A- listed at 700..found 2 comps in the last 4 months, one house sold for 705, one for 620. There was also a foreclosure that sold for 477 (no way to know how bad a shape it was in).

House B- listed at 700...3 comps- sold for 640k, 600k and 600k. However, House B has a bigger lot than the comps & I couldn't find any similar sized lots that sold to compare.

House C-listed at 800 (this is the fantasy house, bigger and newer, so just had to check)-no comps in the last 3 months, one sold in July for 825


Anyway, that little exercise made me think House B might be in reach. Thanks for the pointers!

If you like house B and want to live there, make an offer in the range you can afford. If its too low they may be insulted, but they may also be insulted by an offer $20K off their list.

If they reject the offer, you're really not worse off than before. Also, even if they do reject it now, they might reconsider a month from now if they haven't sold.

Bottom line, the only sure fire way to make sure you don't end up buying that house is not to make an offer!

[chet everett]

My gut tells me that it is still going to be very hard for the seller of "House B" to sell for $600K, here's what I would suggest you do if you REALLY want that house (and given you mention of the MUCH more expensive house C, not sure if you want to work this hard...). You ought to address the issue of lot size -- how different are the lot sizes? If you are in are that was all built by one developer, often the large lots are to offset some other negative -- back to commercial zoned parcel, part of lot is unbuildable, buffer to some kind of nuisance. Thus you can basically DISCOUNT the larger lot by the effect of the negative. OTOH if the area has irregular lot sizes (like in an older town with no common developer) and the lot is just big AND this extra size is reflected in the PROPERTY TAXES you can discount the additional "value" by the additional cost over whatever period you are likely to own the house. Either of those strategies should help the seller to overcome the emotion of "But those are on smaller lots than I have!" and focus on the reality that bigger lots are NOT automatically more valuable... Again, this is just one data point, and if it turns that the owner really does expect to get $700K, and there are others at work this is no "slam dunk", but if your goal is to purchase this house, given the comps, and the reality of not wanting to 'insult' anyone, this is one approach. (And I am sure that others will chime in, that some sellers are completely unmoved by any logical arguement..)

btw, I have found that just as ALMOST every store from Wal*Mart on up prices goods so that they expressed as $13.97 or $450.95 it can sometimes be more reassuring when an offer is recieved as $637,000 -- also tends to lead to more creative counteroffers, in smaller increments...

Originally Posted by Reader123

There have been some helpful comments, thanks! I went through the three houses we like best & thoroughly looked at comps. It's really a small market & nothing seems to be selling, so it was challenging, but a helpful exercise. It's hard to look at the 2 houses that have sold and call them a trend one way or another.

Our three choices are:
House A- listed at 700..found 2 comps in the last 4 months, one house sold for 705, one for 620. There was also a foreclosure that sold for 477 (no way to know how bad a shape it was in).

House B- listed at 700...3 comps- sold for 640k, 600k and 600k. However, House B has a bigger lot than the comps & I couldn't find any similar sized lots that sold to compare.

House C-listed at 800 (this is the fantasy house, bigger and newer, so just had to check)-no comps in the last 3 months, one sold in July for 825


Anyway, that little exercise made me think House B might be in reach. Thanks for the pointers!

[crazyma]

Just thought and I know agents 'talk'..

See if your agent can find out from the other agents
which sellers in your chosen neighborhood are feeling 'desperate'...not so much the ones on the verge of losing their house, but the ones who must relocate out of the area, or those who may have already bought/or have pending contract on a home on the area they want to go to.............
those are some sellers who might very well entertain a REASONABLE lower offer...notice I did not say LOW BALL- I do believe there is a difference.
IMO Chet gave you some good advice, in regard to going in with a researched ,well thought out offer. You never know unless you try! And you could make some sellers very happy
And another thought...if you do go in with a lower offer, please consider NOT nit picking the place to death and expect a 100% perfect house for your lower price! You gotta work WITH sellers not against them

Good luck!!

[20yrsinBranson]

Originally Posted by Reader123

We've been looking and looking and have finally decided we don't want to be 3 miles from the neighborhood we like for 20-25% less than the prices in the neighborhood we like. We want to be in the neighborhood we like. Unfortunately prices are about 15% (100K) more than we want to spend...we go round and round about whether we should make a lowball offer or just sit and wait for the prices to drop some more. It seems like there is much less on the market than a few months ago (or it could be that we have seen absolutely everything so it just seems like less). There are very few comps for the past 3 months, but for the closest thing to comps, some stuff in the neighborhood is selling for 100K less, some is selling at about asking depending on the age & size of the house. We are so ready to be settled, but confused about whether or not to insult someone with a lowball offer or sit and wait to see what happens with the market.


I know this is a decision that only we can make, but I just thought I'd see what others think.

I can't help but wonder what is so important about being in a particular neighborhood. My guess is that have some inherent need to prove that you are "upscale" and have a lot of money so living in a neighborhood that is not full of over-priced mcmansions is not what you are looking for. So you are willing to consider putting yourself into a financial pickle so that you can show everybody how rich you are.

My advice would be to find an INEXPENSIVE house somewhere and save some money. Whether you realize it or not, nobody really cares what kind of house you live in.

20yrsinBranson

[sheri257]

Originally Posted by Reader123

It seems like there is much less on the market than a few months ago ....

I'm seeing the same thing. There's the computer pontificators on this board you tell you not to buy because prices will supposedly drop further. Then there's people like us who have actually been looking and are starting to see a drop in inventory.

My guess is that you're probably seeing some of the same things I've seen. Yeah ... the crappy neighborhoods where I don't want to live aren't selling. BUT neighborhoods where I do want to buy are now selling like hotcakes and there's nothing to bid on because it's all gone.

Look: Nobody can predict any market. As long as you're not buying at the peak and have seen a substantial savings ... I think it's a pretty safe bet to buy.

I've put in a bid on a short sale at $300K less than the peak price. There are people on this board who would argue that I might save another $20-40K or so by waiting but ... if the property is already 55 percent below the peak and there's multiple bidders for each property (which is the case in my neck of the woods) then ...

There's more of a risk of the price going up than down at that point so ...

If you feel prices are bottoming out where you've been looking and you're seeing a lot of buy signals ... definitely go for it.

[cohdane]

Originally Posted by sheri257

I'm seeing the same thing. There's the computer pontificators on this board you tell you not to buy because prices will supposedly drop further. Then there's people like us who have actually been looking and are starting to see a drop in inventory.

Regarding inventory drops, you forgot the standard "local" disclaimer.

I've been tracking my local inventory since June. In June there were 78 homes available in my price range. Today there are 83. Which represents 11+ months of supply at the current rate of sale. And the current rate of sale is about to fall off a cliff.

Your local results may vary. Good luck.