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We've been looking and looking and have finally decided we don't want to be 3 miles from the neighborhood we like for 20-25% less than the prices in the neighborhood we like. We want to be in the neighborhood we like. Unfortunately prices are about 15% (100K) more than we want to spend...we go round and round about whether we should make a lowball offer or just sit and wait for the prices to drop some more. It seems like there is much less on the market than a few months ago (or it could be that we have seen absolutely everything so it just seems like less). There are very few comps for the past 3 months, but for the closest thing to comps, some stuff in the neighborhood is selling for 100K less, some is selling at about asking depending on the age & size of the house. We are so ready to be settled, but confused about whether or not to insult someone with a lowball offer or sit and wait to see what happens with the market.
I know this is a decision that only we can make, but I just thought I'd see what others think.
I say make an offer. You may be surprised. If it doesn't work, no harm no foul. If the property is still on the market for less later, you can try again. Sellers would like to see offers and see if they can put it to bed.
No well researched offer is an "insult". Do your homework, present offers with data and it may be welcome.
If the comps support something $100K less than is being asked, and the sellers want/need to sell, your offer may be a godsend.
I am confused as to your statement about
Quote:
...for the closest thing to comps, some stuff in the neighborhood is selling for 100K less, some is selling at about asking depending on the age & size of the house.
You realize a comp SHOULD BE of similar age, size and condition to the house you are evaluating. If you send over some "supporting data" with an offer and those sales are for houses of worse age, size or condition then they are NOT comps! THAT could be an insult...
They may still be valid 'data points' and point you toward a way to get into the neighborhood you want, IF you accept a house of similar 'age, size & condition'. Clear?
No well researched offer is an "insult". Do your homework, present offers with data and it may be welcome.
If the comps support something $100K less than is being asked, and the sellers want/need to sell, your offer may be a godsend.
I think this may be where a lot of buyers get confused when they submit lowball offers.
You can't just pick a number that you'd like to pay and expect a positive result. You have to have comps - real comps, that are very similar in size, condition, age, features - that support your lowball offer. And you have to hope (or know) that the seller's agent hasn't provided them with comps that support their asking price.
In other words, do your homework (with the assistance of your agent) and if you're going to lowball, make it a lowball based on reality, not wishful thinking. Just as the seller should set their price based on reality, not wishful thinking, come to that.
You can't just pick a number that you'd like to pay and expect a positive result. You have to have comps - real comps, that are very similar in size, condition, age, features - that support your lowball offer. And you have to hope (or know) that the seller's agent hasn't provided them with comps that support their asking price.
I'm not sure that I understand what you're saying here.
Especially when the market is trending downward, why must the buyer use comparable past sales to support their offer?
If we all played strictly by this rule, could prices ever go down? Wouldn't they would always have to go up, since there would be never be pioneers pushing downward in a bear market?
not necessarily..... if you see a downward trend in the comps, you should be able to call it out and identify. And if you know that area, and neighborhood specifically you will know if the appraisers are taking off for down trending market.
You have the numbers help make your case. I think anything you can do (or I can do for you) to take out the emotionality of the business deal is a good thing. Now you have a good case, and perhaps, lessen the impact to the sellers. At the end of the day, they will accept or not as thier circumstances dictate... but you have given the best argument and trying not cuase an emtional response like "i'm insulted"
Well conversely, there could never be an upward trend in the comps according to this idea. Because one would only pay what had been paid!! : )
But we know that the market is either going up or sliding down, and you use the information to your best outcome. If homes sold in the last 3 to 6 months went for more and more... that is an upward trend. If the homes sold went for less and less... that is downward. Hard to argue with what the numbers say.
I just had met with an appraiser today on a short sale we have an offer on. This is the sellers bank who wants the appraisal to make sure it is listed right and selling right. Even the appraiser said the same thing... and right now she basically can't get a selling price for more than anything CURRENTLY listed in the neighborhood. Banks aren't allowing it. That is definately downward trending. HOWEVER, even she said that some neighborhoods are automatically downward trend and others not.
I'm not sure that I understand what you're saying here.
Especially when the market is trending downward, why must the buyer use comparable past sales to support their offer?
If we all played strictly by this rule, could prices ever go down? Wouldn't they would always have to go up, since there would be never be pioneers pushing downward in a bear market?
Well, the comps include information beyond just price. They include information about average days on market, inventory that is currently on the market (very generally, 6 months or less of inventory indicates a seller's market, 6 months or more indicates a buyer's market), which of the houses that sold for $100,000 less than the ones that didn't was a short sale or a foreclosure, and things of that nature. Information that is needed to establish if they're real comps and also which way the market is headed (using a lot of that information). Information that you need to back up your offer.
On average, over time, though, you're right, real estate does tend to go up over the very long haul, with a lot of up and down along the way. Probably because we're always making more people and not making a whole lot more land.
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