Home Buying in 68048>Question Details

Tara Mesa, Home Buyer in Bellevue, NE

First time buyer about to make my first offer. Help!!

Asked by Tara Mesa, Bellevue, NE Sat Oct 8, 2011

My husband and I are pre-approved for a VA loan. We found a great house in a lake community, corner lot, 2800sq ft, lake view, on the golf course. It has lots of recent upgrades, and fits us really well. While we both feel the price is already competitive at 135k, my husband really wants to throw a low first offer at the seller. He wants to offer 120k seller pays closing cost. This house has been on the market for almost a year and the price has been reduced significantly. It is already priced lower then some of the smaller and slightly newer homes around it. Our realtor is telling us that it has picked up interest in the last week and urges us to get an offer in soon, she also seems to think we are already at market value with the asking price. My husband has spent a lot of time overseas and insist that he wants to offer low and start a negotiation dialogue. I'm just worried we will scare the sellers away from the negotiations with such a low offer. Help!!

Help the community by answering this question:

Answers

15
Jan Nicola’s answer
When I list homes, I prepare my sellers for low ball offers. I let them know that they might get one and not to be offended. I encourage my sellers to counter back reasonably. If it's now priced more competitively, it's possible you may loose it if you spend too much time negotiating. I would suggest you have your Realtor do a market analysis on the property and offer accordingly. However, your Realtor must present any offer you write up. Good luck.
1 vote Thank Flag Link Sat Oct 8, 2011
BEST ANSWER
You really have to play it by ear. When I was house shopping I tried to lowball a property I really wanted as a negotiating tool but then lost it because another offer came in that while it was higher than my original offer was still less than I was willing to be negotiated up to.

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!

Anthony
1 vote Thank Flag Link Sat Oct 8, 2011
Whoops, I forgot to explain why I had placed insultingly in quotation marks.

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!
Anthony
1 vote Thank Flag Link Sat Oct 8, 2011
Tara,

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.

Good luck,

Bill
1 vote Thank Flag Link Sat Oct 8, 2011
Tara;
Don't 2nd guess yourselves. Make the offer that you and your husband want to present. The worst thing that can happen is the owner says no.
If it were meant to be it will happen.
Web Reference: http://www.321property.com
1 vote Thank Flag Link Sat Oct 8, 2011
Tara,

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?

Good Luck.

Mark Fleysher
http://www.jackconleyrealty.com
0 votes Thank Flag Link Fri Oct 14, 2011
Tara:

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.
0 votes Thank Flag Link Mon Oct 10, 2011
Whew, that's a relief.

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.

Good luck,
Anthony
0 votes Thank Flag Link Sat Oct 8, 2011
No i wasn't Insulted at all Anthony you have been a huge help! Just trying to figure out what really is an insult and what is a round one of negotiations offer. I didn't mean to sound irritated, we are truly trying to find the balance between extreme low balling and just healthy negotiation.
0 votes Thank Flag Link Sat Oct 8, 2011
To be clear our agent is not being unethical, we just feel she maybe thinking more of a sale then of getting us the best possible price. Once again the advice is appreciated! I don't think we will make any "insultingly" low bids that was not our intention. We want to be as far under the appraised price is possible, I don't think we are being rude or unreasonable in attempting as much. There are well over 50 houses for sale in this lake community right now so I don't at all feel like this is the end all be all of deals. But we will do our best to snatch this one up, if we get it that's great if not that's fine too. You all have given us thinking material, so I am very glad that I posted on here!
0 votes Thank Flag Link Sat Oct 8, 2011
It is not uncommon for agents to have a level of familiarity with each other as we frequently sit across from each other at the "Signing table", even more so if you are in a small community. However if you do feel there may be the potential for some unethical collusion between the agents you may want to see if you can locate an unrelated 3rd party agent to also pull a CMA for you to make sure you are indeed being shown an apples to apples comparison.

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!

Anthony
0 votes Thank Flag Link Sat Oct 8, 2011
Thank you all very much for the solid advice. We are a bit uncomfortable with the level of familiarity between our agent and the listing agent so that has raised some questions. We will be going forward with all the suggested research and making an offer based on the results today or tomorrow. With all the information so far we suspect that there may not be as much interest in the property as we are being lead to believe. We feel like this is still very much a buyers market and we hold the upper hand, if we loose the property we are still in a good situation. We will most likely make a lower then asking offer, but it will be based on the CMA now. Thank you very much. Additional advice is appreciated, knowledge=power :)
0 votes Thank Flag Link Sat Oct 8, 2011
Tara,

There are several things to consider as you develop your purchase offer:

• 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.
• is the home in good condition – or will you have to spend a substantial amount of time and money making it the way you want it?
• how long has the home been on the market? If it’s been for sale for a while, the seller may be more eager to accept a lower offer.
• how much do you really want the home? The closer you are to the asking price, the more likely your offer will be accepted.

Thanks,
Carol Perdew
Prudential California Realty
(209) 239-7979
Carol@PerdewHomes.com
DRE 985176
0 votes Thank Flag Link Sat Oct 8, 2011
Tara your agent should ask the listing agent if the seller has received any other offers and is there any offers they have declined. You need to take note of how much you want the house and if it is worth the risk to offer too low and get turned down or another buyer makes a better offer than do it. If there is truely activity make a better offer than trying to steal it, if they owe more than your offer, chances are they will reject it. The key is dont wait, you are wasting time, make the offer today so you can get on with negotiations that are at a more reasonable price if they decline your low offer.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Sat Oct 8, 2011
We can certainly afford it even at full asking price, we just want the best possible deal. I hope we aren't swinging a bit too hard for the fence.
0 votes Thank Flag Link Sat Oct 8, 2011
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer