Home Buying in Cummaquid>Question Details

Andrew O'mal…, Home Buyer in Cummaquid, MA

what is an acceptable 1st offer for a house in this market? I am considering a lowball offer.

Asked by Andrew O'malley, Cummaquid, MA Sun Sep 28, 2008

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YOU MISSED OUT AS THIS HOUSE HAD A 300,000 MORT ON IT AND PEOPLE LOST IT. BANK BOUGHT IT BACK FOR 185,000 AND JUST SOLD IT FOR 145,000.A REAL STEAL AND PEOPLE DOING IT ALL OVER. APPRAISED FOR ALOT MORE.
0 votes Thank Flag Link Sun Oct 12, 2008
It sounds as if you are going to make a "lowball" just to see what happens - when in fact you can probably come up in the offer. You do risk losing/insulting the seller. Despite it being a "declining" marketplace in
terms of pricing, the best way to decide the offer is to go with the current listings - have your realtor work up a CMA with current listings and solds in the last 3 mos. Lean more heavily on the listings, particularly if they have just recently come on the market. Your realtor will be able to tell you where things have sold off the listing price - 90%? 88%? . I would then work up an offer from there using averages. If nothing has sold in 3 months, then I would expand to 5-6 months, and reduce 3% since this market has been declining 1.0-1.05% a month for the past few months.
Good luck ! But I would not "lowball" for the sake of the activity. Try putting an offer that reflects to the seller that you have "thought" about it - and given consideration to the seller, based on recent market activity.
0 votes Thank Flag Link Mon Sep 29, 2008
There is no "acceptable offer" in this market per se. If you want the property than ask your real estate agent to work up a CMA for you to help you determine a "reasonable" offer. I agree with most of the other comments and would like to add that you should consider time on market, condition, and location in the process of making your offer. Another factor is how much time was the property on the market at its current price? Have there been anyu price reductions? A lot of sellers out there just won't budge from their listed price because they can wait it out or because they have little or no choice. Would you like to be in their shoes? Probably not. Low ball offers are just that and it is not hard for the seller or their agent to figure out what you are doing. Basically, a low ball offer will probably get you nowhere but you are free to try it and the seller is free to reject it out of hand. If you want the house don't insult the owner but make an INFORMED offer not just a trow away.
0 votes Thank Flag Link Sun Sep 28, 2008
Its all about the negotiations, a few years ago you coulnt do it, but now with so much on the market, make the offer but be fair enought to negotiate!
0 votes Thank Flag Link Sun Sep 28, 2008
The best advise to obtaining a good value for the money spent is research. Find as much as you can about the property before writing the offer. What are the Seller needs in this move. Some times a seller needs a soft item like being able to close with on a particular date of staying in the home for a few days after close or having Buyer handle repairs. You do the investigating.
Also if you can find other issues about the house. For example a new road or subdivision being built in the neighborhood, a school closing or opening . You do not need to share positive news but near by property being chosen for the new waste land fill may be important to know.
Also a mistake I have seen on some of my listings an offer that is too low may keep you from getting the home you really want and the one that would be your best buy.
Being piggie for either side often does not generally lead to a great outcome.
I belive there are not good market or bad markets just individual good values and poor buys.
Choices that are quality homes have a better chance of weathering the fnancial storms.
0 votes Thank Flag Link Sun Sep 28, 2008
Everyone below had great answers on ways to value the property to see what it is worth. Remember, real estate is hyper local, so just because you hear general reports that the real estate market is "soft" doesn't mean that is true for every individual town/city/neighborhood. Some cities/neighborhoods are insulated from the down market and therefore sellers won't budge or negotiate with low ball offers. There are, however, plenty of towns/neighborhoods where low balls are being considered even if they get rejected it initially. Alot of sellers are coming back a couple weeks later and begging for the deal. This just happened to one of my clients and we ended up negotiating $104,000 off the asking on a single family in Stoneham. I also just got two calls from two different agents saying they are willing to accept lower than what my clients offered a couple weeks ago. The point is, it depends on the specific town and your level of interest in the property. You can have a buyer agent pull what the average discounts are for the town you are considering to use as a sounding board. Low balls are risky because if it is a house you love and cant live without you risk losing all opportunities of negotiating with a low ball that is so low it offends the seller. That said, if you are willing to be patient you never know.

Statistically offers that are lower than 10% off asking price have very slim chances of being accepted. Check out this blog post on the numbers: http://www.territoryre.com/blog/?p=459

Also get yourself a good buyers agent - it makes a huge difference when it's time for negotiating.

Hope that helps! Good luck.
0 votes Thank Flag Link Sun Sep 28, 2008
Andrew,

The best way to make an offer is to make an informed offer by taking the time to gather necessary information. Ask your agent to provide for you the comps of recently sold homes (last 6 months) in the area of the subject home.

A review of this information should give you and understanding of what the current market value of the property is.There is no "acceptable offer" but the last thing you want to do is offend the seller with your offer....there will be NO response and the door will be closed.

Our recommendation is to use the information that you have collected on the area's recent sales to justify why your offer is what it is. Also to soften the blow, we suggest a pre-approval letter with the amount specified from your lender be submitted with your offer. Sometimes sellers will accept this as the amount you can afford to offer.

Good luck
0 votes Thank Flag Link Sun Sep 28, 2008
My question to you is why are you considering a low ball offer? Is the property "troubled" in some regard(condition, location, etc)? Is the immediate area suffering from an undue number of foreclosures?

Most people derive a lot of pride and self worth in the ownership of their home. This emotional aspect is critical to how well your offer will be received if the seller is not under overwhelming financial duress to sell.
With the price corrections to many real estate markets around the country and daily reports of this all over the media, buyers are no longer self conscious about submitting a less than asking price offer, particularly on a property that has been in the MLS for a lengthy amount of time. However,unconsciously, many homeowners will interpret such low offers as a valuation of their time and experiences in the property.
I concur with Mark...make a market based offer and you are apt to get the best out of the seller...anger them, and it will negatively color how they deal with you for the entire transaction.
I have sold ten's of millions of dollars of Cape Cod Real estate over the years...I have never seen a truly "low ball offer " work for anybody...Most sellers now expect that they will get less than asking, but are not prepared to give away their properties on the Cape. Money is cheap, albeit more difficult to borrow right now...paying 10% more than you wish to right now might be the most prudent move.
0 votes Thank Flag Link Sun Sep 28, 2008
Good Afternoon Andrew,
An offer should be based on a current CMA (market analysis). Are you presently working with a Realtor? If so, they can provide one to you. My feeling is that you are more likely to get your price by making a reasonable first offer than to lowball. Eg. (80-85% of current market based on a reliable CMA) then baby step it from there. I relate it to the situation where if I push you hard, you push me hard back. If I extend my hand, you are very likely to shake it. Don't be a fraid to walk away for a few days if things are not going your way. They will return to you.
0 votes Thank Flag Link Sun Sep 28, 2008
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