Home Buying in 33556>Question Details

Ktp123, Home Buyer in 33556

what percentage lower than an asking price on a house should an offer be?

Asked by Ktp123, 33556 Mon Mar 12, 2012

If the house is priced at $260K and has been on the market for two years in a neighborhood where the average home is $325K, would it be OK to offer $200K cash?

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12
Scott Hulen’s answer
I keep seeing it on offers & transactions from across the country on bank owned properties and it seems like the “general rule” is about a 10% discount off asking price without stacking other concessions. This is not a hard and fast rule but just an observation. The banks have a plan and I think ifs its more than 10% they will wait it out for another 30-60 days then have a further price reduction and continue this practice until someone buys. Just my opinion. ps some areas are becoming hot spots and over asking price is not uncommon.
1 vote Thank Flag Link Mon Mar 12, 2012
There is so much we don't know. What you have shared with us is....
The average home value in that neighborhood is $325,000.
What we do not know is if that community value has been used with this home attributes to establish a 'potential' market value for the subject house. Let us assume this has been done and the neighborhood value and this homes market value is #325,000. Somewhere the number $200,000 appeared. Just like magic. That's a gigantic 40% discount. Wow! So you want to buy this home at 60 cents on the dollar. Now THAT is a GREAT deal.

I think over the past two years, this home owner has kicked a lot of 60% investor offers to the curb. If the above assumptions are correct, the listed price is fair. There is, however, so very, very much we do not know. This two-by-four-across-the-head approach has little chance of success. However, there are better strategies that can produce the same outcome. Consider those. if you don't know the other strategies, then fire in your low-ball offer. Maybe it will start a conversation.
1 vote Thank Flag Link Mon Mar 12, 2012
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.
1 vote Thank Flag Link Mon Mar 12, 2012
There are several factors that need to be taken into consideration.
0 votes Thank Flag Link Thu Sep 6, 2012
If it's the Man O War house, I spoke with the listing agent and she pretty much said the sellers are firm at $260k. It's a good deal at $260k so it's suprising one the previous 3 other offers hasn't stepped up to capture it.
0 votes Thank Flag Link Thu Mar 15, 2012
Your Realtor should be advising you exactly what to bid on this home. The fact that the home has been on the market for two years for less that the average price in the neighborhood is a red flag. However, we are only assuming off of very limited information.

In addition to whatever your Realtor says, you should offer what you feel comfortable with. You may not know the market like an expert professional should, but surely you have been looking at other homes in the area. Trust your instinct and your Realtor's knowledge!
0 votes Thank Flag Link Mon Mar 12, 2012
Hi Ktp,

If you're talking about the property on Man O War, it looks improbable at $200k. You can try $200k and hopefully the listing agent will cushion the blow to the Sellers (looks like 3 owners) so you can ultimately reach an agreement. I'm guessing the current owners are not that negotiable at $260k and that's why it hasn't sold yet.

It's surprising it's not already sold since it was reduced to $260k in December.

Good luck and if you want to search "like a Realtor" with the most details, you're welcome to sign up for a free ListingBook account on my website: http://www.SoldOnTampa.com

All the best,
Alma
Alma Rose Kee, PA
Future Home Realty
813.244.9898
http://www.SoldOnTampa.com
0 votes Thank Flag Link Mon Mar 12, 2012
I always tell people to ignore the asking price and offer what a house is worth to you. What a house should be worth to you (if you are owner occupying) is based on comparable sales, how much you like the area, and how many of your wants/needs the house has.

How much it's worth to you if you're investor would be based on your income and returns overtime.

Offer a little less than what your willing to pay to leave room for some negotiation. I wrote a blog on this topic awhile back (linked below) if you are interested.
0 votes Thank Flag Link Mon Mar 12, 2012
Your Realtor would be best equipped to help you with that. How much have similar homes been selling for?
While you don't want to insult a seller with a low offer, you never know how much they are willing to accept at any given point in time. Circumstances & situations change all the time and an offer that may have been unacceptable before - not so much now.
Good Luck!
Genevieve Ramachandran
0 votes Thank Flag Link Mon Mar 12, 2012
It all depends what kind of a listing this is. It is best that you should consult with your agent regarding your offering price. It is best to make a fair offer that will reflect the true value of the property within the area. If you want to have a favorable response from the seller, making an extremely low offer, is not the way to go.

Good Luck.
0 votes Thank Flag Link Mon Mar 12, 2012
There is no standard percentage, however, the offer should be within market value. If you have access to recent sales in the past 3 months, it would be a more accurate method of determining your course of action. If you need assistance, feel free to let us know. The Ward Team
0 votes Thank Flag Link Mon Mar 12, 2012
A realtor should check to see what similar homes have sold for in the prior six months as a basis for determining what price to offer.
0 votes Thank Flag Link Mon Mar 12, 2012
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