Home Buying in Oak Lawn>Question Details

Jenny, Home Buyer in Oak Lawn, IL

There is a house that has been on the market for more than a year. Is it possible to be approved for an offer that is 175k less than listing price?

Asked by Jenny, Oak Lawn, IL Fri Mar 23, 2012

It is regular sale, and the price changes among that year were 5k less each time, same models have been sold for a lot less than what they are asking for.

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Don Tepper’s answer
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The only way to tell is to make an offer.

However, unless the home is awfully expensive, an offer $175,000 less than the listing price probably won't succeed. Example: If it's listed at $1 million, then your offer would be 17% under the listing price. That'd be possible since--if it's been on the market for more than a year--we'd know that it's overpriced at $1 million. However, we wouldn't know how much overpriced.

On the other hand, if the house is priced at $500,000, even though we'd still know that the house is overpriced, you'd be making an offer for 35% under list. Yes, it might work. But the odds are pretty slim.

The best thing to do is to look at the comps. You say the "same models have been sold for a lot less." Same models in the same neighborhood are good comps. (Assuming the conditions of the properties are about the same.) The comps tell you what the house is really worth on the open market. Let's take that $500,000 example above. Suppose the comps come in at $440,000. That means you shouldn't PAY more than $440,000. You might offer either that amount or less. (Your Realtor can help you with your strategy.) But begin with the comps and work down from there. Don't start with the list price, especially when you know it's overpriced.

One clue you and your agent might look at to determine the seller's motivation. How often has the price come down, and from what level? Example, if it started off at $1 million, and has come down by a paltry $5,000 every 3 months, then there's no seller motivation. On the other hand, if it started off at $500,000 and has come down $5,000 a month every month, then there's some evidence the seller is reasonably notivated. (You get the idea.) The greater the motivation, the greater the chances the seller will seriously consider a low offer.

Hope that helps.
1 vote Thank Flag Link Fri Mar 23, 2012
Don Tepper, Real Estate Pro in Fairfax, VA
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To assume that you can offer $175k less than the asking price and get it is pretty hard for me to imagine. Would you not think the seller would drop the listing price by $10-30K first and see what that does as far as offers before accepting $175k less? I would hope you are working with a Realtor and I would see what your agent suggests.
1 vote Thank Flag Link Fri Mar 23, 2012
Hello Jenny,

There are several things to consider as you develop your purchase offer:

1 Is the asking price in line with prices of similar homes in the area? Your real estate agent can conduct research, called a "Competitive Market Analysis" or CMA, on comparable properties, to help you come up with an educated opinion on the worth of the property.

2. Is the home in good condition – or will you have to spend a substantial amount of time and money making it the way you want it?

3. How much do you really want the home? The closer you are to the asking price, the more likely your offer will be accepted.

Thanks,
Carol Perdew
Prudential California Realty
(209) 239-7979
Carol@PerdewHomes.com
http://www.CentralValleyHomes.com
DRE 985176
0 votes Thank Flag Link Fri Mar 23, 2012
If you were the Seller; would you?

The real question is; WHAT IS IT WORTH?
If the Comps are at -$175,000, then it might eventually be possible.
The Seller would have to come to the realization of it's real worth:
This is assuming that the Seller is not distressed and will hold out for the higher price,
In which case you need to walk away for a few years.

You need a CMA to determine the VALUE before you go any further; otherwise, the arguments are moot.
0 votes Thank Flag Link Fri Mar 23, 2012
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