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Potential homebuyers seeking advice when to counter offer, how to negotiate real estate, seller’s counter offer too high, home only listed for one week
Hi all, here's my scenario, I hope someone can help:
I've been combing the internet every day for new listings and have visited the top 5 properties I've come up with. My husband and I settled on a townhouse and were ready to make an offer. Not wanting buyer's remorse, I combed through the internet again and found a house we both fell in love with based on the photos. This was on Tuesday.
On Friday, our buyer's agent took us to see the new house we saw online and the townhouse we wanted to make an offer on. We fell in love with the new house and decided to scrap the townhouse.
On Sunday, we went for a second look to make sure we really loved the house, and we did. We made an offer that day at 3:00. The list price was $349,900. Our offer was $330,000.
At 6:00, the seller contacted my agent and made a counter offer of $345,000, EXCLUDING appliances. We thought our offer was an honest offer and decided not to respond to the counter offer just yet. Also, paying $345,000 then being sacked with having to shop for appliances is just silly. And we don't want to pay the asking price either... we doubt the house will even appraise up to our mortgage amount.
MY QUESTION: When is a good time to respond to the counter offer? The house has only been listed for about a week. Their open house is this coming Sunday. We are willing to meet the counter offer halfway from our offer, WITH appliances. Of course, I'd prefer to tough it out until the seller realizes that our first offer of $330k was pretty darn good, but I'd hate to lose the house because of these negotiations. Should I respond tomorrow, or wait until after the open house?
I should also add that this house is not exactly a typical dream home. It's on a busy street with an odd shaped lot, with an odd railroad style layout, with odd shaped bedrooms (attic is counted as a bedroom and all bedrooms have less than 8' headroom). However, there is something about this house that appeals to my whole family and we want it. I'm hoping that others will hate it for the same reasons we love it...
Other houses in the area are selling for $375k, $399k, and $409k, so the one I want is the lowest priced. However, these other properties all have "normal" layouts with open floor plans and "normal" bedrooms, some even with basements.
Any thoughts would be welcome! I'm running out of scenarios/ideas to play in my head! Thanks!
Your Buyer's Agent is really in the best position to help you as she knows your market and how well-priced this home is. If it's at $349k when comparable homes are at $375k+, it may not last long, even with all it's quirky features. Have your buyer's agent show you 3-5 good comps to show you whether this home is at or below market value. If it's priced below market value, it may not make it through the open house.
One last caution - it really is all about "location, location, location". The busy street could be the reason it's priced low, which would also be a big reason that you would have a tough time selling it down the road.
if the house has only been listed a week, the sellers usually wont compromise that much, however, at anytime, you can ,,make another offer or counteroffer,
Nevermind the appliances, let the owners have them, take the appliances out of the deal because they will mess it up every time. What can used appliances be worth anyhow, not thousands that's for sure. Buy your own brand new.
You will be able to negotiate the price of the house a lot easier. Gretchen is correct, the house is most likely priced well for the comps in the neighborhood and the oddities of the house will always reduce it's value.
The question is: how would you feel if someone else offered a few more thousand and you lost your opportunity on this house? If you are willing to lose it, then keep looking.
If you really want the house, keep talks (negotiations) open with the seller by a response leading to a price settlement you can live with.
If you're right that the house won't even appraise for the loan, then perhaps the seller also knows they're reaching on the price issue.
IMO, a seller with a reasonable offer in hand is generally a lot happier than a seller with an "open house" sometime in the future. There's a certainty about having a seriously interested & capable buyer now vs maybe getting another later at the top price ... if the seller is seriously interested in selling.
Given the "defects" you describe to the house, many buyers interested today in the area will not be interested in this house, especially if there's only a marginal increase in price to get something a lot more desirable. Low ceilings, attic bedrooms, no basement, busy street (traffic, noise, etc) are serious concerns to many people when they can avoid them for a minimal cost (I can hear the showing agent now, reducing the cost to the absurd after showing this house ... "for only $x's more per day, you can have this instead of the one we just saw on the busy street". "x" just might be only a couple of dollars per day ... and worth it to a buyer.
Open houses really aren't for the seller's benefit, they're for the listing agent's benefit. Especially in a house with defects in a neighborhood with other better homes on the market at the same time.
A final thought ... you hear so many realtors run the old saw "location, location, location". Think about it, it's really "price, price, price". Price addresses all concerns, flaws, defects, benefits, possible upside, and beauty in the eye of the beholder/buyer.
What if the house had been listed at $360,000, you offered $330,000 and they countered back at the $345,000. Would you feel like they gave up enough off the list price after being on the market only a week? Sometimes buyers have a psychological thing about price that has to be a certain amount less than the list price, even though the list price could be a fair market value. You must like enough about the house to still be thinking about living there, so think about the long term picture - you get the house you love at a reasonable price, and most likely it's going to appreciate over the years and it really won't matter what you paid for it 10 years from now.
If you have a set point in how much you're willing to spend, then stick with it. There are a million homes for sale and I'd also consider that although you love this house, it may be difficult to sell in the future for the same reasons you say you love it.
I'd move on and stick to your limits.
Thanks for all the responses everyone. I really DON'T want to lose the house, but I really don't want to pay asking price either, especially now that I hear some of you are in agreement that the oddities I've described should bring/keep the price down.
My friend asked me-- if the house is that bad, why do you want it? It's because I'm moving from New York where there is a store on every street and I don't have to drive, and I don't want to get shell-shocked by moving from this to a suburb. All those other pricier houses I've mentioned are in more suburb situations, with no stores in sight, just neighbors. Also, my husband and I are both artists, so the oddities are what appealed to US-- for us, the question was, why would we want a normal house when we can get a unique one? It also told us that unless there were couples exactly like us, there really is no competition.
My agent just e-mailed me one comp for the area... a house that is just down the block actually. It was listed at the same price, then dropped $10k, then they had a bidding war, and it went back to list price. It's the same age as the house we want, but it doesn't have any of the oddities. The backyard of the comp is pristine and sits right behind the house with a deck (with ours, you need to walk out the front door, go to the driveway, go to yard through gate), and the inside of the comp was beautifully restored in neutral tones and style. The house we want has very bold colors that even I would want to paint over before we would move in. Plus the kitchen cabinets of the comp are of better quality.
I now feel more strongly that our offer was pretty good, however, since I don't want to lose the house, I think I will make my 2nd offer (halfway between my offer and her counter) tomorrow.
I don't know anything about your offer other than the price. The price is extremely important, but it's one of many aspects of an offer.
You needn't share all the details, ...but consider
- how much you're offering to put down
- when you're offering to close
- when you're asking for occupancy
- what your preapproval letter looks like
- exactly how your inspection clause is written
- exactly how your appraisal clause is written
You might ask your buyer's agent (I'm a Realtor with a professional designation and specialty in representing buyers) if she'd sound out the listing agent to see if there's anything the seller would appreciate which you could offer at little cost to you. For instance, could the seller benefit from occupying for a short while after the closing? Might this save the seller a lot of hassle? Might you allow them to enter into an agreement to stay for a bit? Does your situation make this easy for you, or not?
This is just one example of many. Sometimes there's just more to it than meets the eye - and there's often more to it than price...
David is right on target with his advice. If you want to "meet in the middle" on a house onlly on the market for a week, offering an incentive would be a good way to go. (Such as, let them keep the darned appliances. You don't want those old appliances in your mortgage now do you ... over 30 years with interest?) lol! I do get hung up on those appliances don't I ! Experience has proven me correct however, on more than one occasion.
The seller also must know that the best buyers will come along within the first three weeks of listing the property; after that, it's a toss up because those buyers have gone on to other properties.
I'd go a little bit over the half way mark if you can be in the driver's seat with good qualifications, give the seller good terms if you can and so forth as David said. The comps in the area will stand up in the appraisal as long as your qualifications and the amount of your down payment stands up as well.
Golleeeee... let us know how it goes. We love this !
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