As a general rule, after I have run comps and done a CMA for my buyers, I do not recommend that they go beyond 10% if the home is reasonably priced. This will normally get a counter where I live. However, if the home is unrealistically priced, I help my buyers to see where it should be priced, and then I write their offer.
I would suggest that you find a buyer agent in your area who can help you to establish a reasonable price on a home that you would like to buy and go from there. Ultimately, the price that you offer is your decision. Normally, you should get a counter if you are within 10%, but one can never predict what the seller will do-especially when offended.
If a seller is rejecting offers that are within 10%, they may just not be financially able to take anything under what they are asking. There are a lot of people who jumped on the second mortgage or interest -only bandwagon who are stuck. They cannot accept less, so they are going to have to stay in their home, rent their home to someone, or face short-sale or foreclosure if they are unable to sell.
If they are not in financial hardship, they probably have not been on the market very long and they will be wishing that they had countered you after they have sat on the market for a while.
Don't give up, and I hope that you find what you are looking for. A helpful buyer agent should come in handy, but make sure that he or she is willing to do some work to help you. A good buyer agent should be ready with comps and some type of a CMA to determine how the property is priced.
If they are insulted, there will be ten more homes just like that one up for sale over the next year. Best of luck.
If you're financing the home, the real question would be what is the home worth and that's answered with either an appraisal or comparable market analysis from a seller's or buyer's realtor. Lenders, including me, all follow the same basic guidelines. With respect to the home's value, your down payment will be calculated from the LESSER of the sale price or appraised value, hence it's important to get the value right and bid appropriately. It's great if you can get a bargain, but the sellers almost always have done a comparable market analysis so don't expect a "yes" to your bid in every case. You can always make a counteroffer for less than 10% under asking price if you feel the home is worth it. Otherwise it'll take patience and persistance but your plan may eventually work.
How an offer is presented makes a huge difference. Do you have a Buyer Agent who knows the market, how to negotiate with other agents, and is making sure that the seller's agent knows you are a serious, qualified buyer? Or, are you going directly to the seller's agent who doen't know or care about what you want? Buyers have no idea what goes on behind the scenes - it is so important to have the right agent representing you. If you're going directly to listing agents, don't expect much help - they're job is to help the seller, not you!
You are not doing anything wrong by offering 10% discount. It is "low" but certainly not unheard of. Just because your offer got rejected - or you were given a counter offer - doesn't mean your buyer agent can't get you that deal. You just need to be patient and your buyers agent has to be a great negotiator. Often sellers will reject a "low" offer outright because they are sensitive to discount but if your buyers agent strategizes properly and keeps on top of it, the seller will likely reconsider a week later. The risk in low balling is always that there might be another buyer willing to pay more than you. As long as you understand that risk and can be patient usually you can get closer to the deal you want. We recently negotiated $90,000+ off a sellers original asking and at first they weren't even willing to negotiate. My client was patient and we were very diligent.
Unfortunately A LOT of people over paid in 2003/2004 so even though your offer might be the current value of the property if the seller sells at that price they might be losing quite a bit of money or at risk of short sale/foreclosure. Your buyers agent can find that info out for you, though, which should all be part of your offer strategy.
Hope that helps! Good luck.
You are in the driver's seat- especially if you already have a preapproval letter and can really get a mortgage. That's worth a lot in this marketplace. If you need any help or other advice, please let me know. Thanks, and good luck,
Then figure the percentage of list to sold price.
For instance, in much of Kansas City, homes are selling for 94-97% of list price. In some areas, homes are selling for more; some less. It is very particular and can vary from block to block.
If the buyer offers 10% below list, some sellers will indeed feel offended and refuse to do business with that buyer at any price. Usually, the listing agent and the buyer's agent can soothe feelings, put together a counter offer that is more reasonable for that property and get everybody to closing. Sometimes it takes several counters and a lot of skillful negotiating to get both parties to come to terms. This is one of the areas many FSBO sales fall apart.