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I should say first that I have posted many questions to this forum in the past and have always found the conversations useful...so thank you for an active and illuminating board!
I should also say that I am a small-potatoes buyer. My income is certainly nice for me, but it's not so high. I do have a substantial amount of cash from the sale of my home (FSBO, for cash!) last July (as discussed on this board), which will cover a 20% down payment on a house that's priced at $225,000 or so. I'd rather pay less, but there's a lot of junk for sale at that price in Austin TX, where I now live.
So we're not talking huge $$ amounts here, but...
There's a house I've been interested in for several months, just went to see it again. No interest, no takers. The sign-in list for agents showing the place had only one more person sign the sheet since my agent showed it to me last November! I think the house is great, and I don't know why it's not selling, other than it might be too quirky, too unusual, for its neighborhood. This also makes me wonder if, were it my house, I would be having the same trouble selling it in 5, 10, 15 years.... I think it's really the best house that I've seen since I started looking last fall.
Anyway, since it was listed at $225,000 with no action, it was brought down to $218,000 around Christmas.
Yesterday, my agent said, "I wonder if they'd take $195 just to be done with it?"
We haven't spoken yet today, but I was wondering--is it absurd to suggest an offer of about 15% less than current asking, or about $185,000? When I first suggested it, she seemed to think so, but I was wondering here...
Who calls the shots, she or I? I know she is looking out for my interests, and she has been of great help to me all this time, but I also think that the higher the selling price, the more she gets for her 3%. (I know she deserves her pay, though; I've had her driving me all over the place and writing up offers for me.)
She said she would talk to the owner/agent (yikes!) today to get a feel for how motivated they are.... But I'd rather pay 20% of $185000 instead of $195000, and mortgage less, too.
We had a contract that expired on 31 December, and I have not renewed it, but I guess we're operating under the assumption that it's renewed.
Is it absurd to offer 85% of asking price on a house that's been sitting around, hard to sell, in a market like Austin's, which is not doing as badly as others right now? It seems as though my agent never wants to open up with an offer lower than 90% of asking. That seems high to me, when the seller is only going to come back higher...
What are the comps saying. As someone who just purchased in Tx, what is selling around there? Compare that house to what sold, and go from there.
If they're overpriced by 15% your offer could be in line. You don't know until you do the homework.
As for quirky homes, they will always have challenges selling because you need a specific buyer. They aren't vanilla. If you like it, that's really all that matters at the end of the day.
Well, it depends. You do call the shots, but the agent is supposed to show you the data to help you call your shot. What do the comps support?
Sometimes if you go too low you aren't taken seriously or you can make the seller angry enough that they won't deal with you (sounds silly but it can happen.) So what is low enough to be reasonable without angering the seller? That's usually what I try to figure out. Right now, that's what you and your agent need to get together and work out.
one thing that she and I agree upon is that finding true comps will be hard, because it's a one-of-a-kind house, designed and built in 2000.
It is not out of scale with the street, in fact, there are larger houses, but it doesn't look at all like the typical ranches, and it's the newest house on the street. The architect/owner sold it to the current agent/owner in 2003 when he moved out of state. The current owner/agent has moved to a larger home for her expanding family.
So are comps based upon SF alone, or age alone, or amenities alone--no. But there is nothing like this particular house in the surrounding area, so what are good comps?
I should say, too, that it's important to me to do research and find good comps because I was under contract earlier in the fall and the house did not appraise! My bank wouldn't lend on the contract price, and the seller wouldn't come down...so I let that house go (with no regrets, I might add). My agent has been a trouper through all my ups and downs...
But why did she let me make the offer we made when the house appraised for almost $30,000 less (at my bank)? Bad comps? Not enough research? Or were things really different last September? I think that if she and my bank were that far apart in what that house's value really was, then I'm in a pickle.
Also, the house is so quirky--in materials, overall design--will that affect the appraisal, when they often look for best matches in their comps?
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Believe me your agent isn't complaining about the 10K difference, that's only $300 in her pocket. She probably wants to make sure your offer is enough to at least generate a counter offer instead of a snub.
Lenders aren't the only ones who have changed their ways in the past year. Appraisers have had to tighten the screws as well. I've seen dozens of "bad" appraisals before, where the appraiser valued things the wrong way or missed an important element of the comps. Unfortunately when a bank orders an appraisal, it belongs to them and you generally don't get a chance to see it. I'm sure your agent didn't "let" you make what turned out to be a higher than appraised offer, if she knew it wouldn't appraise then she knew the deal wouldn't close. We agents don't like that happening anymore than anyone else.
Appraisers don't like "special" properties because they run contrary to the whole concept of comps and they have to revert to less reliable methods of appraisal, like depreciated replacement cost.
Let's say there have been no sales in an area for the past 12 months and nobody is looking to buy. What is the value of the property? $0.00? $500,000? Well it must have some value, but what is it? Appraisal is definitely an art and not a science.
There's nothing wrong w/offering 185K at this point. If the seller and his agent are bright, they will counter, period. If they don't, obv they don't have to sell for a long time, or their looking for a sucker buyer for their "taj majal".
By the sound of the traffic there getting, it looks like their 15% "overpriced"...
good luck.
Oh yeah, one more thing. As all realtors tell us all the time, YOU are in charge of the amount, the realtor only gives you a range.
I go back to a point I made in a couple of other threads regarding low ball offers. To ME, if I had a buyer who wanted to make a "ridiculous" low ball offer, my recommendation would be dependent upon THEIR intention.
If they seriously are interested in buying the property, have worked with me to determine a reasonable idea of value, and are willing to negotiate in good faith to get the best possible deal on that home...then I am all for opening the door to negotiations. In this case, we don't know what the seller's motivations are (and they may be very happy to receive ANY offer that is made in good faith). While you may not walk away with it at $185K, if you consider it a good opening bid there is nothing wrong with that.
On the other hand, if you are making a crazy low-ball just to fish and see...and you aren't willing to negotiate to something reasonable (in other words there IS no win-win in the picture - it's your way or you walk...) then I'd recommend that you NOT waste the time of the seller, their agent, or me.
It does NOT sound like this is the case here, so I would say make your offer and see what happens. Do it respectfully, perhaps your AGENT could present the offer, or be present at the seller's agent's presentation, to make it clear that you have a serious, qualified buyer and that this is not just a stab to their heart.
Additionally, are there other things that you can trade off in your offer OTHER than price that may be of value to the seller? A quick closing for example (you have no house to sell and could expedite things like inspections and your loan)...may soften it and take the emphasis OFF the price, and keep the tone of the negotiations on a positive footing.
It doesn't sound to me like the agent in question ever said anything about not wanting to present an offer of $185k. Did I miss that? The agent said she wondered if they'd take $195k. Did you say to her, "Hell, let's offer $185k, as I'm clearly the only buyer interested and I want to gget the best deal I can."? Did you even say to her anything about wanting to offer lower than her suggested number at all? Perhaps the $195 is what she thinks is going to be acceptable. Did she say something that makes you think she has some opposition to presenting a lower offer?
Tell her what you are thinking of offering, and why. Let her tell you how she feels about that, and then make the decision. Hell, at this point, I'd consider going in even less than the $185k. (Though, clearly I don't have a clue where you are or what yuor market is like right now.) It's obvious there's no traffic going through the property, and the listing agent clearly isn't the brightest bulb in the marquee, as they leave evidence of the total lack of activity lying around for everyone to see. Maybe his negotiating skills are just as poor, and you can get a real steal.
I'd go ahead and offer $185k (dependent on researching comps). Your agent doesn't care if it's 185 or 195 -- alls she wants is for you and the seller to come to terms and complete the sale.
Since the seller is also an agent, the odds are much better that you won't actually offend her with your low-ball offer and that she'll be willing to negotiate. Also, since she has apparently already moved, the odds are good that she's in a 2 mortgage situation and may be getting very interested in getting rid of that property. She didn't make a huge price drop at Christmas -- probably because Austin's market is still quite good and will probably start to pick up more now that the holidays are over. But clearly she has been on the market long enough to be ready to seriously negotiate with anyone who makes her an offer.
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