How to get the home I want for the right price (strategy question) (RE market, contingencies)
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We are relocating and have been looking for several months- - did one hardcore house hunting trip where we looked at 22 houses in 2 days. (Yes, our agent is a Saint.)
This is not our first home purchase, it is our third. I have come to realize that we are not "normal" in terms of being sellers. Because we relocate so often, our home transactions are never "emotional" for us. The house I sit in as I type is under contract for $30,000 less than we paid 2 1/2 years ago because we needed it sold quickly. (We had the offer the second day that we listed, we just really needed quick offers and listing into winter is always a risk.)
We are educated home buyers and pull our own comps (and use those provided by our Realtor).
So... we found the house that we would like to purchase.
The house has been on the market for 10 weeks and is currently listed for $468,000. 4 weeks ago it was reduced from $475K - - it came down less than 2% which is IMHO fairly silly.
This house was originally listed 2 years ago for $500K, and over the course of 18 months they reduced price to $430K. They then pulled the listing and did some reno work. The thing is... the reno work was not great, and certainly is not our taste. (Our realtor sighed and said that they should have consulted with their agent before doing work... because it is not bang for your buck type stuff.) So I believe that they spent some $$$ to make it more marketable and are looking at recouping the cost.
My husband checked this out at an open house two weeks ago. The listing agent told him that the sellers were "motivated" which was evident as the house is 100% empty and it is clear that they do not live there any longer.
The house is in a great community, has great bones, and is in a cul-de-sac. But... it's arguably the smallest lot in that immediate area, has a very ugly pool/spa, and some cosmetic work - - and it needs window treatments on every window. It has the original a/c units (from 1996) and roof.
We like this house though. A lot. And we want to buy it, but we do not want to spend more than $425-430K which is realistic.
We do not want to offend these sellers. We like their house and want to make it OUR house. So my husband wants to offer $400K and go from there. (He wants to end up at $430K). Is this reasonable?
*** We are pre-approved, are not looking for concessions, and can close within 30 days.
If you worry about offending the sellers or worrying about what they will accept over what you'll pay, you're just spinning your wheels IMHO.
We were in an eerily similar situation 18 months ago - loved a house on a cul-de-sac, ugly spa we did not want, lots of cosmetic work needed....owner was the realtor (ugh). She wanted a certain amount, we were willing to come close, but not close enough. She ended up getting closer to her price. We live in the same neighborhood now and I'm happy we didn't get that house for many reasons that you just can't know about when you are only looking (all the "good" kids the same age as ours live near us, the next door neighbor at the other house always has his boat parked in the cul-de-sac, etc etc).
I guess what I'm trying to say is....things happen for a reason. These people may be "motivated" but they still need to hit a certain price. Only they (and I guess their listing agent) know what that is. So offer what you want to pay and don't second guess.
Not trying to be sarcastic but I'd say the best method is just to offer $400k with your favorable terms of no concessions and just to go from there. There's no real way to know if the sellers will be offended or not, so if it's where you want to start, I'd say go for it. It's not like you're asking for $400k, full closing costs, massive repairs and a long escrow. Just send it in and feel them out. Just don't tell them your offer is based on their "ugly/poor renovations."
If you have any comps to support your offer that would definitely be helpful.
If you really like it and it's "the one" and comps support it at a price of $430k, why not just let them know that's your best offer, show them the comps, and they can take it or leave it. I'm currently in this situation; made an offer, seller countered higher, I countered at the same offer saying take it or leave it. The comps in the area did not support going any higher than my original offer. They can then think about if it's worth it to sit on the house and hope for another, better offer, or to take yours and the favorable terms and just be done with it.
I say the way to get the ball rolling is to make a written offer and see what happens. Also along with the offer list the positives you are offering like pre-approved, can close quick, etc.
In a recent sale we took the "cleaner" contract over another even though the cleaner contract meant less money in our pocket after close.
In a recent purchase we got a great price from the builder as we were staged cash payments, no mortgage buyers. Again, a "clean" deal.
If this is the house you really want, bid on it like you want it, what it's worth to you. For all you know there's another contract working or one will come along while you are trying to decide what to do.
I can't begin to tell you the preapproval letters I write for buyers that are outbid by just a couple thousand and are heartbroken. You can tell when a buyer has lost out, they only make that mistake once. Their next time up, they don't mess around.
hey Camps, feelings should not matter and if its the house you want, then make your starting offer and see what the seller will do. Most agents will usually counter and not take the first offer unless you state it as your final. In this market, just like you reduced yours, not many sellers fully expect to get their asking price. Good luck and keep us posted.
Less than it used to and it certainly applies in fewer sales than ever before.
Quote:
The listing agent told him...
With all dues respect to the agents that post here...
You're on the right track...
These owners may be that archetype downsizing senior couple who have a place down south
which they want to move to full-time and would rather not pay the taxes and upkeep on the old house
and will be "motivated" to take the actual market value or even a little less
for an uncomplicated minimal contingency sale.
Getting the sellers to accept what "actual market value" means in the fall of 2011...
that remains the hard part.
Quote:
smallest lot in that immediate area,
very ugly pool/spa, and some cosmetic work
needs window treatments on every window.
original a/c units (from 1996) and roof.
...we do not want to spend more than $425-430K which is realistic.
Do YOU know what "actual market value" means in the fall of 2011?
Do you have some objective criteria for establishing an offer on this other home?
Quote:
The house I sit in as I type is under contract for $30,000 less than we paid 2 1/2 years ago because...
Uh-huh...
Assuming you do have objective data on the market...
then write THAT number into as simple a contract as you can manage.
(minimum number of contingencies beyond due diligence inspections and a quick closing)
Don't be afraid to go low.
hth
Last edited by MrRational; 11-15-2011 at 07:11 AM..
What my wife does s find the price she wants to pay, then offers that amount on every house that meets her criteria. When the whining about that's not enough comes, she just says, That's what it is worth to me. Eventually we find an estate or divorce who need out and get our house for out price
Your strategy depends on the types of market you're in.
In the Bay Area in California, housing is still very hot (though obviously not as crazy as before), any offer with a 15% haircut risk offending the seller. It's best to to in a little higher to make the seller takes you seriously but offset by making the terms (seller pays closing, etc) favorable to you.
This is out of the box, but In a buyer's market, I'd suggest you simply have your agent call the listing agent and see if they can throw some numbers around. Even if the listing agent say, "Just submit an offer and we'll see." You can still deduce that the seller's agent does not see your number as an insult. Or use LOI (Letter of Interest) instead of an actual offer. LOI is just a simple letter stating the price and a few conditions, commercial real estate uses it a lot because they tend to want all the terms and price ironed out before a real offer is put in. The upside of LOI and phone calls are to signal to the seller that you're interested but you're not in love, and your agent can easily hint that you guys are making inquiries on several properties so the seller feels like he/she is in competition with other sellers to sell to you. Obviously, this only works in a buyer's market.
Last edited by beb0p; 11-15-2011 at 02:24 PM..
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