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Well, we didn't get the house. They came down $5K and we came up $5K but there was still a large expanse in between. We left the offer open, so hopefully they'll come back later and reconsider.
Not to second guess you but if your offer was more than 2% off the sales price of the home, you probably won't get the next one either.
I love to get "deals" for my clients and most of the time I do. I HATE paying full price for anything!
However, if you find a home you love, have your Realtor pull the comps on that neighborhood. If the homes are selling about 98% of sales price to list price, the sellers have this information too. Why should they take $10,000 less if the market value of the home is what they have it listed for.
Do your reserach. Find the comps. Make a "starting offer" but be prepared to pay 2% less, if the house is worth it. And if the home is in a very desireable neighborhood and all the other homes are selling at list price and this one has been on the market 1 day...be prepared to pay full price. Its still better than getting into a bidding war with another buyer!
No, I'm afraid that this doesn't help me. Perhaps there is something very basic that I'm not understanding here. Afterall, I'm not a realtor and don't play the game on a daily basis.
You say:
"Not to second guess you but if your offer was more than 2% off the sales price of the home, you probably won't get the next one either."
"If the homes are selling about 98% of sales price to list price, the sellers have this information too."
"Make a "starting offer" but be prepared to pay 2% less, if the house is worth it. "
These 3 statements are where I get wrapped around the axle. It sounds like you are saying that I shouldn't expect to pay less than 2% below list price for a house. Here is an extremely simple example so that I can do the math in my head.
Let's say that 6 homes have sold in my neighborhood in the last 6 months. Every house is 1000 sq ft and the sale price on each one was $98,000. The listing agents originally listed every house at $100,000. This means that the SP/LP ratio is about 98%. I decide to put my 1000 sq ft house on the market and hire you as my realtor. You list my house at . . . let's say. . .$105,350. By your statements above, I shouldn't accept an offer less than 98% of your listing price, which would be $103,250. However, every house in my neighborhood sold for $98,000. If a buyer wants to buy my house, why would he want to offer more than $98,000?
Let's say that 6 homes have sold in my neighborhood in the last 6 months. Every house is 1000 sq ft and the sale price on each one was $98,000. The listing agents originally listed every house at $100,000. This means that the SP/LP ratio is about 98%. I decide to put my 1000 sq ft house on the market and hire you as my realtor. You list my house at . . . let's say. . .$105,350. By your statements above, I shouldn't accept an offer less than 98% of your listing price, which would be $103,250. However, every house in my neighborhood sold for $98,000. If a buyer wants to buy my house, why would he want to offer more than $98,000?
What am I missing?
I am not a Realtor, but I think in the scenerio you describe above you simply wouldn't get offers that meet the 2% criteria because in such a scenerio the house would be listed at an inflated price not supported by the recent comps.
If 6 similar homes were sold in the past 6 months and all 6 were originally listed at $100K then a realtor suggesting you list yours at 105,350 would be doing you a diservice as the comps do not support such pricing. Hence you would probably not get 98% of your asking price, but would more likey get a similar offer as the other 6 homes recieved. Selling homes for around 2-3% under the asking price is pretty typical in this area, but that assumes the house was priced fairly to begin with.
Exactly what I was thinking. Thank you North Raleigh Guy.
For the house that I just made an offer on. . . .
Comps for the neighborhood suggested $135/sq ft
House was listed at $145/sq ft
We offered $139/sq ft and were turned down.
Exactly what I was thinking. Thank you North Raleigh Guy.
For the house that I just made an offer on. . . .
Comps for the neighborhood suggested $135/sq ft
House was listed at $145/sq ft
We offered $139/sq ft and were turned down.
Yeah, from those details it sounds like the seller has unrealistic expectations on the value of his/her home that is not supported by comps. Sounds like you made a very reasonable offer based on the cost per square foot. Maybe they will realize that and come around to your offer. I find it hard to beleive that someone would pay $145/sq ft when all the comps are $10 lower per sq ft unless they have really done some substantial improvements to the house! I think some sellers still think it is a sellers market and are having a hard time coming to terms with the fact that there homes are not worth as much as they would like to believe.
When we were looking we made a fair offer on a house but it fell through becasue the owner did not get a trasfer he was counting on so they did not need to sell. It had been on the market 2 weeks when we made our offer. It didn't work out thouhg, fair enough, so we moved on and found the perfect house somewhere else. A couple weeks later another seller put his home on the market in the same neighborhood we had made the first offer. It was an exact replica to the first home with ZERO improvements. But this seller was asking $15K more! No WAY did the comps support that. Needless to say the house is still on the market after 6 months and two price reductions, but it is still overpriced to this day.
Good luck to you, let us know how things go!
Last edited by North_Raleigh_Guy; 01-14-2007 at 04:39 PM..
But. . . to be perfectly fair. . . . .ask any statistician and he'll tell you that you can manipulate any set of data to support any argument. ;-)
Sure, the average may be $135, but you'd have to examine the individual data points, trends, etc to get a better picture. Maybe they see something that we don't.
My point is that you, as the buyer, should have your agent look at the comps. If the houses are SELLING for $100,000 and your seller is asking $150,000, yep, thats unreasonable. However...if he has the home listed at $102,000 (realistically) then he'll probably be looking for $100,000, which is where the other comps are. This is just general info. Each seller can ask whatever he wants for his home but he must find a buyer willing to pay and a sales price that will appraise. Sorry if you mis understood. Sometimes I type too fast.
I listed a townhouse in a neighborhood in Morrisville. Lets say it was listed at $130,000. It sold in 5 days. When I listed the next one, I listed it for $134,000 and it sold in 11 days. If I were to list another...I'd list it for $136,000 because the market shows that buyers want this particular neighborhood, so the fact that all listed homes are selling in less than 2 weeks tells the listing agent that its time to ask more, even if the comps have not caught up. Make sense?
Your second response makes sense. It was that first one that confused me. Thanks for clarifying.
Yes, our realtor did print out a list of comps and we did review them when we made the offer.
I do have a follow-up question though. . .
Is there a industry standard computer program used by realtors that searches the MLS database for comps based on accepted rules or criteria? For example, if I'm interested making an offer on a particular house, will my realtor just type the MLS number into his computer and "tada!" out pops a list of properties that are most similar based on criteria defined by the computer program? Or. . . . will my realtor have to manually filter a large list to only include comparable properties based on his own personal preferences/judgement?
Don't forget that unlike some markets, our market tends to list homes at or near market value so buyers I think will often have to bid at 92-95% of list price to get the home. Keep trying. You'll find something!
Our first offer was at 95% of list price. That was not accepted, so we tried 96.5% of list price. That was also not accepted either.
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