Marie, Home Buyer in Mount Arlington, NJ

if a home is over priced how low of an offer do you present

Asked by Marie, Mount Arlington, NJ Mon Aug 30, 2010

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Regardless of the list price, you should base your offer price on the current market value of that property. Even if a property were priced at a discount from its current market value, and you were to make a full-price offer, then your offer (by default) would still be based on the current market value of that property (since the seller priced it right [meaning not overpriced in this case]).
1 vote Thank Flag Link Tue Aug 31, 2010
This is where it is important to have a good agent that you have been looking at homes together for a while, and building a relationship of trust. There are many issues to consider when making an offer, and by working with the same agent, you have gotten to know what you are looking for, you have gotten to know what are good prices, and your agent has gotten to know what you can afford and your limits. Your agent should be researching properties you like to see if there have been other offers, how long it's been on the market, what type of sale it is, whether the seller's are motivated.... Then your agent needs to do some comps to see what similar homes have actually sold for. If there are no other offers and the home has been on the market for a long time, then you can discuss a low ball offer with your agent and see what your agent thinks will be justifiable by comps, and then go for it! Good Luck!
0 votes Thank Flag Link Wed Nov 23, 2011
A home's "Listing Price" should be viewe as a suggestion - not a deterent. The market value of the home - or anything for that matter - is determined by what TWO people are willing to exchange it for - the seller and the buyer. A dozen buyers can consider a property over-priced, but the one who actually buys it determines what it is really worth.

If you've done your research and the home is priced way above comparable sales, then wait until it gets a price reduction before making an offer. This is a buyer's market, however, and ANY offer is usually considered a compliment :)
Web Reference: http://njlakehouse.com
0 votes Thank Flag Link Wed Nov 23, 2011
Assuming you are correct that the house is overpriced, offer market value with supporting closed listings provided by your agent. Hopefully your terms are desirable and you are qualified to purchase. If you try to low ball I guarantee you your offer will not be accepted. I get the feeling you are working directly with the listing agent and if that is the case the above won't work because the agent is working for the seller not you.
0 votes Thank Flag Link Fri Sep 3, 2010
Hi Marie, base your offer on the facts of the market, as captured in a well constructed pricing analysis and you will be in good shape. Overpricing is the greatest of blunders for sellers, but not uncommon. Overpriced homes often draw low ball bids if they draw any at all. You may have a challenge dealing with an unrealistic seller, but you wil have the greatest likelihood for success if you base your offer on facts ... they are so hard to run from ;-)

Good luck to you,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Fri Sep 3, 2010
Marie
The real question should be "how to you present an offer that is lower than asking price?". In any given market anywhere from 70-80% of the listings are overpriced. Doubt me? If they were priced right, they'd be SOLD!

So, the real question is how do you present an offer to a seller that is lower than asking in a way that will make sense, that will work for both sides.

My recommendations:
1. Your Realtor needs to talk with the listing agent (L/A) and find out what the seller needs-
- Why they are selling (do they have to sell, would like to sell if they get their price, just testing the market)
- When do they need to sell (timing, if there is a financial need, do they need a short escrow)
- When are they moving? (a lot of sellers need to move, but sometimes need the proceeds from the sale to make their next move. If you can work out an arrangement, called a leaseback, where they actually sell the home but continue to live in it for a while longer until they are ready to move (while paying you market rent based on your mortgage payment, taxes, etc.)
- What alternatives do they have to selling (
- Find out about the sellers, their professions, family, school, etc.
All these things will help your Realtor write an offer than will contain the terms that the sellers need. Most Realtors fill out the forms and email or fax. Not effective.

2. Look at the comparable sales. The same sales that appraisers will use to help you obtain financing are the sales that will help determine the value of the property.

3. Local market conditions - are values going up, going down. Ask your Realtor to explain the current market to you:
- Months of inventory - how many homes, like the home you want, are on the market right now? How many sold last month. Divide 100 homes on the market by 20 homes sold last month - that is a five month supply.
- Value trend - look at the sold price per square foot of comparable homes, compare to 12 months ago.

4. Offer presentation - after you have done all this work-
- write a personal letter to the seller explaining why you like the home
- Have your Realtor write a letter explaining why you are the perfect buyer for the home and, due to the fact that you are financing your purchase, you can only pay the amount that comparable homes are worth, and have them include two or three really good comparable homes so the sellers see that you are not just making this up.
- include a color photo of the family.
- include proof of funds for the down payment
- include page one of your credit report (cover up your social security number if visible).
- Include a copy of the earnest money deposit check
- Include a pre-approval letter from a direct lender, stating that you are qualified and state the address of the property and the offer price in the letter. That means that the lender has verified all of your information and only the property needs to meet their lending criteria.

Ask your Realtor to HAND DELIVER the offer and ask to present the offer IN PERSON to the sellers. Very few Realtors do this but it can really make the difference. If that does not work ask your Realtor to try to meet the sellers face to face and at least put a good word in for your offer.

The best offer is made when the seller would like to counter with a higher price, but decides to accept the offer as written. So do not add extra contingencies, just focus on what is important.

Good luck.
0 votes Thank Flag Link Tue Aug 31, 2010
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Marie,

Sellers today, in most markets, do not expect to get a full price offer and are usually prepared to accept less. All good offers should be based on accurate information that support it. Your agent should be able to provide you with information on recently sold similar homes in your target location.

It's best to have access to data that can be provided to support the offer. Your offer should be a reflection of the current market activity for your area......not a general amount or percentage of the asking price.

Good luck,

Bill
0 votes Thank Flag Link Tue Aug 31, 2010
I like that Brenda, "Let the agent do the work for you" So true! A good agent, with experience in negotiating. The answer is as simple as "Hire a GREAT Agent!"
0 votes Thank Flag Link Mon Aug 30, 2010
Yes the most important thing is to have an agent. Then let the agent do the research for you to see what other homes in the neighborhood are selling for.
0 votes Thank Flag Link Mon Aug 30, 2010
Have your real estate agent find all the recent sold properties (3-6 months back depending on the amount of similar homes) those still for sale and others that are currently under contract. Your experienced agent should look at the length of time similar properties are taking to sell and what percentage of are selling to determine the market in your area. Look at the average prices and take into consideration the condition and features. Then offer what you feel it is worth and what your are willing to pay.

Good luck with your offer and let us know how you make out!

Theresa Kuyl
Your Savvy Realtor
Web Reference: http://YourSavvyRealtor.com
0 votes Thank Flag Link Mon Aug 30, 2010
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