Home Buying in 30342>Question Details

Couple, Home Buyer in Atlanta, GA

Where to position my first offer? 15% discount reasonable?

Asked by Couple, Atlanta, GA Sun May 4, 2008

I am bargain hunting in this mostly buyers' market, what's a good first offer to start? Let's say I am willing to buy at 10% discount (house price range 500-600K). Thanks!

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18
Typically no. 15% is NOT reasonable. Seriously. The list price to sales price in 30342 is 95%. The Original list price to sales price is 94%. Why would a seller look at an offer that low, typically? Are there deals available that will be purchased for 10-15% below the asking price? Probably.

Before you look at anymore houses, I would suggest that you forget what you know about how to buy a home and begin to understand value instead. It will become clear very quickly that you may find that a home that sells for 100% of the asking price that is a better "deal" than the one that sold down the street for 10% below asking price.

What you are trying to do is not the right way to approach buying real estate becuase you are not looking at value. What you are doing is allowing an egocentric idea like "I got a deal because I paid 12% below asking price" to lead your logic instead of actually determining what the right price for the home is.

And oh, by the way, it is not based on the asking price! You are far less likely to get the bargain you seek searching the way that you are.
3 votes Thank Flag Link Tue May 6, 2008
Er, sorry. Typing on phone made for a significant typo! What an *outspoken* response.
Flag Sat Sep 5, 2015
Wow. What an obnoxious response.
Flag Sat Sep 5, 2015
Couple,

That's a great question. There are so many variables when making a first offer and negotiatiing a contract. It really depends on the original list price, how motivated the seller is, how long it has been on the market, location, surrounding area (if it is transitional or established), but most of all, how does the price stand up to comparable homes that are for sale and recent homes sold (in the immediate area)?

I feel that each offer is unique and there is no set amount below the asking price that is appropriate for a first offer. For example, if two homes in similar condition, finishing, and proximity are equally appealing to you and they are priced $40,000 different, it is difficult to place a percentage on the offer price. Seller's circumstances may cause varying list prices and therefore some sellers list a home to sell quickly. Data regarding the comparable homes sold will support the offer price you choose.

A good buyer's representative is able to assist in finding the home you are looking for...it may not be a specific percentage off of the list price, but still can be a great deal.

The market has definitely changed and most sellers are willing to look at a broad range of offers. It is the right time to look for a bargain on a home.

I hope this helps!
2 votes Thank Flag Link Sun May 4, 2008
I haven't read through any answers but I am certain that you are hearing answers that say "it depends". I hate that answer and I wish there was a rule of thumb but what if a property is 30% overpriced for the market....would a 15% reduction be a good deal, or if it was 40% under value would you feel good about a full price offer? We get caught up on list price vs. offer and you need to get away from that line of thought completely. You will do well....use your gut and make a good deal!
1 vote Thank Flag Link Sun May 18, 2008
Sure. 15% discount in an offer is more than reasonable. Remember though you are buying in a buyer's market. I have seen on that level of home buyers come in lower on an initial offer and ask the moon in upgrades and their offers be considered and negotiated. Remember, especially if it is a new home (spec) and you are dealing with a builder, they are hurting right now and will make you a deal.
1 vote Thank Flag Link Fri May 16, 2008
It never hurts to ask...the concept of offending a seller is ridiculous. Buying / selling a house is a business transaction. Worst thing they can say is no and you can offer higher. During the housing boom, it was different but now, lowballing someone is common. I'm sure the seller won't refuse to listen to your subsequent offer if your first offer was too low. Most sellers are desperate now, just take a look at every news article that comes out about housing and they are horrible with no near end in sight. If I were you, I would offer 20% off asking and go from there. Good luck.
1 vote Thank Flag Link Mon May 5, 2008
Although it does sound reasonable, I would suggest that you have your Realtor do an analysis on the home.

It's important not to get caught up in percentages off the LISTING price. You may find a home substantially under valued but miss out on it because of your desire to get a % off.

Also consider the scenario of ONLY asking for 15% off when a home is priced 20% over market. You'd have overpaid by at least 5%.

Percentages are a great way to make sure you are being unemotional, but do it from the true market value, not the listing price.
1 vote Thank Flag Link Mon May 5, 2008
Joshua Jarvis, Real Estate Pro in Duluth, GA
MVP'08
Contact
The key is to make the offer. If you never make it because you like so many others are sitting on the fence then there is no bargain to be made. Also, I disagree with the agent from Atlanta who wanted to know if you were working with a buyer's agent and whether pricing was 10% high in that area anyway. No other in this market is a waste of time. I have found offers as much as 35% low. Go for it. The key is to do it. Take that plunge when you feel your due diligence has been done.
0 votes Thank Flag Link Sun May 18, 2008
Any offer is an opportunity to negotiate. Go for it. Check comps first, though.
0 votes Thank Flag Link Sat May 17, 2008
You bet...I posted the sales data for the past year in Sandy Springs in a chart on my blog a couple of weeks ago. Check the web reference link below to have a look for yourself. Every home is different and value differs person to person. Also remember that everyone has different levels of motivation.The truth is that there are good deals for buyers and many sellers are still doing quite well also. It just depends on the market. Here in Atlanta, it depends on what city you are referring to!
0 votes Thank Flag Link Tue May 6, 2008
Thanks Ryan, your response makes me feel a lot more comfortabe with a low-ball starting point. if your local experience tells you that the market is quite efficient that good properties fly off the shelf, the fact the ones I am looking at stayed on the market for more than 3 months is probably very solid indicator that these properties have not been well priced. What I was worried was the market was slow and inefficient that even good ones get stuck, so it's hard to tell if a low-ball offer is warranted.
0 votes Thank Flag Link Tue May 6, 2008
Some people will tell you offering 20% off asking is ridiculous. Well, I think it was ridiculous couple years ago when people were bidding OVER asking price to buy a house. It's all about supply and demand. Right now, supply is far exceeding demand.
0 votes Thank Flag Link Tue May 6, 2008
"that's a self serving statement. If your agent won't make the offer for you, find another agent as there are thousands out there"

No offense, but, it's not always that easy...that's why I say I can't offer a REAL answer. I don't know the specific houses he is talking about.

"I also like Ryan's answer but prices are trending downward across the country"

They are 2% higher in Sandy Springs than they were 1 year ago and they are still trending up. Sales are down, prices are up. Good houses are selling as fast as they come on the market for at or near full price here and that's what happens in a buyers market. Good houses go FAST.

Real estate is too local to make these generalizations. You need specifics and specifics to your market.

"This is a bad time to be a seller but sellers had a great time 2000 to 2005 and I think the value of their house appreciated far more than 20% in that time period so all they're giving up is some of their profit."

Maybe, maybe not.
0 votes Thank Flag Link Tue May 6, 2008
Honestly, it would not be prudent to say one way or the other without knowing more...someone else may answer you differently, but, I would not venture to do so without knowing more about the house. If you want a general answer, I suppose you could take a shot, but, you should be able to articulate your reason very well. The comps that you talk about - how comparable are they really? How long were they on the market? Are the lots similar? Do you know about the systems (HVAC, roof, water heater, etc...) were they previously listed before selling? How well is the current home being marketed? Is it upgarded the same way (better or worse) than the comps you are talking about? Have you pulled the tax records for the subject and the comps?

I for one could never give you my professional opinion with the information that I know at this time.
0 votes Thank Flag Link Tue May 6, 2008
I sincerely thank you for taking the time to respond to my question. Many responses center around list price vs. value, which totally makes sense. Please allow me to take a step further and rephrase the question -

Let's say about 5-7 comparable houses were sold in 2007 between a range of ($530k - $590k), but nothing has happened in 2008 and several similar houses have been listed at around $550k for say, 3 months now. Would a first offer of $470k be reasonable?
0 votes Thank Flag Link Tue May 6, 2008
Couple,

As others have stated you can approach buying a house at a flat rate discount %.

Agents like myself are encouraging sellers to price their homes aggressive in order to sell quickly. You could miss out on a great deal by insulting a seller who already has thier home priced well.

If you are looking for great deals and want to negotiate contact me about corporate owned relocation properties. These homes are purchased by the relocation company when an employee has to relocate due to a job. These homes are abundant, priced well, and the corporation is eager to negotiate to get the home sold.

If you are interested in working with me I can pick out these properties for you and help you negotiate a great deal.

James Dudley
ERA Sunrise Realty
678-781-7418
james.dudley@era.com
0 votes Thank Flag Link Mon May 5, 2008
As Joshua points out, a 10% discount off of a house that's overpriced by 15% means you're overpaying. Determine what the real, true value is in today's market. Then, since you're bargain hunting, your goal is to try to get the house for less than that.

Recognize, too, that seller motivation will have a big impact on your ability to get a bargain. If someone bought a new home before selling their current one, and they're now paying two mortgages, their motivation may be high and they may be more willling to discount. Someone who has to relocate due to a job transfer may be more motivated. And the list goes on. Look for true value. Then look for motivated sellers.

Hope that helps.
0 votes Thank Flag Link Mon May 5, 2008
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
Contact
Price.

Terms.

Time.

It's never just about price.

And right now, this Spring, sometimes it is about competition. The good ones are going quick and at discounts. The 10% of Sellers who "get it" - price, terms and TIME - will not blink at a 15% off offer.

The Sellers who really get it are getting multiple offers, so your 15% off will look really cute to them. Govern yourself accordingly.

You will find a bargain - make lots of offers.

What neighborhoods do you like?
Web Reference: http://intowninsider.com/
0 votes Thank Flag Link Mon May 5, 2008
First of all I would consider contacting a REALTOR to help you negotiate a deal. There are many factors that play a role in making an offer on a property. Some of these factors are the market, condition of the home, comparable homes sold prices, etc. A REALTOR will help guide you in the right direction on a price. You want to usually start out with a lower offer, but not one that will insult the seller. Your offer should be reasonable and one that the seller will want to counter back.
0 votes Thank Flag Link Sun May 4, 2008
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