One more thing.. don't listen to the incredibly ridiculous "bid 10% under the asking price" so called rule...

This is just plain dopey and you'll look like a schmoe... Do your due diligence. research the item.

To do an across the board 10% is just ridiculous.

Ask your realtor for comps.. real comps.. same neighborhood, street, type of house.. Comps from 2 years ago and recent.. see what they were selling for at the peak... and see what is close now.. then ultimately bid what you think the house is worth. Go with your gut. pay what you would pay if you really wanted the house.

I would talk to a reputable mortgage or real estate professional who has a good relationship with a reputable and honest appraiser. In many cases, the appraiser will be happy to run a "comp check" for their business partner. I recommend using the appraiser of a mortgage rep because this will allow you to take this comp check and check it against what your realtor thinks. You can use these two to keep them each in check. (I would tend to give more slightly more weight to the appraiser's comp check). I think in this market, regardless of value, you can safely go about 10% below asking price without offending the seller. Trust me...they'll be happy that there's interest at all in their house. Good luck!

I wouldn't use Zillow. Contrary to what another poster said, their information can be incredibly wrong...for example, they have trouble "zestimating" stuff like waterviews or good location. Also, they seem to pick up information such as appraisals used in Home Eq loans, which have always been very high. Probably something that will change shortly, though. :)

Dear Veronica,

A large part of my negotiating strategy when representing a buyer is to not allow emotions to get in the way of an offer. The old adage that you draw more flies with honey than vinegar is so true. First, have facts to back up your price opinion. Every buyer would like to get the property for less, and many think that properties sell for less than what they actually do. Pulling neighborhood comparisions, hopefully sold within the last three months, and looking at price per square foot for properties similar in size and style to this home will answer your questions.

Once you have determined the fair market value of the house then you can begin working on your starting offer. An offer that is 5% less than market value might be in line, depending on your market.

When presenting the offer it's important not to demean the home. Many people feel that every potential flaw of the home needs to be pointed out. That's not at all what the homeowner wants to hear. Present the comparables with the offer (if that will help your case) and tell them that you do like their home very much. Compliment it (and make them feel as though you will appreciate it if you are successful in negotiations) and simply present your case and offer.

Good luck!
Once you have determined

If you are looking for comps, try domania.com, nj.com/real estate, zillow.com and other sites for information. Contrary to what the real estate agents here say, the market is slow. Some houses are staying on the market in excess of one year. I see houses where the price comes down 25% before it is sold.

Veronica, There are a few things to do to make you offer more effective. One is to get information on how many homes are currently for sale in Avenel. Then find out how many have gone under contract in the last 30 days. When you divide the number of homes under contract into what is on the market what you get is the absorption rate for that town. the absorption rate is the amount of time in months that it would take for all the homes ina town to sell if no more homes came on the market. Six months is an ok market. as you get to 9+ months it is a slow market. Share this information with the seller. Next get a list of the comps in the area. Share these properties with the seller as well. You also should write a letter. Tell them about yourself and your family. If you are working with an agent they should present your offer in person providing all of the information.

If you are afraid of offending them, why don't you begin the offer with "we don't want to offend you but" and then explain it may be stretching your budget or even, we think your home may be a tad overpriced. In a good sellers market, an offer of 5% below asking is normal (in Ohio). In this market, I wouldn't be afraid to go 10% unless you really, really, want the home. Then it's not overpriced at all.

Hi Veronica:
Its very gracious that you don't want to offend the owners. What you are really asking is what is this home worth in terms of price, desireability, and market value.

The price is what the owners have placed on there property. They are telling you this is what they think their home is worth in comparison to the homes in the area. Many times it is also a starting point.

The desireability factor comes into play when you want to compare how much you want this particular home and you have completed the pro's and con's in your head.

Market Value is something altogether different. What are the comparable homes in your area. Your REALTOR can obtain all this information for you. A comparitive market analysis is usually done when determing price - put you and your REALTOR can come up with the same information to determine if the home is priced within the markets parameters.

It would not be offensive if you make an offer that keeps with the three factors I have mentioned. You will know immediately if the offer you are considering is fair.

Good luck and I truly hope you have found the home you've been waiting for!

Hi Veronica,

Before giving a more concise answer, I have a few questions for you & your husband. What is your objective for purchasing this particular home? Is it to occupy yourselves as a primary residence, a second home, a rental property or are you looking to quickly flip it to make some "big" money? Are you working with a real estate professional who is experienced and knowlegeable in the area you desire to purchase? If so, has this agent/Realtor shared comparable sales figures and the tax records for the property in question? How much does the seller owe in outstanding mortgages? What do the numbers suggest for an average sales price? By how much do you "feel" the home is presently over-priced? What major upgrades & improvements (if any) have been made to the property? I presume that the seller (while offering a lease/purchase arrangement) would not have an issue selling the property outright, is that correct?

Once your objective is determined and you have answers to the above questions, one can begin to formulate a negotiation strategy including a good starting point for an initial offer. It is quite possible that the subject property is listed at or near a fair market value or was listed over-priced for a number of reasons. Regardless, nothing ventured, nothing gained... If you have a good handle on the market and have credible sales stats to back it up, get out there and make an offer. Best wishes for a successful negotiation.

If they are as overpriced as you believe them to be, don't worry about offending them. If they are offended by what you consider a reasonable price for the property, so be it. At the end of the day, what have you lost? All they can do is say no, after all. Now if the asking price was competitive, you would want to take that possibility into consideration. When you know that the value is there, you want to negotiate the best possible deal without the risk of alienating the seller with a lowball initial offer. Keep in mind that it is not a lowball offer just because it is considerably less than the asking price. If I am writing an offer at what I believe to be market value for a property, it is not a lowball. I could care less if it is $1000 or $100,000 under the list price. My chances of reaching a deal in the case of the latter is miniscule, but sometimes the best deal is the one you don't make. If the seller is unwilling to sell you the property at a price that you (and your agent) feel is fair market value, don't buy it!