Home Buying in Newton>Question Details

The_Bayou, Other/Just Looking in Newton, MA

Is there a risk to offering the full asking price for a newly listed home?I have had bad experieces in

Asked by The_Bayou, Newton, MA Fri Feb 8, 2008

the instances where I offered the full asking price prior to the first open house. It lifted the seller's expectations and hopes of bidding war, and it is possible that I would have done better by offering slightly less and then raising the offer to full if necessary. I and am curious to hear the perspective of buyer and seller Realtors.

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Thanks LS, I will clarify.

I am asking if you think that, from the buyers perspective, there can be negative consequense to offering the full asking price on a newly listed price. And, I mean this especially in markets that were once very hot.

I feel that when a seller's agent tells an owner that he/she has received an offer of full price on the first day the house is on the market, the reaction is seldomly "great, I got what I wanted, take it!" Instead, I think owners start dreaming of a bidding war, or worry that they priced the house to low, and the owners often tell the agent to reject the offer and wait to see what happens at the open house. This has happened to me a few times as a buyer.
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The negative consequence is that the seller will think they should have asked more. The agent should have prepared the seller for the possibility of receiving a full price offer quickly, especially if the house is priced competively. We've had buyers turn around and tell the agent they want to cut the commission if a house sells quickly, too. Which is interesting because they also want the agent to cut the commission if the house takes a long time to sell! But I degree... the consequence to you as a buyer is that they will withdraw the home or want even more. So assuming you've done your homework and know it's a good price, I would offer, say 480 on a 500 K home. Contrary to another agent who said to offer 425, as an agent who has had those kind of offers, I can almost guarantee that if the house just came on the buyer is going to say forget it, and not counter.
0 votes Thank Flag Link Fri Feb 8, 2008
Feb 2008 -- A person would be absolutely out of his mind to offer full asking price in this housing market. People now are offering tens of thousands lower than asking price -- and often the properties are selling for much less than tax appraisal value or mortgage value.
2 votes Thank Flag Link Tue Feb 19, 2008
Real Estate,

I think your answer is indicative of one of the problems with Trulia.

You answered that "a person would be out of their mind to offer full asking price in this housing market." But, I don't believe there is one "housing market" in the United States, but instead hundreds, if not thousands, of housing markets. My bet is that there are some areas of Charlotte that are in more demand than others, but I could be wrong - I don't know your markets.

Here in the Boston area, the market is different from city to city, and even within some cities. For example, Arlington Heights is very much in demand and people are receiving offers at or close to list price. This is not as prevalent in other parts on Arlington.

Also, your comment is simply based on "full asking" without knowing how much the house is actually worth. I understand that nobody should offer full asking of $500k on a house that is worth $300k, but if the house is worth $300k and the asking price is $300k, are you saying that the act of listing the house at its value actually decreases the homes value?

People answer questions on this site without understanding the markets the questions are referring to. I see that you just joined the site two days ago, and maybe did not understand that the questions did not relate to the area of Charlotte where you are a real estate pro. But, in the future, you should understand that this is not a Charlotte specific site and that many of the questions are in regards to other real estate markets.
1 vote Thank Flag Link Tue Feb 19, 2008
I know exactly what you're talking about now The_Bayou. Actually, I think more about those things from a buyer's perspective. As you have stated, we do the same thing- if your offer is accepted- you wonder if you could've offered less and still gotten the home of your choice. I think it's just human nature to want more from the seller's perspective. So, in short from a buyer's perspective you may get negative consequences as the result of offering asking price really early in the game but remember it's just that- a game- If you want the property, I still say offer what YOU think it's worth- then at the end of the day you are satisfied with what you offered whether or not your offer is accepted.
1 vote Thank Flag Link Fri Feb 8, 2008
Hi The_Bayou
I'm not sure I understand your question. Can you please clarify?
I'll try to answer what I think you're asking- If it's a hope you want, I recommend you offer what you think this house is worth especially if there's the possibility of other offers. Another thing to take into consideration is whether or not the property is FSBO, REO, short sale etc.
1 vote Thank Flag Link Fri Feb 8, 2008
This is a seriously dated thread......
0 votes Thank Flag Link Sun Mar 3, 2013
Risk in terms of a sellers behavior in my opinion doesn't change. Sellers (like buyers) can either be reasonable and pragmatic or unreasonable and unrealistic. With nearly 25 years of experience and 800 plus successful transaction behind me I'm unaware of any way to predict how someone is going to react.

To me the best offers are based on hard market data an this is in fact the single most important service a professional Realtor can offer: the ability to accurately gather, analyze and share accurate market data so that Buyers and Sellers understand what the market is paying for specific properties. Only ready willing and able buyers set market pricing, never agents and never sellers. Sellers may or may not like market pricing if they don't then their not going to sell and nothing they or their agents can say will ever change this. Buyers also need to be realistic, making low ball offers with half baked logic as to why their offer should be taken seriously is a waste of time and a joke,. In order to buy a home they too need to be prepared to pay what the market is bearing. Negotiations are only successful when neither side gets what they want, but each gives and each at the end of the day can say, "It's fair and I can live with it."

My advice is find an experienced broker and have them analyze and help you understand the true market value of any property you're considering purchasing and them prepare your offering strategy based on this data. I've attached a link below on how to find a great Buyer Broker regardless of where you live.
0 votes Thank Flag Link Sun Mar 3, 2013
If you want the home and offer full price w/o contingencies, the seller cannot act as you say, for if they do, they are being unrealistic and you will not want to complete a transaction with an unrealistic seller, no matter how desirable the home is.
0 votes Thank Flag Link Sun Mar 3, 2013
The_Bayou -- to answer your question, it depends on the property. The housing market is not as blind and whimsical as it once was. We have resources to be much more informed and on which we can base a more logical opinion on what fair market value would be for a property. Obviously, an experienced real estate broker may have a "feel" for what is reasonable, but it is always best to actually look at the data. Whether the seller is realistic about the fair market value of his/her property is another story ... but with data, you'll have stronger support.

Given the study of recent sales and what else you've seen available on the market, and activity that has been happening in the market (and by "market" I do mean "immediate market pertinent to the property". One wouldn't necessarily compare what is happening to a $250K condo to what has been happening to $500K single family homes ... even if they're in the same town, or even in the same neighborhood) ... compare that with what you know of the property .... and then ask yourself if you feel you are offering a fair price for the property?

The seller may or may not be asking a fair price ... and if the asking price is drastically different from what you would feel is the fair price, then you might speculate on your strategy to either bring them closer together ... or perhaps your willingness to deviate from your idea of fair market value, depending on how much you like the property.
0 votes Thank Flag Link Sun Mar 3, 2013
I found a house I wanted at a great price.

The house had languished on the market for over a year at 250K.
The seller dropped the house around Christmas to 199K

Feb 2 2013....

I offered 192.5K, after the house had been up at the new price for 45 days, they refused and then tried to sell the house on their own to a friend for the 199K. Of course the friend couldn't qualify. They wanted us to buy it again so they countered with 199K or the asking price.

I countered at 197K or 99% of their asking price. This caused a total meltdown on the seller's part and they walked away again.

The home has not been updated since 1987. The Zillow estimate is 230k The roof & the furnace in my estimation would have to be replaced regardless if they still were working or not. within 5 years. The bathrooms all needed to be upgraded. The flooring was worn. It needed a fence. The inside and out needed walls patched and paint. The solar hot water heater was unplugged and unused. And the list goes on and on.

Needless to say, I estimated at least 25K to make the necessary repairs doing most of the work myself (I' m damn handy) So my net offer seemed to me to be pretty good.

After what they had done with their friend, in my estimation 99% of their price was a full offer.

So now they are putting the house back on the market to get the 2 thousand dollars.

Am I stupid?

If the inspection came back with the litany of things I mentioned and more, I know they would not budge off their perception what its worth.

So.. I probably am better off not getting the house in the long run and can go down the street and find another gem.

So Even if you offer 99% of the asking price, if they think things are going to be better just around the corner, there isn't much to do but go find something else.
0 votes Thank Flag Link Tue Feb 5, 2013
The_Bayou I agree with your last comment. I'm in Texas (Dallas) and most of the homes here are selling close to or right at asking price. (Real Estate Pro's in the area have said the same here on Trulia) A few of them have sold for slightly over the asking price. So, yes it totally depends on the area.
0 votes Thank Flag Link Tue Feb 19, 2008
Thanks Jon. I moved the question because I thought it was better than adding a new question to an existing thread. I appreciate you input.
0 votes Thank Flag Link Fri Feb 8, 2008
It really comes down to the property if it is overpriced then no a full price offer is a mistake. If the property is priced correctly or below markt a full price offer is a good idea.

The liting price is essentially a brokers opinion of value. The true value is what you are willing to pay. The catch is that the seller has to agree to sell at your price. The anser will depend on the property you are looking at.

The best advice I could give and I would expect the realtors on the thread would agree hire a good buyers broker that can help you determine the value and structure your offer so it gets accepted.
0 votes Thank Flag Link Fri Feb 8, 2008
Bayou... Same question here, different thread.

If you're going to go after newly listed properties, you need to manage their expectations first, don't be afraid to come in low, but let them know you're interested and just testing the waters. If you come in close to asking you're feeding into their beliefs that their home actually is worth more than it's listed at.

If it's asking $500k and you come in at $490k within a week of it being on the market, they're going to hold out for more. If you come in around $425k but you really want it (assuming there's no other offers yet), you make them work you up to $485k, they're happy with their agent, they're happy with themselves, and they just want it sold, they don't want to go through that again.....

But don't take too much time, the last thing you want is another buyer to come along...
0 votes Thank Flag Link Fri Feb 8, 2008
Thanks LS, I will clarify.

I am asking if you think that, from the buyers perspective, there can be negative consequense to offering the full asking price on a newly listed price. And, I mean this especially in markets that were once very hot.

I feel that when a seller's agent tells an owner that he/she has received an offer of full price on the first day the house is on the market, the reaction is seldomly "great, I got what I wanted, take it!" Instead, I think owners start dreaming of a bidding war, or worry that they priced the house to low, and the owners often tell the agent to reject the offer and wait to see what happens at the open house. This has happened to me a few times as a buyer.

I have wondered if I should have offered a little less, say $490,000 on a $500,000 offer. Waited for a counter, and then finished up somewhere around $497,500. This way the owner feels like they got more out of me and isn't worried that they missed out on a bidding war or that they priced the house to low.
0 votes Thank Flag Link Fri Feb 8, 2008
When a property is newly listed or listed just recently there may an opportunity to grab the property before it has accumulated a number of showings and then possibly multiple offers! I do a tremendous amount of my business as a buyer's agent I always tell my clients if we are looking at newly listed homes we will have to offer at least close to the listing price or the full asking price and the reason for this is simple when a house just comes on the market most seller's will take a wait and see attitude so if your offer seems short of their expectations they probably wouldn't accept your offer anyway! The best advice I can give you is to contact a Realtor in your area to help you get past the nuances of a newly listed property and the delicate nature of the offer there after! But as a side bar if properties in your area seem to have extended “DOM” then a possible low offer may not be shunned as quickly get the advice of a qualified Realtor in your area if you need assistance in this area send me an email I have many Century agents that I work with across the country!

Good Luck
Anthony
0 votes Thank Flag Link Fri Feb 8, 2008
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