However based on the many foreclosures, Short Sales, and regular comps in the neighborhood I didnt feel the $185K pricetag was appropriate (and neither did my agent). So I was contemplating a first time bid of around $163K, but was worried if bidding that much below the list price would be insulting to the seller.
The answers I received on here, as well as from my agent when we went for a private showing, convinced me to go a little bit higher just to get things rolling. So, 3 days after asking this question I put in an offer of $171,900. A day later, they came back with a counter of $184,900 along with a note from their Selling Agent that read "Thank you for your offer. We would love to work with you on the price of this great home, but we're not giving it away".
It was at that point where I was the one insulted. Their counter, along with their note, made it clear they wanted to play hardball. And in this market, with Short Sales literally up and down every street in the neighborhood, I was literally disgusted. At $172K I already felt I was near the top of my limit, and I had no intention of going above $174K. So I walked away.
About a week later (and after seeing about a dozen more homes in person), I found a house with more room, more amenities, and quite frankly in a better area...all for a list price of $164900. My wife was in love with it, and so we went ahead and offered list. Fast-forward to August and we closed the deal, and I love my house. (In hindsight, I probably should have haggled the price down a little on this place too, but with the way my wife fell in love with it I just wasnt willing to let it get away at the time).
As for the other house, Ive kept tabs on it. In August, while we were under contract here, they dropped to $175. In September, it went to $168. October, $159. And in November it listed as a Short Sale for $149,900. At some point in December it was taken off the market altogether because I havent been able to find it, and I know it wasnt sold because it doesnt show up in the sold listings.
Bloomberg is predicting that home prices will go down another 5-7% this year in IL, as a new glut of foreclosures hit the market. And thats evident in my neighborhood as there are a few vacant houses with For Sale signs out there even in the dead of winter. The market conditions are not going to improve anytime soon around here. So the moral to this story is ANY offer is better than NO offer at all. Sellers dont have the luxury of being insulted anymore...if you get a bid, you should feel extremely lucky and be willing to work with whatever that number is. The owners of that first home had a bona fide bid of $172000 on their plate, and because they chose to play games they now sit with a place they couldnt even move for $30000 less than that.
In this market, the buyer holds all the cards and as a seller you need to understand that. If you insult the buyer, they can and WILL walk down the street to the next home, because Lord knows there's a ton of homes to see.
Anyone else who wants to restart this discussion thread, please feel free to chime in. As the Spring selling season begins, I think this is a valid subject that should be discussed among Agents and Sellers alike. Having been through both sides of it last year, and knowing what this extremely depressed market is like firsthand, it bears some real discussion.
As for insulting the sellers, it's always a case by case scenario. Some sellers/agents find things insulting, but I feel this day in age, you should try and work with ANY offer that comes to the table. Sometimes buyers are just "testing the water" and will offer a low bid, but, in fact are willing to come up in price. I always keep things professional, to see if the two parties can come to an agreement of terms or not. If not, everyone moves on.