Simply stated, by checking the recent comps for homes sold in your target home neighborhood, you will achieve a clearer understanding of what "ball park" you need to be in to successfully administer your "low ball" offer.
The "Eckler Team"
Century 21Alamr and associates
Venice, Fl 34285
If you take a look at what the homes have been selling for in the area that you are interested in buying and make an offer considerably lower (-15-20%) than the recent sales that would be considered a lowball offer. Do not worry about putting in a low offer, the seller can only say no or counter your offer. At this point in time many markets throughout the country are looking for qualified buyers to make an offer. If you find a home that you truly want to buy, set your maximum amount to purchase the home and stick to it.
I wish you the best in finding a home to purchase!
Any update on if you found a home to make a bid? I have two listings in Gurnee closing in the month and know better than most bidding strategy for the subdivision you are considering. Call me if you are not already working with another agent. If you are working with another agent, ask them your questions!
Michelle, the amount you bid on a house has nothing to do with the percent off the ASKING PRICE. If the asking price if 50% higher than FMV and you offers 20% less, how is that a bargain? Thebest thing for you to do is educate yourself as to what other similar homes have sold for. The easiest way is to hire a buyer agent to do it for you, but if you're a do it your selfer and not in a hurry you can find out for yourself also. Base your bid on what comps have sold for, not on what a house is listed for.
Licensed Associate Broker
Accredited Buyer Representative
GREEN Designated Agent
William Raveis Legends Realty Group
My wife and I are looking in the Wildwood and Grandwood areas of Gurnee. During our first bid on a house we offered a VERY low-ball bid of 135K (with my realtors "go for it" consent) to their 189K asking price. Once it was in, our realtor handed me a report showing the recent sales in that area. I sat down with my trusty calculator and worked out the averaged differences between original asking price and closing price on 13 homes (included 1 foreclosure and 1 short sale) in that area. Similar to Tom Martinson's answer the closing prices ranged from 13.4% to 33% below original asking prices...and the the average was 13.9%. I also ran the math without the foreclosure and short sale in the mix and came out essentially with the same percent discount.
So I agree with Tom's assesment, although I am still going to offer what I feel is reasonably lower to get the best deal I can....It's our money...not the realtor's. You can always raise your bid to whatever you want as long as you stick to what you can afford. You can always put a time limit on an offer...say 12 - 24 hours...and they can always say NO...and risk not selling.
In the end our 1st offer on the house (29% lower than asking) got denied so we added 10k and that got denied...then another 10k with a request that we wanted them to reply with a counter offer. They countered a 9k discount and we walked away. We also found out the buyers did NOT "need" to sell, they had another house in Nevada.
My suggestions to your are to search each house address on websites like http://www.trulia.com or http://www.realtytrac.com (paid service with GOD info...even shows bank/lender name) to learn its sales history and other public record info. Ask your realtor to talk to the listing realtor to find out if ANY other offers have been made, for how much, and if any deals fell through. After your first visit, go back in the house WITH THE TENANTS AT HOME and just casually ask OPEN ENDED QUESTIONS like, "so are you moving out of state? Also, ask, "If you were to buy this house today, what would you need to do to it? Have them tell you stuff...ya they'll boast but you can find out a lot of info if you know how to ask questions the 'right way'.
The main problem is that sellers are trying to keep the price to not lose on the deal, and we are trying to buy at a good (if not low) price. Good luck.
A property is worth what a buyer is willing to pay for it. Previous sales in an area tell you what other buyers have paid for like kind property. Comparable sales are simply a guidepost that has been used by folks to determine the approximate price range as established by other buyers. As a Broker, I avoid using terms such as "Low Ball" - it only serves to create an adversarial type of negotiations. We have been in a stagnant to deflationary marketplace and values have been going down in many areas. The caution on Comparable properties is when looking at them, be sure they are very recent - as something that may have closed 3-6 months ago, maybe not reflect today's value of like-kind homes in the market. Egos are sensitive in this marketplace - some agents are very worried about how they may be challenged by the sellers as they assured the sellers of the value and the buyers are painting another picture. Given the complexity of this marketplace - the challenges with financing, the huge inventory I encourage my clients and my colleagues to remember this is a business transaction and to keep cool heads and maintain objectivity. A properly crafted offer on a property is an "expression of interest". Additionally, when considering an offer, i encourage my buyers and sellers to consider the value of the property through the eyes of an appraiser or the bank. If the bank doesn't agree with the value of the house - it presents another hurdle in the transaction. Therefore, I feel it is critical to do your research and work with a Realtor that will assist you in presenting your offer in the most professional manner. The deal ultimately is between the seller and the buyer - agents are merely the facilitators.
P.S. My office is located in Gurnee and I believe you are getting inaccurate info on selling prices vs. listing prices if you think the ratio is 84%. That information is readily accessible thru the MLS and it is consistently in the mid 90's. Whatever site you are using or how you are accessing the info is not accurate and basing decisions on mis-information is not in your best interest. Good Luck.
Check online websites to see what homes have been selling for RECENTLY, say since the beginning of this year. I have used the sellers tools on the Baird Warner website and find it very useful. Each month they give you a report on homes sold during the previous month, as well as the last 30 homes sold where you are looking.
We are looking in a northern Illinois suburb, not too far from Gurnee (where the question was asked), and average sale price over the past 3 months has been about 84% of list price. Two-thirds of homes sold in the suburb we are looking at sold for LESS THAN 90% of list price. So, as a buyer where we are looking, we would be overpaying to begin the negotiating at 94% or 96% of list price.
We recently sold a home in Michigan for 25% less than we had put into it- that was $100,000 we lost in only 2 years of owning the home. It was only 8 years old and in perfect condition- very unlike the homes we are seeing here in Illinois. But it was the price the market could bear and we knew we had to keep the buyer or they would move on.
Realtors have a duty to educate the sellers as to what homes are really selling for. Buyers are educating themselves and will not over pay in this market. There is an over supply of homes in almost every market. Buyers can and will walk away and bid on the house down the street.
Sure, starting your bid at 20-25% below list could be considered a low-ball offer. Understand the market you are buying in and place your bid accordingly.