Hi there, There are many factors to consider such as, type of seller(bank owned, short sale, typical seller), time on the market, time since last price reduction, and of course where the current listing price is at in relation to actual market value. There are a number of things in the offer, besides the price that can sway a seller to take a lower price as well. Some homes are already listed at a price that are an excellent bargain and getting another 20% off is not a reasonable expectation. A large part of my business is listing and selling bank owned properties and there are very specific strategies to making a good deal even better on those types of properties or to make your offer stand out in a multiple offer situation which occurs often when you find a great deal. Have your financing in place and have a prequalification letter ready. Get familiar with the market so you know a good deal when you see one and be ready to act quickly when the right one comes along. Be prepared and find a competent Realtor that you can form a good working relationship with. Let me know if you have any other questions or if I can be of any assistance.

Do your homework! Have your agent prepare and opinion of value. 80% could more than you should pay - it all depends on so many factors. As an agent, I prepared a one page flyer for our own house, just prepared it as an example for my clients for various reasons. The asking price was millions over the real value - as a joke. My point, do your homework and align with a good buyer agent. Good luck.

Hey there,

We aren't seeing a lot of offers this low and few accepted except in the high-end price range. As you go lower in the Durango area price range the percentage you see asked for or accepted is much lower. I do tell my sellers not to be upset with 10% off offers although the range we're seeing accepted (for decently priced homes) is more like 3-5% in rural areas and 2-3% in-town. I hope this helps and, of course, let Samantha and I know if you need a good, agressive agent to help. Cheers, Sebastian

LISTING PRICE
Understand that the LISTING PRICE has one primary objective, to attract attention: It is not intended to be set in stone, and in many cases it is not even a good guideline toward the SELLING PRICE.

Some Sellers believe that by setting the LISTING PRICE high, they can always come down, and people will make an offer anyway: WRONG! Buyers will just bypass the property and look at houses that are within their price range. And six months from now, the Seller will slowly start lowering the PRICE, (this is called “chasing the curve”) and Buyers will be asking the question; “What’s wrong with that house?” and “Why has it been on the Market so long?”

Other Sellers set the LISTING PRICE low, to attract multiple offers. (The correct strategy.) We are asked; “Aren’t you obligated to sell at this price if someone offers it?” The answer is probably not; for that to happen, you would first have to have only one offer, and secondly, the offer would have be exactly the same, down to the smallest detail, (please discuss this with your Realtor).
Another thought; Buyer will search for potential properties by groups; for example, $400,000 to $450,000, and $250,000 to $300,000. If your house is priced at $460,000 or $310,000, the Buyers will never see it. (something else to discuss with your Agent.)

Different Banks have different philosophies about pricing their properties: You cannot draw any conclusions without a good analysis.

Have your Realtor do a CMA, (Comparative Market Analysis) to help you determine your Offering Price. It is the surest way to determine the Market Value of the property.

It is NOT about percentage off list. This is a big misconception. It is about value! If a home is actually worth $100,000 and whether the owner asks $105,000 or $120,000 - it is still only worth $100,000.

Keith & Kinsey are right on below. It's not the percentage, it's the true market value. You need an agent to help best determine the value.

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The Marie Souza Team - Top Selling on Cape Cod
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I always tell buyers to ignore the asking price, figure out what the true market value of the property is, and what it's worth to them. This should be based on market conditions, comparable properties, and how much the buyer really wants that particular property.

It really depends on your market. I will answer the question as if you were buying in my market. In the Kansas City market the answer is generally NO. If you were my client I would call the listing agent with you next to me and say something to the effect of “my client and I just toured 123 Joe Lane, they are interested in the property and are considering making an offer, they feel there are some items which need attention and are considering making an offer of around 80,000 (100,000 list price) would your buyer be interested? Hopefully at this point you get some guidance. If it is a bank owned property REO, than the general rule is 10% or wait 30 more days and see if they drop the price. The banks and asset managers have a system and they generally do not break the rules. PS I have fired clients who continually break the rules and try to low ball everything, I don’t need any more practice filling out 80 pages of forms for a 500.00 commission. In some cases I charge an administrative fee (200.00) to submit the paperwork then credit it back if the offer is accepted, this tends to make the offers more realistic.

Durango,
if you have ANY interest in purchasing the home, you shuld open the conversation by making an offer.
The owner and listing agent are well prepared regarding the types of buyers out there looking for a bargin.

Be aware, the nature of your offer WILL set the tone of the conversation. For instance:
If the home is priced at or within 3% of market value, and you come in at 80%, I would advise the owner NOT TO RESPOND AT ALL. The ower would object and the counter would be -1% or some token reduction. It is more likely the buyer, if they are a REAL buyer, will submit a more reasonable offer, quickly.

However, had the initial offer been resonable, it is very likely the counter would come in at 75% of the difference.

Summarizing, if this is the only way you know to open the coversation, them by all means do it.

Annette Lawrence
Broker/associate
ReMax Realtec Group
Palm Harbor, FL
727.420. 4041

You can offer anything, but dependong on how long the proerty has been on the market, you run the risk of ticking the seller off and refusing to even counter your low-ball offer. What's your agent say?

All offers are negotiable, and in this climate I would never counsel a seller to reject an offer outright, but you can certainly expect a counter. So much depends on the sellers motivation and situation--and they don't have to share this information other than if they are facing or in foreclosure/short sale mode. A good buyers agent will give you comps to show pricing, list-to-sold ratios, time on the market, and if there have been previous offers. Is 80% reasonable? IN most case that's too much of a discount for our market. I have our 2011 stats for Durango and the County if you'd like them--

By definition, "reasonable" means that there's a reason. If you have a reason, it's reasonable.

Is it a tactic that will further your goal? Gosh, we don't know!

I don't know what is happeneing in the Durango market, but in the Denver area market you would be wasting your (and your Realtor's) time. Even 10% below asking is unlikely to get a "yes" in the current market here. Ask your Realtor to show you what has happened in the past 6 months in Durango sold properties. Get a ratio of asking price to actaul sold price to see if it is reasonable.
You have asked quie a few questions tonght. If you are not working with a Buyer's Agent- get one.

Everyone likes a bargain but where did you come up with the idea that 80% of the asking price for a house in Durango makes sense?

Durango's market might be softer than over here on the Front Range. Even still ... you're taking a risk.

Over here, inventory is in short supply and getting shorter all the time. We're heading into the heavy buying season with low interest rates and rents going higher. Sellers have been holding on for the market to come back. The shoot-low strategy may not work because the uncertainty that was here is evaporating.

Why is low balling risky?

* If the seller bought before the downturn, they might not have that much room to negotiate. Besides, I don't know about you, but when I bought my house I didn't intend to make a big gift for the next buyer when it comes time to sell.

* You risk upsetting the seller. When people get upset, they don't always react predictably. Your offer may not even make it past the seller's agent. Chances are - even if they are not represented - they may not respond. That's the best way I know of saying "you have to be kidding."

In your best case, a good agent is going to reject your initial overture and ask for your "best offer."

As an agent, I generally counsel that buyers should shop for what they can afford. It's a lot less work for everyone, including the buyer.

There might have been a time when the markets were so slow that strategy found someone very scared and frustrated. With the rental market as strong as it is, sellers are opting to become landlords before they'll take that kind of hair cut. Even with the possibility that more foreclosures will be hitting the market, the banks have been reluctant to swamp the boat with a lot of properties. Over here the market has been very stable. That isn't to say there are not bargains - but they usually are priced that way. You might want to look for motivated sellers among foreclosure and short sale properties.

SuZ

It really depends on if you are offer market value. I suggest you contact a local Broker who is family with the market you are shopping in and get an understanding of what is reasonable.

I can tell you here, in California, when a home is priced right, around market value it will sell between 95 and 97% of listing price. It doesn't make sense to take an offer at 80% when a seller can drop it 5% to 10% and reposition the home for a new set of buyers and get more money.

Each home and unique and so is your area.

All the best to you.