Home Buying in 80234>Question Details

collisson, Home Buyer in Pasadena, CA

In a seller's market, what type of concessions can a buyer offer a seller?

Asked by collisson, Pasadena, CA Mon Jul 21, 2014

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Come to the table without a real estate agent and negotiate directly with the seller. Hire a real estate lawyer (we paid 500.00) to perform as an escrow agent and close the deal yourself. The real estate industry has been subverted to the advantage of real estate "professionals" that only drive up the price of a home to the seller. The 6 to 8 % commission paid to the pro's comes out of the sellers pocket no matter what they tell you. Sites like Trulia allow the buyer to go direct and save thousands. If your not experienced enough than bite the bullet and pay a buyers agent 1 or 2% and look at for sale by owner homes until the home you want goes off the market and then make an offer saving yourself the selling brokerage commission. The real estate industry as a whole needs a serious revamping when the sale between two individuals of a 500,000.00 home cost an additional (6%) or 30,000.00 dollars just to play the real estate agent game.
10 votes Thank Flag Link Mon Jul 28, 2014
Wouldn't that restrict the buyer to FSBO homes only? How can I find out who the actual seller is on realty sites like Trulia? They only give contact info for the listing realtor. Thank you.
Flag Mon Jul 28, 2014
this sounds good but we've all been cowed into thinking we need them (real estate agents) for liability reasons
Flag Mon Jul 28, 2014
Remember, in a hot market, you aren't competing against the seller, you're competing against other buyers.

Pre-inspect so you can waive the inspection contingency. Consult with your agent and mortgage broker about waiving appraisal contingency -- it may or may not be a good move for you. Consider asking your banker for a commitment letter (you have to go fully thru underwriting, it's stronger than a pre-approval). With a commitment letter you can also possibly waive the loan contingency. Again, your banker would know.
3 votes Thank Flag Link Tue Jul 22, 2014
I've never heard of a buyer "pre" inspecting a house before making an offer and writing a contract????
Flag Tue Jul 29, 2014
not bad advice...but most underwriters look at the property as well
I guess if you have sufficient funds in your bank they might think about it
Flag Mon Jul 28, 2014
I don't think we are in a sellers market. We are in a buyers market. Just try to sell a house and see how it goes unless you are willing to take a loss on value.
2 votes Thank Flag Link Mon Jul 28, 2014
The question came from Pasadena, CA. The market in NC is not relevant as real estate is local.
Flag Mon Jul 28, 2014
It is a seller's market in Dallas and most of Texas. Things are going well down here.
Flag Mon Jul 28, 2014
houses in the northwest are receiving several offers. That is in the entire metro Puget sound area. It is definitely a sellers market.
Flag Mon Jul 28, 2014
The fewer contingencies (home inspection, appraisal, financing, home sale contingeny) you can have in your offer the better. Although I'd never recommend buying a home without a home inspection. Other than that, offering more earnest money lets them know you're a serious buyer. Definitely get pre-approved as well.
2 votes Thank Flag Link Mon Jul 28, 2014
Where is this seller's market? I'd really like to know. Hundreds of properties on the market for years in my county.
If I were buying, I'd make my offer and leave it on the table. None of this emotional desperation buying that led to the last housing bubble. There are plenty of other properties.

Example:
I wanted to buy a car and it just killed the dealer that I would not fixate on a color. If I couldn't have the color i wanted--and that color was not offered--than it didn't matter what color I got. He, finally, picked a color for me and and we agreed on a delivery date, but he called a week ahead that my car was in. Forget it. You can't give me the terms we agreed on, I don't need your car. Sell it to someone else.

As a buyer, I'm not going to be film-flammed into 'concessions.' I'l go as as far as to counter offer a small amount, but beyond that, if i'm without a house, i can always find another someplace. As a seller, I'll not be greedy, but since there is water where i live, at a higher than sea level elevation, I guess I'll just let the buyers get in a lather about wanting my place, when that time comes. And see what they offer. Or I'll die in it. Not a bad choice, IMO.
2 votes Thank Flag Link Mon Jul 28, 2014
Happy to tell you- Seattle, WA where houses on the market get multiple offers and sell for $50 to 100 thousand dollars above asking. I know, I'm a buyer and have been for 9 months. We've lost out on 5 homes we've bid. Here as a buyer you make sure you have NO contingencies, you pay for a pre-inspection AND you write a cover letter telling the seller how much you love their home and why they should sell to you. These are facts and you can google it to check.
Flag Fri Aug 22, 2014
It's a sellers market in the San Francisco Bay Area, where properties sell within a week of being put on the market for many thousands of dollars over asking price. Many of the offers are for all-cash, meaning that even good buyers with large down payments are often out of luck if they have a mortgage contingency. Yes, this area is in a huge economic boom, unlike many parts of the rest of the country.
Flag Wed Jul 30, 2014
The car dealer couldn't wait a week for you to pick up a car? Sounds a bit odd overall to me.
Flag Mon Jul 28, 2014
Buyers and sellers have both been demanding more options regarding how they can buy and sell real estate. From that demand you have observed plethora if choices from DIY activity on Craigslist, FSBO on their website, flat fee and even auctions.

All of these, especially auctions actually INCREASE the cost of selling a house. Auction from 11 to 25%! What the consumer fails to recognize is how these fees are hidden and dispersed. These buyers and seller all seem 'HAPPY" because the believe the beat the system. The reality is, they paid more, everyone made more money....and the overall costs were much greater.

Traditional real estate sales have significant transparency, where costs are clearly spelled out and known. And that cost is what ever you negotiate with the professional involved.

Red Sump fails to pull back the curtain on the real risk 'coming to the table without a real estate agent' presents. When things go wrong, Red Stump won't be there to put Humpty Dumpty back together. Your REALTOR will not only keep Humpty Dumpty on the wall, but does indeed have the resources and skill to present solutions to reach the best outcomes possible

Take a look at this 'unrepresented' seller situation.
http://www.trulia.com/voices/Home_Selling/Back_out_at_closin…

You have many choices. With many choices comes greater risk and responsibility.
Choose well.
2 votes Thank Flag Link Mon Jul 28, 2014
It is Red Moon Bay @ Stumpy Point must be another realtor making a mistake.You must have gone over this in your morning sales meeting. Our final realtor not only misrepresented the square footage she escaped free and clear because we had signed the required disclaimer on all real estate deals that absolves the agent of everything. Read It !! That is why you hire a lawyer to handle the transaction for 500.00 versus the 30,000.00 going to the agents. You get a fair price for services render and you have qualified legal representation for both parties. It virtually assures you of an honest transaction without the commission. Speaking of commission go online an look up the Real Estate Commission website and look at the number of real estate pros that have been fined or suspended. Enough said !!!!
Flag Mon Jul 28, 2014
If you ask me.. agents do everything they can to scare the hell out of homeowners so they don't sell on their own. Nightmare situations can happen with a realtor too and you get to pay 6% to them on top of all the other fees. The only thing you said that should be noted is that there is a greater responsibility when selling my owner. Don't be overly emotional about your property. Have a good real estate attorney on hand and research the market..
Flag Mon Jul 28, 2014
If you were following the thread you should have recognized this was in response to RED Moon from Stump.
You are right....it is AMAZING!
Now we can take to tread further away from the topic of the question.
Flag Mon Jul 28, 2014
Wow. It's amazing how you said so much, yet said absolutely nothing related to the question. This must be a stock paragraph you copy and paste just to see yourself "in print." Another agent with a massive ego... not a surprise.
Flag Mon Jul 28, 2014
Get all your ducks in a row. Get Pre-qualified, start cleaning up your credit at least 6 mos. before house shopping, a year is better. Pay off student loans! Pay yourself 1st, consistently, banks really do look at this. Put away a cloud house payment, this way when you buy a home, you are already use to the payment. When you get to the point to shop, know that you will have to pay for a house inspection and it is money well spent. It can make or break a deal. If a improvement has been made to the home in the last few years, make sure a permit was pulled and there are no leans. Nothing like getting to the signing table to find out the roofer didn't pay his subs and the new owner (YOU) has to pay them. Good Luck!
2 votes Thank Flag Link Mon Jul 28, 2014
oops thanks
Flag Tue Jul 29, 2014
liens….not leans
Flag Mon Jul 28, 2014
All good advise but doesn't seem answer the question at all
Flag Mon Jul 28, 2014
In a seller's market - the best concession a buyer can make is to overbid.
1 vote Thank Flag Link Mon Jul 28, 2014
Would you pay more for the last loaf of bread on the shelf knowing another was coming soon at market price? Overbidding is technically overpaying. Why pay more for something when the market will soon provide more product? Bid only what the property is worth. You will regret paying too much in a few years when your property is worth less than your mortgage. Learn from the past, the market has not rebounded yet.
Flag Thu Jul 31, 2014
Looks like I need to move to CO, Sally. Our estimated closing costs on a $600k home in Queens NY are just under $30k. I WISH they were only $5,000.
1 vote Thank Flag Link Mon Jul 28, 2014
Closing costs are insane... That's why homeowners are still getting the shaft while everyone else is making money.
Flag Mon Jul 28, 2014
Make it a cash deal and NOT contingent upon financing. That will help.
1 vote Thank Flag Link Tue Jul 22, 2014
Don't make an offer you don't have the resources to close, particularly if you aren't confident about your offering price appraising.
Just sold a condo in Seattle and gave the buyers 7 days to waive the financing contingency. Had two other offers behind them.
The property was priced right and the bidding war started on the first day of the listing.
Flag Mon Jul 28, 2014
If you are asking what a buyer can do so a seller accepts their offer simply make your bets offer first. Include a pre-approval letter, reduce or eliminate contingencies. A clean offer is a strong offer. If you are looking for concessions as a buyer, i agree that adding them to the price is the best way to go. Such as if they are asking 200k then offer 210 with 10 credit to closing costs.
1 vote Thank Flag Link Tue Jul 22, 2014
lol guess you think all sellers are stupid
Flag Mon Jul 28, 2014
I would've countered the FHA with the extra 500 instead of going with an offer contingent on selling their home-I've seen too many deals fall out because the buyers sale fell through
0 votes Thank Flag Link Fri Aug 1, 2014
I received 4 offers in 3 days when I put my house on the market In May. Austin was definitely a sellers market at that time. The first offer was a low ball with a 30 day cash close, another had a contingency on selling their home but was $500 over ask, and another was at ask with FHA financing. The offer I took was $500 over asking price, a conventional loan, and most importantly to me, the closing date met my needs. I probably could have pushed for another round of offers, but I wanted to not be a jerk and to make sure the buyer was as happy with the deal as I was.

Find out what's most important to the seller -- price, closing date, if they are willing to do repairs, buying appliances, etc. -- then make an offer that meets as many of their criteria as possible.

And it doesn't hurt to be likable!
0 votes Thank Flag Link Tue Jul 29, 2014
If you are in a seller's market and you find a house you don't want to pass up, and you are able to offer a closing date that meets with the seller's needs, that would be your strong point.
0 votes Thank Flag Link Tue Jul 29, 2014
simple dont but a house in a sellers market. unless u have money to throw away. this is how we go in this situation in the first place . people over paying fora home.. People just dont learn..
0 votes Thank Flag Link Tue Jul 29, 2014
I am looking to buy a house in TN, there are so many houses on the market, I would think it was a buyers market.

Am I wrong?
0 votes Thank Flag Link Mon Jul 28, 2014
The reason there are so many homes available in Sevierville is because of its proximity to Gatlinburg/Pigion Forge area of the Smokey Mountains National Park. The park gets over 10 million tourist a year(tops in the country) and the result is TRAFFIC. It is the take a side street kind of traffic in the area due to the main entrance of the park and Gatlinburg. Beautiful area its just all tourist and cars the summer months.
Flag Tue Jul 29, 2014
I've learned that you can't really tell about the market until you determine the condition of the homes that are being offered. I've seen markets that look to have a lot of houses, but after doing some go-sees you start to realize most are sitting for a good reason. In that case, the houses that hit the market that are desirable will go fast, so the power shifts to the seller. I missed out on the home of my dreams because I thought the seller was overpriced, only to later learn that the price was fair given the good condition of the home relative to the comps.
Flag Tue Jul 29, 2014
This whole thread is a waste of time!
0 votes Thank Flag Link Mon Jul 28, 2014
Agree! Way off topic.
Flag Mon Jul 28, 2014
redmoonbay, Home Buyer in Stumpy Point, NC

you're advice is incorrect, firstly the question is for a buyer. A buyer does not pay any realtor fees whatsoever so it would absolutely be the stupidest mistake to buy a home without a legal advisor and some who can protect you from being taken advantage of.

2nd- another idiotic piece of advice- to see it with the agent then wait (God only knows how long) for the listing to expire, then swoop in to make you're own deal. Hmm, well for starts that male the buyer liable to pay their agent commission where they did not prior to this brilliant move- then after the buyer has waited out the listing, perhaps 6-12 months they can expect that houses have probably gone up in value since they began the waiting game and depending on their finances, could've out priced themselves for any home. Lastly, there's generally a good reason a home hasn't sold in a year, from structural probs, title prob,unrealistic seller etc so its actually a tip to stay away!!

buyers please don't listen to this persons advice, you'll do yourself a terrible injustice and for no reason as realtor services are always free to buyers and if something does go wrong you have someone to go back and hold responsible should something go bad and realtors are insured.
0 votes Thank Flag Link Mon Jul 28, 2014
I would take advice from either of you based on your professionalism
Flag Tue Jul 29, 2014
shellypomee, Home Buyer/Agent, San Diego, Ca

Only your advice is stupid "firstly,stupidest ?" really? First of all, I would rather have a lawyer advise me that any idiot who's only qualification may be that they were able to pass a real estate exam. Do you know what a lawyer is? I am not saying all realtors are bad but the good ones are in the minority and the value of what they do is not commensurate with what they are paid. I didn't say see it with an agent, walk up to the front door and say hello. The fact that a sign is in the front yard doesn't prevent that. Unless in distress, all homes have the commission built in to the price. The listing might just get canceled. Malarky on homes that haven't sold having structural problems. Get permission to inspect prior to offering if your worried. Or you can pay Shelly her 3% for filling out the paperwork and another 3% for the sign boy.
Flag Tue Jul 29, 2014
Never forgo an inspection no matter what!
0 votes Thank Flag Link Mon Jul 28, 2014
Quick closing, paying more of the closing costs, less days on inspection, higher deposit, add a few dollars to your offer. Best one is cash closing. All of these things get the sellers to pick you
0 votes Thank Flag Link Mon Jul 28, 2014
The professional you have hired to represent you will have no less than FOUR (4) fundamentally important things to can do to give your purchase offer real authority and assuage the seller the their most significant concern.

Time to meet up with your REALTOR and ask how you can become a buyer SUPERHERO!

Best of success,
Annette Lawrence, Broker/Associate
Remax
Palm Harbor, FL
727.420.4041
0 votes Thank Flag Link Mon Jul 28, 2014
When real estate agents demonstrate REAL ethical behavior, we will have more faith in them. We have dealt with them in Texas, and it's not pretty. Lots of unethical behavior in the Dallas-Ft Worth metroplex. We finally did find one with ethics, but we also asked them specifically about their policies and told them we are not interested in unethical behavior. As someone told me, who is also an agent/broker, a real estate license can be issued to someone who is 18, a high school graduate, and who passes the state exam. That's all. There seems to be an increasing wave of unethical behavior in real estate (including title companies), as there is in many areas of the business world now. Disgusting. The generation that grew up with a lack of consequences for behavior.
Flag Mon Jul 28, 2014
"The professional you have hired to represent you will have no less than FOUR (4) fundamentally important things to can do to give your purchase offer real authority and assuage the seller the their most significant concern." What? e.g., "to can do," "the their most significant?" Annette, if you show this lack of attention to detail in writing a simple sentence, I would be reluctant to have you representing me in a transaction involving hundreds of thousands of dollars.
Flag Mon Jul 28, 2014
I agree with WayneCreek from PA, and I have a real estate license! Realtors need to give away this type of information to Buyers for "free". The reality is that most buyers hire Realtors once they see that the Realtor has a level of skill, competence, and abilities that the Buyer may not have. So....my fellow Realtors, stop fighting the new reality. Giving away simple *information* doesn't make you obsolete, it makes you more valuable.
Flag Mon Jul 28, 2014
Welcome to the 21st century, where "realtors" spend most of their time trying to justify their existence on the websites that replaced them.
Flag Mon Jul 28, 2014
Barf barf barf!
Flag Mon Jul 28, 2014
Do you mean what can a buyer ASK for? In this market you can ask for seller to pay closing costs (also called Seller Concessions), BUT I strongly urge buyers to factor that into your offer. Let's say you need sellers to pay $5K in closing costs, and the house is listed for $500K. You may want to offer $505K so the seller "nets" $500K.

I would also talk to your lender and get an estimate of what closing costs will be, based on the loan you're getting, and the property you're interested in. I've had buyer's lenders say they need $7K-$10K in closing costs which is outrageous (for Colorado homes in the $250-300K price range). My lenders usually only need about $3-5K (depending on the loan of course).

If you find a lender who has lower closing costs, the better. Better yet, some lenders will actually PAY a good portion of your closing costs so you don't need to ask the seller to pay for them! This way you can go in with a very competitive offer, whereas other competing buyers may be asking for $10K in closing costs. You want your offer to be as attractive to the seller as possible.
0 votes Thank Flag Link Mon Jul 21, 2014
Writing some of the closing costs into the offer (therefore the mortgage) will probably raise the tax appraisal, but it's all a balancing act based on what each buyers' needs are at a given time. I used a state first-time-home buyer grant and seller's "assistance" to help me with the very high closing costs in Austin, TX in Spring of 2011. My purchase price, even with the increase in the closing price versus the list price, was still less than the seller had paid for the house a few years earlier, so the tax appraisal actually came down after the close.
Flag Tue Jul 29, 2014
Offering a higher purchase price to induce the seller to "pay the points" is ludicrous because when the house transfers, the taxes will be higher to the new buyer. Many times, taxes will be the reason people get priced out of housing. Not a smart move.
Flag Mon Jul 28, 2014
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