What defines a lowball offer? (foreclosure, 6%, negotiations, new agent)

[sskkc]

Does it vary by region?

One of the homes we're interested in has been on the market for 2 years, 8 months, original owners, 25 year old house. Small town - even during the booming years, there wasn't much action, other than the new developments - lots of foreclosures & short sales in those neighborhoods, but we are not even looking at those.

They took the house off the market for a few weeks over the holidays. Before that, there were no price reductions. It was listed again about 4 weeks ago, new agent, about 15% lower. We'd like to offer 20% less than current asking.

This is a small town we're moving to. While I don't want to insult folks, I also don't want to pay more than I have to.

So, is 20% lowballing? How about 30%? I've read some of these threads and searched but I haven't seen this clearly discussed.

Sellers in this market don't REALLY think they'll get list, do they?

Just wondering what y'all think.

[Rakin]

In general sellers would like to get withing 2-3% of their asking price if the house is priced well. usually I have found 6% off is the "Insult" line and anything below is not considered serious.

In todays world I would say that anything below 10% off list is considered a low ball offer, But every house, every situation is different.

Depends on the sellers motivation.

[MikeJaquish]

Originally Posted by MikeJaquish

Great answer.

"Low Ball" and "Insult Offer" are typically terms used by Sellers who are emotionally vested in tangential factors and cannot keep emotions from clouding their participation in a transaction.
Actually, there is no such thing as a "Low Ball Offer" or "Insult Offer."

There are only successfully negotiated sales terms and prices and failed negotiations. Nothing else is material.

I posted that in another thread, but it is still solid as a rock.

Why would sellers not think they would get list price? Thinking they will or won't without analyzing the price versus the market value is a waste of time for everyone.
Worrying about percentages rather than market value is a clear indicator of diverted focus.

Originally Posted by sskkc

Does it vary by region?

One of the homes we're interested in has been on the market for 2 years, 8 months, original owners, 25 year old house. Small town - even during the booming years, there wasn't much action, other than the new developments - lots of foreclosures & short sales in those neighborhoods, but we are not even looking at those.

They took the house off the market for a few weeks over the holidays. Before that, there were no price reductions. It was listed again about 4 weeks ago, new agent, about 15% lower. We'd like to offer 20% less than current asking.

This is a small town we're moving to. While I don't want to insult folks, I also don't want to pay more than I have to.

So, is 20% lowballing? How about 30%? I've read some of these threads and searched but I haven't seen this clearly discussed.

Sellers in this market don't REALLY think they'll get list, do they?

Just wondering what y'all think.

[sskkc]

Why would sellers not think they would get list price?

Well, all homes in this price range (within $20k of each other), this size, this neighborhood that we've been looking at have (4 total) been sitting on the market between 9-32 months. One other sold, for 30% off list (6 months on the market, but it had no fence, carpet was PINK throughout, all the walls wallpapered, no appliances, etc) The time they've been sitting leads me to believe their prices are above 'market value' or they would've sold. Perhaps I'm wrong - I'm new to this. This will be our first purchase, but I've always been "watching".

We'll find out next week! (Pre-approval just came through today, so we start making offers next week)

Thanks for your input and time.

[bigfatturkey]

i suspect for someone who has held on to the house for 2yr8mths...he/she is likely not to be in an urgent need to sell. hence, might not be willing to accept too low an offer

actually i think there's really no rule-of-thumb here. some sellers are more willing to negotiate than others. of course, it also depends on how desperate the seller is.

there was a house that i saw which was relisted and I was told that previously the house was listed for $390,000 and an offer was made at $380,000...the seller was SO offended that he decided to take the property off the market for awhile! geez....

[rjrcm]

No matter what the list price, you should try to determine market value from recently sold similar homes. Base your offer on that value.

[bigfatturkey]

Originally Posted by rjrcm

No matter what the list price, you should try to determine market value from recently sold similar homes. Base your offer on that value.

what if there is a similar comp that seems way off? like a house is listed for $450K...and just a few house down, on the same street & in the same neighbour (houses are the same age with similar construction - exterior & interior), a slightly bigger house was sold very recently for only $304K. i thought it was really weird 'cos the sale price seems unreasonably low for that area. perhaps it's a short sale/foreclosure or something...but it's still an admissable comp right?

so i suppose it wouldn't be too offensive if i were to make an offer base on the comp's $304K? the sellers should understand the rationale for the seemingly lowball offer?

[sskkc]

Originally Posted by rjrcm

No matter what the list price, you should try to determine market value from recently sold similar homes. Base your offer on that value.

There was that one home that sold last month for about 30% off it's list ($130k list, sold for $99k vs this one's current list price - $149k). It was 200 sq ft smaller and had the other issues I mentioned, but nothing else in this neighborhood sold in the past 4 months.

Where will the realtors find comps in a case like that?