Home Buying in 90292>Question Details

Adam, Home Buyer in Culver City, CA

Is placing a significantly lower offer than asking price an issue with an owner?

Asked by Adam, Culver City, CA Wed Oct 15, 2008

My wife and I have been looking in the Marina De Rey area and still believe the properties are still overvalued in today's market. We have the means and are preapproved right now and have been looking at a few properties. One property in particular has dropped its asking price by 2.5% in 3 weeks but we feel they are still about 6 to 7% high. If you were our agent would you recommend putting an offer on this property 6-7% lower than asking? Are there any negatives to doing this?

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Answers

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6%-7% is fine especially when your belief is based on real market data (recent sales in the area) as opposed to a personal feeling.
As to negatives to alow ball offer, there are several: (a) you might miss out on buying a house that you truly would enjoy because your offer makes you look like you're not really interested. The seller might not even bother responding to your offer, (b) you waste your time and (c) a real estate agent will start thinking you're not serious and will start acting accordingly.
You should either accept the fact that MDR real estate is expensive or start looking for a home in your financial comfort zone (even though you said you have the means).
1 vote Thank Flag Link Tue Jun 7, 2011
If you have not hired a buyer agent, I recommend that you do so before placing an offer on anything. You need a good CMA done of the area. You also need an agent that knows the Westside areas.
Some owners will not consider a low offer..other's might. I have seen owners throw an offer in the trash and refuse to work with that buyer, because they felt they were insulted by the offer.
A good agent will be able to present your offer in a way that shows the offer in it's best light..and it's not all about the amount either. It has something to do with the motivation of the seller as well.
Regardless of what the media,or the situation some homeowners might be in, you can lose the chance to purchase a home you really love if you do not have the right tools to negotiate that sale.
1 vote Thank Flag Link Thu Oct 23, 2008
As a homeowner, an offer of up to 10% below asking price is fine. If you go below, you are risking rejection because most realtors try to price the homes to sell with the owners final okay on the price. I got an offer yesterday on my deceased mother's property in San Pedro which was 20% below asking and I refuse to even answer it despite my realtor's protests. Go for it because you are respectfully within the ballpark of an expected offer. Don't be surprised if you get the property because some (not me) price the properties 10% higher because they expect low ball offers from the get go.
1 vote Thank Flag Link Wed Oct 15, 2008
Adam,

Only with an agents help, would I approach this strategy, and would do so cautiously. The ultimate question you have to ask yourself is whether or not you are willing to walk away if they don't meet your price. Most buyers underestimate the amount of emotional attachment they have to real estate when they buy. With this in mind be honest with yourself on this point.

You need the agent for many reasons, but ultimately in these sorts of transactions there is a buffer that they provide that will be necessary to get this deal done. It is very difficult to present your own offer and to come in low. Good luck

Cameron Piper
Web Reference: http://www.campiper.com
1 vote Thank Flag Link Wed Oct 15, 2008
I always recommend having a buyers agent write the offer for you. When you go through the listing agent then you aren't represented to fight for your offer. The listing agent becomes a transaction broker meaning they represent nobody, they just present info. At least that is how it is in my state.

I recently had to become transaction broker and the buyer wanted to offer at least $50k below asking. The seller was so offended by the offer they didn't even want to consider the offer from the buyer anymore because they were so upset. It really depends on the seller and how they feel about the house. You should consult with an agent to find out what the best offer price would be based on comps. It's always worth a shot to offer lower than comps, but beware you may make the seller mad as well.
0 votes Thank Flag Link Mon Aug 19, 2013
Dear Adam,

This question was asked in 2008 which was a different real estate market. The current housing market is different in Marina del Rey. In 2013 mortgage interest rates are slightly above 04%, reos and short sales have diminished with standard sales majority of inventory, scarcity of active listings on the market. Currently, there is more demand than supply. Listings are seeing multiple offers. The result is that prices have increased with many properties going over asking price. In this market it is not wise to make an offer below asking price unless, the property have been on the market a long time with no price reductions. In my opinion, a long time in this market would be 30-45 days. If property has been on market along time then it is overpriced and realistic sellers have to consider lower bids.

Gail Mercedes Cole
EXP Realty
310.853.9933
0 votes Thank Flag Link Mon Aug 19, 2013
Without specifics....the best offers are those that can be presented and defended by your RE agent.

Bill
0 votes Thank Flag Link Sun Jun 9, 2013
This is 2013 and values in Marina del Rey, CA have increased. There are bidding wars on homes. I would suggest doing you homework on values in the area but 2013 is not the time to place a significant lower price on a home. This is not carved in stone. Say the home has been on the market for a long time and you are aware for current market values. I would place a offer based on recent sales.

Gail Mercedes Cole
EXP Realty
310.853.9933
0 votes Thank Flag Link Sat Jun 8, 2013
Though an agent should prepare a market analysis to assist sellers with the listing price, it is not a requirement that the seller use the agent's information. You need to consider many factors when making an offer. If you think the home is overpriced, ask your agent to prepare a market analysis. This will provide you with recently sold home values as well as those properties currently for sale. You can also hire an independent appraisal company to perform an appraisal for you. It is not likely you will have the opportunity to re-use this information for your own loan purposes, but it will provide the information you are looking for. If a home does not appraise for the contract price, you will have the option of re-negotiating your offer or pay the difference if it is a small amount. Or, if an appraisal contingency is within your contract terms, you may have the option to cancel the offer with no penalty.
0 votes Thank Flag Link Wed Oct 15, 2008
I wouldn't worry too much about "insulting the seller". But since you are planning on making an offer that far below the listing price, rather than beginning lower (ie: 10-14% below list) and working your way UP to 7% below... I would simply have your agent present your offer as a "purchase price offer", this is "not a negotiation, this is the offer for purchase... take it or leave it".

That doesn't necessarily mean the seller won't still attempt to counter anyway... or even reject the offer out-of-hand... but at least they'll know what they're dealing with at the outset.

btw... in order to make your 93% offer as palatable as possible, try to make sure that every other aspect of the offer is as clean as possible. A closing date that the sellers like, substantial earnest money, very short mortgage commitment with a decent down-payment(or cash), short inspection period, short attorney review, (if you use attorneys in your area). There's a lot more to a good offer than just the purchase price, that makes it attractive.

A 93% purchase price, at least in our area, is not an outrageously low offer. I don't know how that holds up in Culver City.
0 votes Thank Flag Link Wed Oct 15, 2008
Alan May, Real Estate Pro in 60201
MVP'08
Contact
You need to be careful not to insult a seller. If you feel you need to go lower than 10% you may want to rethink the home. In today's market many buyers feel that a sellers will take much less that listing price. Remember that the listing agent has done a Comparative Market Analysis to determine what the market value of a home is when they take the listing, and as is the case here, reprice to make it more attractive to the buying market.

Good Luck!
0 votes Thank Flag Link Wed Oct 15, 2008
Adam,

I would definetly submit an offer on the property, you have nothing to lose. But I would encourage your agent to present the offer. It seems that most agents in my area just get an offer in and just fax it to the listing agent, which is fine but I have seen that when I have a buyer that is wanting to submit an offer below listing price I can useally get a better response from the sellers by presenting the offer to them in person. Besides I know why my buyers are submiting the offer in the first place. Hope this is helpful!
0 votes Thank Flag Link Wed Oct 15, 2008
Adam,

Then go for it. You have nothing to lose. To have a reasonable hope of getting the house your first offer cannot offend the seller. Unfortunately what offends a seller is different in every transaction so you will need to lean on your agent to get his/her professional impression.

Cameron Piper
Web Reference: http://www.campiper.com
0 votes Thank Flag Link Wed Oct 15, 2008
I would have an agent place this offer, and I would be willing to walk away without a second thought.
0 votes Thank Flag Link Wed Oct 15, 2008
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