So bottom line is get a CMA, if you really love the house and want that specific property make an offer that your agent believes has a reasonable chance of being accepted.
However if you can go either way and don't mind missing out on the property then lowballing can be a great way to negotiate, but you also take the risk of losing the property to someone that wants it more.
I hope that this helps you with your decision process and whichever method you use I wish you the best of luck and hope you love your new home when you close!
I did not intend to imply that you were being rude or in any way unreasonable. I hope I did not insult or provide offense with my comment, that was not my intent, however if I did I sincerely and wholeheartedly apologize.
Allow me to please explain. I don't believe in the concept of an "Insultingly" low bid. It is kind of an inside joke and I intended to impart that but in my flurry of typing I forgot. :)
Whenever we hear the occasional sellers agent call and say things like, "You really want me to submit this to my seller, it's insulting!" the agents that I work with and I can't help but chuckle.
After all, the seller usually realizes that a low offer is just the opening round in negotiations and for a Real Estate professional not to makes me scratch my head. Unfortunately it is really not that uncommon of a reaction to "Lowball" offers.
As far as trying to get the absolute best price for your house, that is obviously the goal for any intelligent buyer.
Despite the fact that it will result in a lower commission when acting as a buyers agent I always encourage them to do as you have chosen when they are not absolutely "Married" to one particular property.
It is not only the ethical thing to do but to do other would be in direct opposition to our fiduciary responsibilities to our client in my opinion and my commission should never be in my mind when I am negotiating for my client.
Thanks and have a terrific day!
Listen to your realtor. The fact that the price has been significantly decreased should attract increased attention. The fact that you see it as a good opportunity is also an indication that others will have the same perception.
If there is additional interest, taking the low road and trying to "lowball" the seller may decrease the chances of your success. It sounds like your agent has a good feel for the local market. Ask her where she feel you should begin with this process....it's your best chance at getting the opportunity to negotiate a successful contract.
Many buyers that take the "lowball" route on a home they really like, live to regret taking this approach. Keep in mind that your lender will not make you a loan on property that does not appraise for the selling price. Let that be your voice of reason while negotiating...ask your agent what she thinks the property will appraise for and then go from there.
How much do you want this home? You say it's already significantly dropped prices, and you are aware that you are not the only person looking, and your Realtor suggests a specific price on it...
Are you a serious buyer? Make a serious offer, before someone else does and you start this process all over again, and you're not guaranteed to find another home that fits you well.
Another thing to consider: if the home is having a lot of difficulty to sell, perhaps there's something in the home that needs to be repaired or rehabilitated?
One of the things that I do when I write-up an offer for a buyer is to do a "sellers closing estimate" and then also check on the estimated pay-off for their mortgage is. Let's say the sellers financed 110K in 2001 and you make the 120K offer with closing costs - without considering taxes and other closing costs you are already at 105K. I also do a market check and tell you how many months inventory we have - maybe six months in many places in Florida. Then comes "the question" - if this property is gone tomorrow to another buyer and you lose it because negotiations take too long would you be upset. If the answer is yes - make a competative bid. If it is no then do your low ball. The worst thing to do is loose a great home you like because you will spend 2-3 months, yes I said months comparing every house to the one that got away and you will find it hard to get over it.
Sometimes its a bit tough to read mood on a screen. :)
One thing you can do while waiting for your CMA is to drive around and look at some other properties on your own that are similar in location and style/condition to the one you are looking at, average their asking prices up and then knock off 10-20% and then adjust it as you feel appropriate to for your prospective properties specific deficiencies, merits and defects and that may provide you a decent starting point for a lowball offer.
But do keep in mind, as your buyers agent it is his/her job to attempt to make sure your offer has a chance of success and inform you if he feels it won't but he still MUST submit your offer in a timely manner and the form you made it.
Another negotiation tool you may want to use is instead of going for a lower price see if you can get the seller to cover more of the closing costs. That can sometimes be more successful than offering a "insultingly low" offer.
Just something to consider.
Once again good luck and happy house hunting!
There are several things to consider as you develop your purchase offer:
â€¢ is the asking price in line with prices of similar homes in the area? Ask your realtor to conduct research, called a "Competitive Market Analysis" or CMA, on comparable properties, to help you come up with an educated opinion on the worth of the property.
â€¢ is the home in good condition â€“ or will you have to spend a substantial amount of time and money making it the way you want it?
â€¢ how long has the home been on the market? If itâ€™s been for sale for a while, the seller may be more eager to accept a lower offer.
â€¢ how much do you really want the home? The closer you are to the asking price, the more likely your offer will be accepted.
Prudential California Realty