The first piece of traditional advice is to look at the comps. Apparently you've done so; you say there "are not many." You may have to make the best of what you have. And bracket, too. That is, if there are some 2/2 townhouses listed, they're not great comps but yours (being just a 2/1) is probably worth less. Your agent can give you some other tips. And the advice below is good, regarding condition, location, and so on. And one other thing your agent can do: Ask the listing agent for the comps on which he/she based the $139,000 price.
The other factor I always inject is what you can afford. Not what you're prequalified or preapproved for. But what you can comfortably afford. That number may be less than your prequalification number. That should be your maximum price; your offer should be at or lower than that.
Let's say, though, that you're prequalified to $140,000, and that there are no decent comps. At this point, gather any information you can about seller motivation. Are they selling because they've already bought a new home. (High motivation.) Or are they just testing the waters and have said, "Well, if it doesn't sell for our price, we'll just hold off for a year or two." (Low motivation.) The higher the motivation, the more likely they are to take a lower price.
Then gather information about what they bought the property for and (if possible) what they owe. Understand: That has no relation to its value. However, as a practical matter, if they bought the property for $120,000 a couple of years ago and are trying to sell for $139,000, then they don't have a lot of "wiggle room" to negotiate. On the other hand, if they bought 10 or 12 years ago for $45,000, then there's plenty of room for negotiation.
Ignore any statistics you may see about properties generally selling for, say 95% of their list price. First, that's a generalization, and many don't.
Second, you don't know what price reductions had occurred, nor what seller concessions were offered. For example, a property is listed at $200,000 and it sells for $190,000--5% lower. But is it really 95% of the list price. Not necessarily. Suppose the house originally was listed 9 months ago for $249,000. It's been reduced over that period to $200,000 and sells for $190,000. That's just 76% of the original list price. And let's suppose there were 3% seller concessions. So, while the house "sold" for $190,000, the seller actually received (before having to pay commissions, etc.) 74% of his/her original list price. Yet the number that would show up and be quoted is that the house sold for 95% of its listed price.
Finally, one of the other comments below suggests that a modest reduction from the list price won't "insult" the sellers. Look: Don't worry about insulting the sellers. Some sellers get insulted if your offer is a penny below the asking price. They think their home is the best one in the city, and they're already unhappy that their Realtor has suggested a lower list price. On the other hand, some sellers are highly motivated, and would be overjoyed at any offer. You're not a psychiatrist; you don't know the seller's innermost psyche. Don't worry about insulting a seller. Worry about making an offer that represents a good value to you and that you can comfortably afford.
I know: You're probably still hoping for the "magic" number: What's the right number? There really isn't one. But do those first two steps--gather whatever comps you can and then figure out what you'd be comfortable paying. That's your ceiling number. Offer less. And if offering 85%-90% is what you'd like to try, and that number meets the two criteria above, then give it a try.
Real estate agents are not the ones to tell you what to offer. BUT... they are the ones to provide you with the information. help you understand and prioritize that information. And they are the ones to help you put together an offer that has a chance of being accepted by the seller.
An offer is a many-legged stool and price is just one of those legs. An important one, but not the only one. Your agent can help you put together an offer that stands strong on all those legs.
You are wise in not relying on your experience in another maket to decide what to offer. Even within the Portland area, there are wide variations in the difference between list price, final list price and closing price from one area to the next. Your agent can look at the transaction history on the RMLS of sold homes in the area to get that information.
Best of luck with your offer!
Great Question. Ask your agent to show you a CMA, for townhomes in the area, that are active, gone pending, and sold in the last 3 months. You will want to look at the numbers, as well as the condition of this home compared to others that have sold in the area.
Also, look at the property, is it on a busy street? Is it next to a commercial building, gas station, etc? Are there any drawbacks that can may make it hard to sell in the future? Is it a fixer?
Additionally, do you want the seller to pay for a home warranty? Closing costs? HOA dues?
These are things to also consider when trying to decide how much you are willing to pay for a property.
Additionally, have your agent pull a Trio, this will show, who owns the property,( is it bank owned?) and how much is owned on the 1st, (typically).
I'd like to address that, and shed a little light on why that is.
I'm the Broker/Owner of EBA Portland, LLC an Exclusive Buyer Agency here in Portland. My clients rely on me emphatically for their real estate purchase. But in entire length of my career, I have never told my clients what to offer.
The question you asked in good. Buyers / Sellers turn to professionals exactly for the purpose of representation, direction and guidance. BUT . . . the truth is; you DO NOT WANT an agent "telling" you what to pay for a house. Just as you DO NOT WANT an agent "telling" you what price to place on your home for sale (as a seller).
Here's why: it's to protect you! Believe it or not.
Agents can provide price ranges, suggestions of pricing, etc. and this is entirely ethical. But if a listing, for example says, "You can get $XXX,000 for your house. List at $XXX,000" and the sellers does this, what if . . . this was a low-ball price to begin with just to get the place sold quickly . . . not for you, but so the agent can get a commission?
A truthful agent will provide you with RECENT comps of the area, and "discuss" pricing strategies with you. Both in the home purchase, and the listing sides.
A truthful agent will provide you with information that you -- they one paying for the home -- can make an intelligent, informed consentual decision.
You should NOT rely on an agent to tell you what to pay for your house. You should rely on your agent to discuss pricing strategies, negotiation strategies, explaining the recent comps, etc.
I always educate customers and clients alike on the very subtle difference between of "telling" a client vs. counseling a client.
Can you imagine a buyer who is angry at their agent if they lost the house they loved: "YOU told me to offer that price. I trusted in you, I relied on you and YOU told me to write up the offer with that price!"
But the house was sold to another buyer who might have had a different pricing strategy.
The point is that the home might have been sold to the other buyer ANYWAY . . . but, if the buyer's agent TOLD them what to offer, is very difficult to repair that trust once it's gone.
I recently had an out-of-state buyer who wanted to pay $XXX,000 for the property. They liked it SO much, they were willing to pay full price. While I did NOT tell them what to offer, I spent a lot of time preparing comps for them to look at, and spend time with them explaining the market. Buyer said, "Okay, let's drop the price, and offer $10,000 less."
I could have done that too. But, I actually do have a good finger on the pulse and suggested that the buyers might want to start off with an offer $20,000 less, and explained and counseled them as to why!
But I never TOLD them what to write up in their offer. It's unethical on so many levels to do this.
Our deal was accepted as written with the $20,000 OFF list price!
Here's a good example of how an agent, while not "telling" their clients what to offer, got them to understand and feel comfortable with their offer and saved them money.
I hope this helps!
I agree, Realtors can and should offer opinion; but not so much an opinion of what to offer- rather opinion on whether the sale price on the home is really in the ball park of similar homes recently sold or listed for sale. Your realtor may have to pull data from a larger bulls eye search. Look at what is for sale in the neighborhood, even if they aren't good comps. You'll be able to see price ranges...Just so you know, that price, unless the home is a dump will be competitive according to my recent searches in that area. Be on top of it and get your data quickly.
The actual lowest offer will come out at the end of the negotiations, when you and the seller agree or decide to end the negotiations.
Now is a great time to buy unlike a few years ago, because more sellers are motivated to sell their home and move on in fear that their house will sit on the market too long. Best wishes to you.
I would say that is totally base don sales comps and that has to come from your agent. So look at that. Being 5-8% below that is not an insult. You want to get the home at or below the last sale to insulate yourself against further reductions in value.
Be a buyer and get what you want. The rates are going up so I would strike now.
Best wishes to you;
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Yes, Realtors should be the one who can give you the advise on how much to offer. Interview a few Realtors, find the one you like and ask them to produce a comp for you on the property.
We always say that there is no 'typical' percentage lower you should offer on a property - there are a lot of factors involved - is the house priced reasonably to start with? How motivated is the seller? How does the house compare to others? How long has the house been on the market? What's the location, condition of the house? What's the trend in that particular area? etc.
Get professional advise for a reasonable offering price for the house.