Question Details

Jennifer, Home Buyer in Georgia

How to lowball but not offend? Price is too high for condition.

Asked by Jennifer, Georgia Thu May 8, 2008

We've waited for a farm to come up for sale since the owner passed away four weeksago, and this week the son listed it (FSBO). His price is a bit high - built 1954 and no updates, bad roof/rafters due to water leak, power meter will shock you if touched, termite damage, overgrown pastures, fences are down, etc. We want it, but my husband wants to offer 65% of asking, and pay no more than 75% due to repairs. He feels that since they began cleaning it out immediately, and put the sign out so soon, then they must really want the money. Any thoughts? I don't want to offend or scare them away because we love the place. They built it originally and have lived there since. We believe it to be paid for, so any money made is profit for the two children.

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Hi Jennifer,
My name is Michael Brenner, I am a Realtor in Winter Haven Florida. here is something that I try to tell buyers and sellers.

I would approach with caution and confidence, I would ask the seller to meet you at a nuetral location to make the offer. Buy him lunch.

I would ask how the property became in such dispare first, ask why no one had taken care of it....with empathy. Paint the picture that you would love to restore the property. Paint the picture how you see your family happy with the property. Let the seller see that you are a real person and not some business transaction. Keep referring to how sad that no one could help the owners take care of such a beautiful place and that if it were in better condition you would love to make an offer.

I would not make any type of dollar amount known until you see how reasonable he begins to realize how the property is not worth as much because of the condition. Look at him as you would a new puppy and that you just love the property and see so much potential for your happiness. Do not over due it!

Ask what his plans are with the money he makes on this sale, ask if he has a charity he is going to give to, ask if he has children he wants to save for, ask if he has a new investment for himself he would like to bring some money into.

He may break knowing a buyer is on the fence. It may not be that day, but he will break and realize he can't take advantage of good people wanting to help him out of this property so he can move on. You have to paint the picture that you only have so much money and that you respect how long it has been in their family and you can't work miracles if there are roadblocks in your way. You want to do what is right and give the most you can, but unforteunately in thecurrent condition it will be hard.

Let him know you are always a phone call away and that you want to have the first right to refuse. this could take weeks or even months before he breaks.

Negotiating is not about being firm and hard, it is about knowing the others emotions and using it as leverage.

All I ask is you to be fair with the offer and have it reflect your true intentions and make it a win-win. If you show the owner you are discounting the price because of the condition make sure the owner gets a good profit like you said for having the investment for a long time..... and you will close it.

2 votes Thank Flag Link Thu May 8, 2008
Excellent advice below regarding buying the estate. Usually, I'm like a broken record: "Don't worry about offending the seller." And I stand by that advice for any investor, as well as any purchaser who wants a good buy. However, you say that "we love the place." In that case, the advice below, and the scenario laid out by Michael, is on target.

Without playing a psychiatrist, I think you may have two sales jobs to do. One on the owners of the farm you want. The other on your husband. Although you say "we love the place" and suggest the price "is a bit high," your husband only wants to offer 65% of the asking price. Now, if that's what a knowledgeable Realtor in the area suggests you offer, that's fine. But in many instances, if someone said that "we love the place" and acknowledge the price is "a bit high," (again, if the comps came in close to the asking price), I'd suggest offering something closer to the list price than 65%. That offer could, indeed, offend the seller.

As for your husband's theory that the quick clean-out and listing for sale indicates that "they must really want the money," he may be right...or wrong. Any decent financial planner (and I'm not one of those, either) would recommend maximizing assets. And a vacant farm doesn't fill the bill. It's simply good financial strategy to sell the property, take the money, and put it somewhere (or into something) that will help the heirs. That's another reason I like Michael's strategy.

Hope that helps.
1 vote Thank Flag Link Thu May 8, 2008
Don Tepper, Real Estate Pro in Burke, VA
I agree with Michael. Let them know what your plans are with the property and the things that you told us. If this is a sentimental family home, they may love the idea of someone starting a family there and restoring it to it's former glory.

Becareful not to offend them by accusing them of neglecting the property, but emphase that you see so much potential and want to put love and memories of your own into it. While still letting them know that there is a budget and you cant over pay for the house....

~Cassandra Bickel, Realtor
1 vote Thank Flag Link Thu May 8, 2008
We are being advised by a realtor, who is a dear friend of several years, but his opinion matches that of my husband, which I obviously don't agree with. I feel like there is a sentimental attachment because this is their homeplace, and they aren't seeing it for what it really is. We want to fix it and live there for many years, not just use it as an investment. I am hoping that they'll be somewhat swayed by that, versus someone just looking for a deal to resale. Unfortunately, this is one that we'll regret if we miss out, but my husband is hard-headed enough to stick to his guns.
1 vote Thank Flag Link Thu May 8, 2008
It seems like you have done some of your home work already. When you go in with your offer, wether you do it on your own or use a Realtor, the best thing to do is go in as strong as you can.

Are you paying cash or are you getting financing? If you are financing, do you have a large down payment? Is it contingent on you selling your current place? Are you able to close quickly?

A lot of times these can make the difference of getting the offer accepted or loosing out to someone else - or even just distancing them.

Also, go in with all of your research documented. If you are going to put in a low offer, tell the sellers in writing, why. Let them know that you are offering what you feel is a fair offer, what repairs are needed and what other homes in the area are selling for (sometimes farms are hard to judge which is where a professional comes in handy).

They may not be aware of all the repairs that are needed in the house. With you explaining the offer, they may be more open to considering and negotiating your offer rather than just throwing it out the window. And remember, you may not know their true motivation. If it was built as a family farm and they grew up there, even though he is unable to keep it, it may be diffcult letting go of the memories that are with the house.

Good luck!

~Cassandra Bickel, Realtor
1 vote Thank Flag Link Thu May 8, 2008
You folks have given wonderful advice, and I never would have thought of the angle that Michael presented. I definately feel more confident and prepared for the discussion with my husband, and then hopefully with the sellers.

The realtor is a good friend of ours, but even he calls himself a "slum lord". He thrives on the rush you get when you find a great deal, and he bragged last night about getting a house for $19,500 when they were asking $68k. So he is certainly not considering the emotional aspect of this sale. While I love a great deal, I also sypathize with the family and their loss.

If it were in good (not great) condition, I think it would be a fair price. So perhaps I'll start from there and subtract the contractor bids to get an idea of what to offer.

Certainly, appealing to their emotions will help. We do want to lovingly restore it, we don't have children yet, but this would be a great place to raise a few, and our three fat horses and one mule would just adore the 16 acres of lush grass! The apple trees, muscadine vines, horseshoe pit, big oak trees, I could go on and on about how much I love it. If its meant to be, it'll happen...
0 votes Thank Flag Link Thu May 8, 2008
Get as much info as possible before making the offer so as to save you the time if you know your offer will not work for the seller. The seller needs to feel like (A) you are genuinly interested in their property (B) your offer is for real, & (C) that you can perform the contract for which you are making the offer (you are well qualified, in other words.) In any case, the more preparation you give them that your offer will not be what they are asking the better.
0 votes Thank Flag Link Thu May 8, 2008
It really does depend on your motivations and goals. Without knowing your local market, I can't tell you if your plan of action poses a threat of offending the Seller or not. If you're motivated to buy the house and your goal is to fix it up yourself to live in, the price might not be the most important factor to consider. If you're motivated to get a great deal and your goal is to have some instant equity, offending the Seller is probably not the most important factor. I imagine that you, like most buyers, are somewhere in the middle so you'll have to dance a little and see if you can find some middle ground there. If this isn't something you guys do very often, Jeff's advice to talk to a local Realtor is pretty well founded. They can help you figure out what the current value is and what the improved value would be. With that information you'll be well equipped to start the negotiations. Good Luck!
0 votes Thank Flag Link Thu May 8, 2008
Find a local, knowledgable Realtor who can provide you with the proper market information to help you with your decision. Make an informed decision and have your Realtor negotiate the best terms possible on your behalf. Also, ask yourselves "do we have to buy or do we want to try to get a deal?" If the answer is the former, don't let a great opportunity pass you by.
0 votes Thank Flag Link Thu May 8, 2008
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