Question Details

lucy, Home Buyer in Bellingham, WA

We are first-time home buyers interested in buying a $269,000 home. Comps price it lower, what should we ask?

Asked by lucy, Bellingham, WA Sat Aug 11, 2007

Comps price it at $238,000 and $300,000. It has been on the market for 2 1/2 months. We would feel comfortable with $250,000. What should our opening offer be?

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Lucy, do you have "good" comps? A comparable that doesn't take into consideration size, year built, amenities and location isn't a good comp. It sounds as if you have only a few comps to consider. Expanding the comparables by adding in like properties in other areas of the city might be a good idea. If several comparables suggest closer to the lower end then regardless of what you feel comfortable with I wouldn't advocate paying more.

Why does your agent feel as if the property is worth closer to $260? Does what he says make sense?
Web Reference: http://www.ChrisTesch.com
2 votes Thank Flag Link Sun Aug 12, 2007
Hi Lucy,

First of all, be very careful about comps. You should see for yourself what's out there. Obviously you can't see what sold, although you can always knock on the door of someone who bought recently and tell them that you are considering buying in the neighborhood and would like to their house.

Ask your agent to show you the comps that are active because there are comps and there are comps!!! I have seen real estate agents pull comps without having done their homework. They'll line up all the 3 BR 2 BA between 2200 and 2300 sf with a pool and they call them comps without even previewing them. A good agent will preview the comps and will tell you all there is to know about the properties. By the way, this is one of the reasons why real estate agents are so valuable. The good ones spend a huge amount of time visiting properties to know what's out there.

This being said, your game should be to purchase at the lowest price possible, isn't it? First thing you ought to do is find out the other player's motivation. You'd be foolish to propose $250,000 when you could get it for $240,000. Remember that if they don't accept your offer, you can always make another one.

Sellers should not get mad at you. You made an offer. If they want to get mad, tell them to get mad at the people who did not make an offer. Don't let the opponent what's in your hand. If you tell them that you absolutely love the place, they'll know that you will go way up. If you have another property that you are interested in and that is very similar, let them know. They will be softer.

If you don't like negotiating, then make your best offer and let your agent that it is final. But make sure that you stick to your guns. You do not want to lose credibility. In today's market, I have seen seller refusing offers only to come back two weeks later and asking the buyers to put the offer back on the table. This is why I would give them time to think about accpeting the offer. Don't give them only 24 hours to respond. Give them four days or more.

In your case, assuming that the comps are well chosen and there are no competing offers, I would bid below them. Good luck.
2 votes Thank Flag Link Sat Aug 11, 2007
Part of a pricing negotation strategy is based upon the ability to read the other party. Without knowing that, it is difficult to know what my suggestion would be. If your buyers agent is strong, I would go with a lower number versus close to your targe. In many markets, sellers are understanding the need for negotiation. If the property was new to the marekt this week, I would definitely go in at the higher number. Conisdering it has been on the market for 2.5 months, use the extra negotiating leverage.

If your agent can produce comps that support lower numbers, go in with that lower number. A good buyers agent will be armed with market stats to support his/her buyers offer. By low, based upon the limited data here, I am thinking 231K to 235K.
1 vote Thank Flag Link Sun Aug 12, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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Lucy:

Allow me to preface this response with a warning that I do not know your market or its conditions.

That said, if you were my client and if there were no other competing offers, I would suggest a starting offer at $237,500.
1 vote Thank Flag Link Sat Aug 11, 2007
Roberta Murp…, Real Estate Pro in San Diego, CA
MVP'08
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Comps at 238 and 300? That's quite a gap. Comps usually come in a much closer range, especially at that price. Where did you get your information from? With the house on the market for 2.5 months, what's the average days on market for the location? Why are the sellers selling? How much of a mortgage do they have? If you have answers to all these questions, it would help you determine where to start your negotiating. Even after you have all this information, sometimes it doesn't matter how good an arguement you can make, if the seller has a number in their head that they want (rational or not) you may have to pay it if you really want the house.
I would start by refining those "comps" to be sure they really are comps. Afterall, that is the number the appraiser from the bank will be using to justify your mortgage amount. If they both really are "comps" then you have an argument for an opening offer at the $238 range--just remember, you can insult the seller and they may not want to deal with you if you go in too low to begin with. Good luck!
Web Reference: http://www.dianeglander.com
0 votes Thank Flag Link Sun Aug 12, 2007
PLease tell me that you are using a Realtor - especially as a first time home buyer. A good Realtor will be able to get in there anfd help you negoptiate a fair price for both parties.
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Sun Aug 12, 2007
Cindi Hagley, Real Estate Pro in Pleasanton, CA
MVP'08
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What does your agent suggest? They will or should prepare for you a market analysis of the suggested selling price. Comps are guidelines....I would say they aren't good comps if there is that big of a spread. Also is market moving up or down? How long do you plan to stay there. Are the comps current on the market or closed sales? When does seller want to move and does it match your timeframe. My normal analysis includes more than 2 other properties and I would hope your agent does the same for you.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Sat Aug 11, 2007
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
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In our market place I could not in all fairness recommend to a buyer that they pay more than the comps.
0 votes Thank Flag Link Sat Aug 11, 2007
We are working with an agent. He thought it was worth $260,000. But when I do the math with the square footage of comps I get a range of 201,000 to 300,000. We really can't pay over $250,000. Should we go with $231,000 which will split the sellers and my target price? Or offer $245,000 and move little?
0 votes Thank Flag Link Sat Aug 11, 2007
Will you be working with an agent? Without knowing the area it is hard to say. Knowing the market now in most areas I would say you would say to go in a little lower than your maximun bid. The worst that they can say is no. If they say no and you want to try again do so. They will know you have real interest and may be willing to negotiate.
Web Reference: http://carriecrowell.com
0 votes Thank Flag Link Sat Aug 11, 2007
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