Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I've made several offers and only one I considered to be a lowball to a bank because frankly I didn't care if I got it or not. Now I'm glad they didn't take it.
I would knock off a few thousand from the most you can offer. That way, if they counter you can bump it up just a bit from your initial offer and they know it is the most you can or will pay.
Good Luck!
This what I would do. Give yourself a few thousand to throw in when they counter.
Mistake is to be in love with the home - be ready and willing to walk and not feel you have to find that extra thousand or whatever.
Don't have a "can easily get a mortgage", have a pre-qual. You can do that on-line right now, tonight. It doesn't matter if that's the bank you will get your mortgage from, it doesn't matter if the rates are not satisfactory to you. You can search for better mortgage terms next week, you need the pre-qual - it means you are serious and it's proof you are going to find a mortgage; not just your say-so that you can get a mortgage.
Our first bid on this house (closing on Monday) was accepted - it took them about a week to agree to our bid - which was over 10% below asking. We were prepared to go up, but not a whole lot. We had a first bid and a final bid before submitting our bid. We had a Buyer's agency agreement with the realtor. She submitted a copy of our pre-qual along with our bid.
Research the house online - before you bid. Find out the taxes, the last sale date, price, quality of siding, and most of all, appraisal. If you can't get it, ask your realtor to go to the town/city hall and get it for you. Go to maps.google.com - look at the house from above, look at the whole neighborhood, zoom in and check out the roof. Then make your bid and make it subject to your approval of a certified house inspection. Spend the money and get the inspection done - it's worth it. We had 3 houses inspected. We walked away from the first, $250 poorer but NOT a "money-pit poorer".
Mistake is to be in love with the home - be ready and willing to walk and not feel you have to find that extra thousand or whatever.
Don't have a "can easily get a mortgage", have a pre-qual. You can do that on-line right now, tonight. It doesn't matter if that's the bank you will get your mortgage from, it doesn't matter if the rates are not satisfactory to you. You can search for better mortgage terms next week, you need the pre-qual - it means you are serious and it's proof you are going to find a mortgage; not just your say-so that you can get a mortgage.
Our first bid on this house (closing on Monday) was accepted - it took them about a week to agree to our bid - which was over 10% below asking. We were prepared to go up, but not a whole lot. We had a first bid and a final bid before submitting our bid. We had a Buyer's agency agreement with the realtor. She submitted a copy of our pre-qual along with our bid.
Research the house online - before you bid. Find out the taxes, the last sale date, price, quality of siding, and most of all, appraisal. If you can't get it, ask your realtor to go to the town/city hall and get it for you. Go to maps.google.com - look at the house from above, look at the whole neighborhood, zoom in and check out the roof. Then make your bid and make it subject to your approval of a certified house inspection. Spend the money and get the inspection done - it's worth it. We had 3 houses inspected. We walked away from the first, $250 poorer but NOT a "money-pit poorer".
There is more than one house for every person.
You're absolutely right and I'm "in love" but very realistic with what we can and cannot afford so if they don't take our bid, so be it, we'll find something else. This will be our third home purchase so we're not newbies by any means.
I will absolutely be pre-qualified prior to submitting an offer and hopefully pre-approved as well.
You are absolutely right though that we need to take a step back, think about things rationally and not emotionally.
Right now, we're waiting on a buyer for our house so no offers yet, but we may be getting an offer next week and are told they want to close fast so we're just looking at what's available should we be in a position to make an offer next week.
Sellers often have the misconception that what they paid, need, want and/or ask out of the sale of thier home, has any bearing on what someone will pay for it.
Buyers often have the misconception that what they can reasonably afford has any bearing on what a property will sell for.
Forget about what sellers are asking and instead focus on where the market is, right now and the local trend. Look for very recent closed comps of comparable properties. Use an agent who knows the comp properties. Find out the listing history. Nothing wrong with the buyer's agent asking the listing agent about an ideal closing date, before the offer is made. Not everyone wants a quick close.
As a buyer in this market, there is no guarantee in my lifetime prices will ever go up again. In fact they probably are still going down considering all the forclosures piling up that the banks have been unwilling to release. Therefore, except for a primo property in a good neighborhood where I might be willing to pay 10 years worth of rent for a place, I'm thinking that a seller would be smart to even take an offer of 5 years worth or rent for a house that has been sitting for two years. At least he'd have today's dollar purchasing power. We all know where the DOLLAR is headed.
If the seller thought he could get 8 years worth of rent in a declining market for the house, realistically (for a sales price), then waiting another year or two for that to happen could also mean that the dollar would buy half as much when the property finally sells. So eight years of rent in the future would buy the equivalent of 4 years worth in today's currency. So accepting a deal offering 5 years worth of rent --even if you take a loss, is better than waiting ---especially because you also will lose money paying for the utilities and taxes waiting for another buyer.
Have any agents used this negotiating strategy when submitting lowball offers?
I'll make this simple. We had our house prices as competitively as we could without the benefit of any real comps. We interviewed 3 realtors and went with the cheapest of the price suggested by them and cut even that by $10K.
That said, we had one offer that started at 80% of LP and topped out at 85%. Funny thing is that the buyer wasn't even pre-approved by the bank and was going to finance 90%. We effectively told them to take a hike.
Our last offer started at 93% of LP and topped out at 97%.
First offer was a low ball, second offer realistic given our pricing. So if realistically priced, pleaes don't low ball...be realistic.
one more thing...is there any value in including a letter with a low offer explaining our situation? Here's our situation:
1. We are a young family relocating to a new state
2. getting almost nothing out of our current house due to the RE market in our area
3. we'll easily qualify for the mortgage we need and have excellent credit and stable work history
4. we can close quickly
5. will not nit pick during inspection, but do want to be able to walk away if huge issues are found (like they need a whole new septic etc).
We've absolutely fallen in love with this one particular house that is slightly out of our price range.
Would a letter detailing all of this help soften the blow of a low offer? or not bother?
I'm surprised nobody has mentioned this, but from reading your posts, it doesn't sound like you are in a position to afford this house regardless of whether a low ball is accepted or not.
If I were in your shoes, I would rent for a while in your new home town and save up some cash for a bigger downpayment.
Looking at it objectively; if the housing market has bottomed out, then all the problems with toxic assets and bad appraisals and tight credit should ease, and you'd have time to save up some cash and be able to qualify for a larger mortgage.
If the housing market hasn't bottomed, then this house or others like it would be much more affordable to you in a year or two. You'd have the perfect storm of a lower home price, greater % cash for a down payment, and conceivably wouldn't be subject to PMI.
I don't think you are out of the question at 5% off list. are you also asking for closing costs? any additional concessions beyond price can slow things down. keep your offer clean. don't junk it up with a bunch of contingencies, etc. and you should be seriouly considered. You don't say where you are, but a lot of areas are going into their slow season, that can be motivation enough for a seller who HAS to move.
which brings me to..... do you know why they are selling? a more motivated seller means a more motived deal : ) If they are moving for a job, etc... a good clean offer will be looked at very strongly!! Ask your agent if they can nose around for anything....
we can afford the house, that's not a problem. We could easily "qualify" for the house at list price (and well above), but I will not go above a certain monthly payment level. I don't have 20% because our house, which was bought in 2001, will have fallen almost to 2001 levels by the time it sells and we have to relocate.
I would love to rent for a while, however there are almost no suitable rentals in the entire county that we're looking at (like 10 total in the entire county that meet our needs) and we kids in elementary school so I am not going to make them change schools twice.
The net net is that I want to get the house at a price we can afford but if I can't, so be it. There are other houses lower priced but the drop in quality is huge.
Last edited by arielmina; 08-30-2009 at 05:46 AM..
What do you have to lose..... Come in lower so you can come up to your best offer,
It will eventually be too late to get the $8k for most people who are out buying so there will be a significant drop in buyers out there. Plus with interest rates going up soon and the winter months around the corner the market will be flat. Take a shot....the worst they can say is no...besides if they say no now they may come back sooner then you think.
Moderator cut: no manual signatures, please
Last edited by Marka; 09-01-2009 at 04:46 AM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
