House sale price just dropped $5K. Bad to make a lower offer? (negotiation, agent)

[jghorton]

Actually, the "asking price" dropped $5K, not the "house sale price." Of course, you were talking about the asking price. But, it's important to recognize that a seller can "ask" any price for their house ---and it need have little relevance to what they actually sell the property for.

Stores that offer big discounts and 2-for-one's have mastered this technique ... by showing how much "you are saving" --- based on an over-inflated, retail-plus price -- that nobody ever pays anyway. Only the bottom-line price actually matters; regardless of whether one is talking about a loaf of bread ... or a house. (In a similar vein, some husbands say that their wife's attraction to sales, ... will 'save' them into the poor house!)

[Sky-Blue]

Originally Posted by NilaJones

I haveknown sellers to have an attitude of 'we already came down on the price once, so no more.'

Yes, you phrased this in a better way than I came up with in the OP. Thank you.

Originally Posted by willow wind

What you can do to make your offer stronger is to present comparable CLOSED sales to the seller, which hopefully would support your offer.

I will be making a full cash-on-hand offer with a fast close (the house is vacant) that's not contigent upon the sale of another property. That's one possible advantage of my offer.

Originally Posted by mainebrokerman

keep in mind,,,everytime the listed price changes, it gets updated in the mls again

Yes, this will attract other buyers to at least take a second look. My other advantage is I've already toured the house and have done some initial research & thinking on my own. The price and lack of complete enclosed backyard fence (extra work for me to get one installed) were the main obstacles.

Originally Posted by carnivalday

Are you saying it has only been listed for sale for 2 months? If so and they dropped the price already, they might be getting itchy to sell. I also would wait a few weeks to make an offer, and Id make your lowball offer.

Yes, I didn't make that clear in the OP. The house came on the market in late June 2013.

Originally Posted by crescent22

You bid the lowest amount you think they will enter negotiations on.

Originally Posted by davebarnes

$183K
The worst that can happen is: NO, sod off.

There are several intangible things about this house that are hard to find that matter to me (but most other buyers won't care): nearby public library, nearby my work, nearby friends' homes. So I don't want to completely offend them to never consider a second offer presented later. And at the same time I don't want to offer too much just to get my offer accepted.

Originally Posted by manderly6

Your agent has no clue if they will reject the offer or not. Go with what you think is the right number. If your agent has a problem with that it is time to find a new agent (maybe it already is).

He did call the listing agent to fish around for information from her. She told my buyer's agent that the seller wanted to list the house at $208K (instead of $200K), but she talked them down in price and nwo the seller wants a $194,900 full offer. But this is just part of the dance. Very doubtful the listing agent is going to reveal the magic number to my agent. One thing I did NOT like was that my agent tipped-off the listing agent that a written offer from me could be coming in the next day. So, if I don't follow through right away, they will feel slighted when they get the offer next week. Uggh!

[sparks82]

The house has also been on the market for 2 months. In many parts of the country, it would be considered a stale listing already. 185K is a perfectly reasonable number to bid. its only about 5% off the current asking price. Given your comps, it doesn't seem like an offer that should be too offensive or ridiculously off the mark. My real estate agent, before we had hired her, told us that in our hot area, listings generally sell at or about 1% lower than the asking price if the house is properly priced to market. When the area was pretty popular but not super hot, houses were going for about 2-3% under asking. Its different from place to place - if you want to find out for your area just swing into a few open houses as if you're thinking of buying and ask the realtors.

If the seller does find your offer to be way too low, they'll let your agent know and then you can always bump up your offer if you still want to try for the house. Depending on how they counter or not counter, you'll know how much room you have to negotiate. Had your agent said something like "I think the house is priced properly at around 195K" and gave you reasons as opposed they just lowered so they're likely to reject, I would find your agent to be more credible.

Our sellers had dropped their listing price twice within less than a month before we bid. We bid more than 6% lower than the latest list. Ended up getting the house at 5% lower than last list price. Found out later that they were hoping for final price to be at 3.5% lower instead of the 5%.

[don1945]

It is always amazing how a little time changes what people will take for their home. They are already starting to ask for less, that is a sign they are softening in their expectations. Your agent needs to do their job and submit your offer and shut up. How do they know what will happen until they make the offer ?

Offer $185 and then if it is rejected wait a little longer and resubmit at $ 183........the $ 185 will look pretty good to them at that point.

Don

[jackmichigan]

Originally Posted by Sky-Blue

This afternoon, I talked with my buyer's agent about an offering price: I would like to offer about $183K-$187K. Or at least start the negotiations at $185,000 (and ask for them to cover some closing costs). My buyer's agent says that since they have already lowered the price, they will probably reject any offer much lower than $195K.

Is a lowered price the new point of negotiation (it's standard to offer less)? Or, is the lowered price what the buyer needs to offer to have it accepted since the seller has already "compromised" first?

I work primarily as a Buyer's Broker. No way would I encourage you to make a full price offer. The house is vacant. You're paying cash. I'd start as low as you feel reasonable. With cash, you should be able to go in lower than other comps. You can always go up in your offer, but rarely can you go down. Besides, sales typically slow down towards the end of the year. You don't "need" to buy this house. There are lots of other houses out there. To reach a good deal, you need to be willing to walk away.

If you plan to pay cash, however, what closing costs would you be asking them to cover? There would be few closing costs in my area for a cash offer. I wouldn't complicate an offer by asking for closing costs if the closing costs were insignificant. And if there are certain costs you'd like them to cover, it's better to spell out what costs the Seller is responsible for in the purchase agreement (e.g. title insurance, etc.).

Your agent does not know how low of an offer the Seller will accept. The listing agent probably doesn't know that amount either. You should not feel compelled to make a high offer.

Originally Posted by Sky-Blue

One other thing that may be affecting this: My exclusive representation contract with the buyer's agent expires in October.

I wouldn't bring it up...but I'd let it quietly expire.

[Meglion]

I'm not sure where you live, but real estate heats up in the fall in most places, which could affect the seller's stamina and hope that they'll get close to the price they want. In my opinion, this is a business transaction, and if you feel that the agents are both on the up-and-up, I'd offer my best and final with an explanation of the work that will need to be done and the comparison to other properties. It's a business transaction, so hopefully reason will prevail, but if not, it simply isn't meant to be your home. Don't go above what you feel comfortable offering - there will ALWAYS be more costs to moving than you budget for. Good luck!

[Ted Bear]

I am always amazed/surprised that, as we get into these posts, more and more information comes to light.

"A full cash offer for an empty house..." Would not those have been important details to know at the outset?

So....$200,000.....houses that aren't selling these days generally get about a 10% haircut from the first 'realistic' listing price. So now you are talking $180,000. The ' seller wanted to list at 208, hurt to come down to 195, etc., does not matter. That is for THEM to deal with, not you.

You wish to bid in the mid 180's?

Go for it. Have your agent write up an offer at your interested level, and formally present it, in writing, to the sellers. That starts the process. The possible responses have been outlined above, so no need to repeat them.

I would only give the bid price to your agent. He sounds like he does not have your best interests at heart, and sharing additional info (like I 'could' pay up to 189) is not a good idea with someone with whom the trust is lacking.

Make YOUR bid, go from there. There is nothing 'embarrassing' about your plan, in spite of what the seller (or your agent) might like you to think. We are all people, but really, what do you care what the seller 'thinks'? This is business, not pleasure. Keep it that way. The 'woulda, shoulda, coulda' doesn't matter. Your pricing and approach is well within reason. Were you to lob in a $169 bid, then no, but that is not the case here.

[davebarnes]

Originally Posted by Meglion

I'm not sure where you live, but real estate heats up in the fall in most places

What?
In Phoenix and Florida.
Not in most of the rest of the country.

[Sky-Blue]

Originally Posted by jackmichigan

If you plan to pay cash, however, what closing costs would you be asking them to cover?

The backyard is missing about 150 feet of fencing in the backyard to enclose it on the fourth side (on a property line between the next door neighbor). Anyone can just walk right into this house's backyard through the huge gap. Yet, 27 years of previous ownership and they never got around to putting up the fourth side of the fence? I'd ask for part of the expenses to install this side of the fence and gate.

Originally Posted by Ted Bear

The ' seller wanted to list at 208, hurt to come down to 195, etc., does not matter. That is for THEM to deal with, not you.

I'm starting to believe that this was a psych trick played on me by my own buyer's agent. Trying to make me see what a bargain the house really is at 195K when it was 'supposed' to be $208K.

[crescent22]

Combine the cash offer with expiration dates to put some pressure on them.