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Old 02-08-2008, 11:01 PM
 
19 posts, read 76,809 times
Reputation: 13

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I am thinking of purchasing a home in Dunwoody and was wondering what is a reasonable offer off of the listing price? Would it be frowned upon or insulted if I ask for 40k less than listing price? The owners of the home has no ties to this house because it was a corporate housing. Any feedback is appreciated.
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Old 02-09-2008, 04:02 AM
 
Location: Mcdonough, GA
242 posts, read 801,463 times
Reputation: 47
40K seems a lot but in this market anything is possible. Do a search (some websites like metrobrokers.com) to find out how much recently sold properties in the area went for.

Make an offer they can only say no or yes.
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Old 02-09-2008, 05:34 AM
 
3,972 posts, read 11,872,421 times
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It would help if we knew the starting price... $40K off of a million is a lot different than $40k off of 400K.

Also, is a single family home or condo/townhome? Has it been on the market a long time and are there lots of things on the market in the same area?

If it is a single family home, is it in DeKalb or Fulton, if you don't mind sharing? There are parts of DeKalb that may me impacted by school redistricting, so this may play a role in your offer.
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Old 02-09-2008, 06:04 AM
 
Location: Cary, NC
87 posts, read 226,227 times
Reputation: 54
I have friends who have recently purchased homes in the metro Atlanta area, not particularly Dunwoody but Alpharetta. That being said both bid 10% off list price for the homes and both were able to secure that price. They advised me to do the same, I did just yesterday on a new home in a highly desireable area. List had been 379, the builder lowered it to 359, I got the home for 320 - signed contract.

An important point with is expressly quoted in this article on MSN this morning is that mortgage appraisers are now limiting comparables to the last 3 months. When I pulled the comps around the home I am purchasing, the builder made big compromises on two homes that sold in 12/07 in price. My lender wanted comps prior to providing my pre-approval as well. So I used those comps to drive my price strategy and it worked. I also put less earnest money down than is typical but I have a closing date in a little over two weeks so that closing date was worth $$$ to the builder/seller as well.

I received a 'lowball' offer on my existing home as well, it was the first offer I received within the first two weeks of putting it on the market. Lovely little family moving from CA, they offered me 45K less than my list. It didn't offend me, I couldn't blame them for trying to wheel and deal in this market either. A week later I had an offer in hand at my list price for my home was priced correctly to reflect the current market.

Buying a home is an investment and a business. Owners/sellers in this market have to anticipate there are many factors driving pricing to include what lenders can and cannot do as prices continue to drift and fall a little bit.

This article seems more responsible than many I have read and less reactionary, but full of good advice.

A home buyer's market? Hardly - MSN Money
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Old 02-09-2008, 09:44 AM
 
19 posts, read 76,809 times
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Thanks everyone for your feedback!

To get an idea what I am looking into ...

It's a single family home listed for 379k. It started out in the market last year and was in and out of the listing for whatever reason. It's corporate owned and prior owners were relocated to another city. I'll be dealing with the corporation for the buying process should I move forward. It's in the chesnut elementary school district.

Lastminutemom...
What do you mean dekalb school redistricting? I'm in dekalb county.

Thanks again...
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Old 02-10-2008, 01:36 AM
 
Location: West Cobb (formerly Vinings)
3,615 posts, read 7,156,153 times
Reputation: 818
10% under the listed price isn't abnormal, depending on the last time the price was dropped. You or your agent can feel out whether the seller is desperate. If there are no other offers, then you can offer $40k off the listing and if they don't even come back with a counter offer (not common), you'll know you went way too low and you'll need to come back with something much higher (such as only $15k off), or move on. Additionally, you should look at comps for recent sales in the area.f
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Old 02-10-2008, 05:42 AM
 
3,972 posts, read 11,872,421 times
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Corporate owners are usually desperate -- or at least not emotionally attached to the house, if you know what I mean. It is my understanding that realtors are starting to receive more low offers than in the past -- they won't be surprised and certainly it is hard for a corporate entity to get their feelings hurt!

In either 2009 of 2010, DeKalb county will be opening a new elementary school to relieve overcrowding at Austin, Chesnut and Vanderlyn. You can read about it here...

Updated Redistricting Plan for DeKalb County Schools

A big chunk of Chesnut will not be impacted as the largest neighborhood is right across the street.
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Old 02-10-2008, 07:24 AM
 
Location: Inman Park (Atlanta, GA)
21,870 posts, read 14,256,015 times
Reputation: 14305
I would also check the county tax records for what the current owners paid for the house. Although the owners may not be "attached" to the house - they would defiantly be attached to not loosing money on the deal. I am sure that they would like to at least break even on their investment depending on how long they have owned the property. The tax records will also show when the house was purchased.

In a corporate re-location - you should find out whether or not the true owner is the corporation or the individual. Obviously relo companies are not in the business of owning real estate and they have their bottom line number that they must meet in order to make the deal work.

Is $40K really a great deal off the asking price. Like others have noted, check the comps. I don't know what the comps are like and who knows if the Seller has it on the market at an overly inflated price? If the comps dictate that the neighborhood is solid and your deal does go through at $40K less - you may be doing a disservice as your sale will become a comp and others will try to do the same too. Of course that depends on what the market will continue to do and no one has a crystal ball.

$40K, in my opinion is a lot off the asking price. I always advise my clients on low ball offers in the following manner:

1. How would you feel (emotionally) if someone offered you over 10% less than asking price? Not everyone can treat this as a business transaction and emotions do get in the way.
2. Are you okay if the Sellers tell you to go and take a hike and refuse to negotiate with you on round two? If the answer is no and this is the house, then you might want to come up a little on the asking price for round one.
3. I would suggest dangling a carrot in front of the Sellers such as a quick closing so that you don't appear to be yanking their chain. Get your financing in order so things can go quickly and you demonstrate that you are indeed serious about the transaction. It will weed you out from the Buyers that are just casting a line and trying to catch a bargain.
4. One last thing, make sure that you are not offering this low ball offer with a contingency in selling your own home in order to get into this one.

Good luck to you. It is indeed a Buyers market out there. I would also ask you to look at your offer that you are planning to make. Is it a straight $40K off the asking price or are you adding insult to injury by asking for closing costs on top of that and thus placing your offer at more than $40K? I would suggest that you try to get into the house with as little money out of your own pocket so that the Seller pays for a majority of your closing costs. I think that most lenders have capped the closing costs paid by the Seller on behalf of the Buyer to 3% of the contract sales price. Double check with your lender.


Of course there is no general rule in how much you should low ball an offer. Like the previous poster wrote, he was not insulted but he then got a full price offer. If the property is priced appropriately - then it will generally sell at that price.
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Old 02-10-2008, 06:45 PM
 
Location: Cary, NC
87 posts, read 226,227 times
Reputation: 54
George Chong - well I placed an offer last Friday, the area is a new development outside of Chapel Hill, very strong real estate values but just a current minor glut of new construction. House originally listed for 379K, was lowered 20K in January to stimulate interest, but same builder sold two homes back to back in 11/08 and 12/08 at significantly less than list prices. Both homes on same street with a wee bit less square footage but similar in lot size and all other features.

End result, since I went for pre-approval for my loan the lender asked for the last 3 months of comparables. That drove the price in that the lender clearly stated that my offer needed to be in a certain range in order to 'guarantee' the appraiser would approve the loan? That was new news to me, but when we arrived to make the offer with our agent, the sales agent for the builder actually agreed with me that lenders are now making comps no further back than 3 months the new qualifier.

End result, first offer I made was for 315K, builder countered with 340K, I countered with 322,9K and a three week closing, I would assume all closing costs also.

I think I have a good value for the area, and am protected from a measure of further decline in home values by year-end.

I think if you come to the bargaining table prepared from a business standpoint, to discuss the forces now bearing on home buyers from a lending perspective with not just appraisals but also higher downpayments to qualify - then that is what makes the difference.

Do your homework, your lender will so pulling comps and evaluating average cost per sq/ft is also key, for any area/subdivision any home you offer. I don't think anyone can afford to be offended personally by the market we are currently in. I do think and can state this from recent experience, in my instance it was the agents who wanted to drive the prices up higher.
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Old 02-10-2008, 08:31 PM
 
2,642 posts, read 7,777,493 times
Reputation: 584
I've been in this situation. We bought our place after it had been on the market for more than a year. Seller started out asking ~500K for it, then lowered to 460K, got a contract, lost the contract (issue in basement - since resolved), got another, lost that one (buyers wanted to pretend to live in the school district but found out it wouldn't work), lowered the price to 419K. We came along and got it for 390K after it appraised for 430K.

So, I'd say go for it. They'll most likely counter offer.

Make sure you can rest assured that it being on the market a while isn't because it's got major problems.
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