BEST ANSWER
There is never a sure way to tell how a Seller is to react, so you you have to figure out what the home is worth to you.. I use the following “formula” . 1st Know what you need, what you want and what can be compromised (if anything). 2nd, Ask yourself what price will allow for you to still enjoy quality living (of course home ownership has some sacrifices, but you don't want to be house poor). Once you have that number, you make sure the home has everything you need. If it doesn't, subtract the costs of adding in those needs then you have your maximum you would pay for that particular property in order for you to feel confident in calling it home. You then have to look at the home and see if it has everything you want, if it doesn't, subtract the costs of adding in those wants from your maximum, now you have your ideal. The 3rd and final figure is the comfort zone, to arrive at this number, take your maximum number and add back any wants that happen to be mechanical (new electric, heat, roof etc.). The reason I do it this way, is because sometimes wants become needs come Home Inspection time. Like if the electric is fine but you want upgraded electric and the home inspection reveals the electric is not even up to code, you are going to need for it to be certified safe. At that time you would request it be done by the seller (or maybe you would accept a credit as to the amount ). It is a second opportunity to negotiate, where you can ask for these systems to be repaired, replaced, certified etc. It is important to work through these negotiations, any defect the Home Inspection reveals will have to be disclosed by the Seller. So if the seller cannot come to an agreement with you, a mechanical defect as named in the agreement of sale, will be an issue with the next buyer. That being said, Once you have all 3 numbers- your maximum, ideal, and comfort zone it's not so much of a % as it is a psychological thing.. It depends on the amount of the difference between your maximum and their asking price. You want to go under contract at a number between your Ideal and your comfort zone. Come home inspection time, you can reassess and then negotiate further to make sure you are closing at a price that is within your comfort zone. That being said, it is important to remember, despite talk of a Buyer's market, when a property is priced correctly any offer less than asking proposes a risk of losing the property. Good luck!
Wed Jul 30 2008, 16:18
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