Whether or not you can offer less than the asking price on a home?
Home buyers may offer more or less than the asking or list price of a home. In general, reasonable offers are considered.
A reasonable offer is one that takes into account recently sold comparable homes in the area as well as other general economic conditions. For example, The number of recent sales and or foreclosures or short sales are important factors to consider when making an offer.
If you are considering making an offer on a short sale or REO there are more factors to consider. For example, the more cash you have to put into an REO or short sale the more favorably the bank or lien holder will view your offer. Also, remember that many short sale and REO properties end up in bidding wars.
An offer of 160k for a house listed at 180k is an offer that is 88% of the asking price. Depending on the amount of cash involved in the offer and any problems with the house this offer seems a bit low.
We don't always tell you what you want to hear we tell you what you need to hear.
Yes, you can offer less. However, there are many components to look at.
- Was the Home in Escrow before and just came back on the market ?
- Are there multiple offers on the Home (nothing unusual since over 12 months in Las Vegas)
- Are you paying cash or finance?...cash is King right now
- Condition of the Home
- Location of the Home, like next to a busy street or intersection....
- just to mention a few....
Please do not hesitate to call me (702-375-5912) anytime with any question(s) you may have.
Edgar Theisen, REALTORÂ®, ABRÂ®, GRI
Century21 Aadvantage Gold
614 N. Rainbow Blvd.
Las Vegas, NV 89107
If the property has been on the market for over 30 days, your agent should call and see if they can find out why. Does it have some problem that has prevented it from getting offers? Was it damaged while it sat empty? If its bank owned, the bank may take a little less than list price but don't be surprised if they counter you.
If the property is a short sale, the seller gets to decide what offer to take. Remember though, the seller's lender has the right to counter and ask for a higher price.
However, if the property is priced low for the market, its going to get multiple offers unless its in really bad condition. The Las Vegas market is very competitive and we have very little inventory. If this house is bank owned and has been on the market for over 30 days, are you sure it has just fallen out of escrow (maybe once or twice)? Have your agent do a little due diligence for you.
If it truly has been sitting there with no offers, when we have so little inventory (over 66% of the houses on the market are in escrow and another 25% are juggling multiple offers), I'd be concerned.
Let me know if you need my assistance.
Heather Peck, SFR
Everything in Real Estate is negotiable! With Bank-Owned (REO) properties, especially those that have been on the market for a while, the important thing is to understand it's true market value. Is there a reason that no one has paid their asking price? First you have to compute its true value.
To arrive at it's true value, start with a professional Market Analysis to determine what it would actually sell for if it were in top shape and completely repaired, ready for move-in. That's called "As Repaired Value" (ARV).
Subtract from ARV the cost of all repairs you need to make to put it into shape, AND the cost of holding it while you do the repairs (utilities, security, normal cleaning and upkeep, taxes, insurance, HOA fees, etc. Also subtract what it's going to cost you to re-sell it (closing costs and commissions). Then, subtract a profit for yourself, because you are going to do the work and put up with the market uncertainties and hassles. The amount that's left is its real current market value. Many people pay too much, and find out that their bargain wasn't so cheap after all.
Understand, the banks don't want to own the property. However, the people who negotiate the sale are not necessarily aware of that. They work with computers and numbers. Often, REOs sell for considerably less than their advertised price. You might ask your agent to look at your market and compare recent REO sales with the initial asking price to give you an idea. Don't think that there is some sort of formula; each deal is different.
So, don't be afraid to offer what you think it is worth, but KNOW that number, and be willing to justify it if they balk at your bid. Be aware that others are making the same calculations and may be bidding against you. That's OK, because you still don't want to pay too much for a home with no disclosures, no warranties, an uncertain past, and possible hidden flaws..The bank may take its sweet time, lowering the asking price in little jumps, hoping that someone will get interested, or they may take your offer. You can't tell until you actually submit that offer.
Doc Stephens, REALTORÂ®
However, forget the asking price. It doesn't matter.
What matters is how much the home is worth. And it might be well above or well below $180,000. Example: Sometimes homes are priced deliberately low in order to spark a bidding frenzy. I showed one house that was listed at $180,000. It actually was worth (based on the comps) about $240,000. My clients, unfortunately, didn't understand that and "knew" that the home was worth less. They offered $165,000. In 3 days, the house got 8 bids, with the winning bid around $230,000. My clients were shocked that they'd lost. Incidentally, their offer was the lowest of all 8.
On the other hand, sometimes banks may try to recover their investment in a house. If someone bought it at the top of the bubble for $500,000, a bank might try pricing it at $400,000, even though the house really is only worth $250,000 today. In your case, if the house has been on the market for 30 days, it probably isn't worth $180,000. But there might be other factors involved, too.
Bottom line: Forget the asking price. Get a Realtor to run a CMA (comparable market analysis) on the house to determine what it's really worth in today's market. Then pay no more than that for the house. Perhaps offer less.
Hope that helps.