You have some very good answers already posted. However, your question did not address, if you were working with a Realtor, or not. If you are working with a professional, trust their advice, as even in Florida, we still have multiple, "Over Asking" offers on aggressively priced homes. But, as a licensed Broker in Florida (where I am assuming the home is located) I have successfully negotiated offers even lower than 15% when it was possible.
There are a few critical factors. The first is dealing with a professional on the other (listing) side of the transaction. Hopefully the listing agent will explain to the seller not to be upset with your offer, but rather be upset with all of the other people that came to see their home and rejected it. Your agent should do a CMA (Comparative/Competitive Market Analysis) for you, so that you know roughly what the market value is.
Another critical factor is to remember that the Seller is making the first "offer" when they set the asking price. This offer is made to the public via the MLS and any other method their agent and they choose to market the home. When a buyer makes an offer it is really a "counter" to the Seller's initial offer. If the Seller is confident that his agent has given his home adequate exposure, they are often willing to negotitate. The Sellers set the market, but the buyers always determine the value.
One piece of advice though, don't get so caught up in getting a deal on a house that you compromise on finding a home. The best deals in any market are houses with location liabilities (busy streets, unsightly towers, or unkept neighborhoods) or distress sales (foreclosures, death, and divorce) Just remember people who couldn't make their mortgage payment for a year also may have skipped routine maintenance, and a house with a location liability only sells for one reason in any market - it is the cheapest one available.
One of the blessings of our current market is that time is on your side. Take your time and work with an agent that will show you enough property that will give you confidence in your decision to purchase your second home. This is your reward ... make it fun!
I often write special conditions about the offer being accepted or rejected for a certain amount of time.
RE/MAX Bryan-College Station
It is very reasonable to set a time limit but 24 hours seem way to short for your offer. If you were offering full price, 24 hours would be fine. But with a 14.4% below offer and a second home, you should give them 3 business days, in my opinion.
Some agents don't like low offers but it is their duty to present it to the seller. If you get any attitude finding a good buyer's agent, you can always go with http://www.buysiderealty.com and do all of the offers online. This is assuming you have been looking at the homes on your own at open houses and on-line.
Yes, you can do that. My advice for constructing an offer is to base it on the specific property, recent comps, trends, absorption rates and competition in that neighborhood. If a 2 very similar properties were priced 50K apart, and you used a simple percent below ask price as your guideline, you could still overpay for a property.
Some sellers may decline to counter to your offer. But, if there is lots of inventory and another home will suit you, that's OK. You simply move to plan B.
If you have cash and can be flexible about the property, you will be able to buy well. Choose a good buyer agent who can negotiate and present well on your behalf.
in short your answer is yes! Should you check the surrounding area and see what homes have recently sold for? Sure you should but as a Realtor in Florida an offer for 10 to 15% below list price should be accepted well. There was a time that an offer like that would do nothing but upset the seller and sour a deal. In this market there is a good chance that the seller will accept it or at the very least make a counter offer. There are so many homes to choose from and sellers are very well aware of that. As far as the time frame, unless the seller is out of state and not easily reached 24 is very acceptable.
Best of Luck,
Linda J Sears
The only insulting offer is NO OFFER.
So get out there and buy a house already!
#2 If you are not a cash buyer, obtain a letter of qualification from your lending agency that
specifies the amount you want to pay.
#3 Provide an initial cash deposit with a secondary deposite to follow. A larger amount will
demonstrate you level of seriousness and hold their attention.
#4 Offer a quick closing-most motivated sellers want "OUT" as soon as possible-A 30 day or
sooner closing also hold their attention.
#5 Don't confuse things with trying to negotiate personal items in the offer....keep it clean!
Once the offer is accepted you can deal with other issues.
The answers you received were extensive and informative, and probably right. But none of them may apply to the local market where you intend to purchase. You appear to be in a very good position to achieve exactly what you intend. But let me ask some questions: are you truly a cash buyer (it makes a difference with a savvy listing agent)? Also, did you know you can purchase a second/investment home with IRA (individual retirement account) funds in part or in its entirety? Investigate you long-term options and tax implications more thoroughly with a local REALTOR who has residential investment experience. There are more variables here than you have probably considered. Best of luck and happy hunting!
24 hours is fine.
Next , what will be the sellers response? I find at times that some sellers get offended and difficult to work with when they get an offer WAY WAY under asking price. However, on the other hand there are a few that will be excited to have an offer and counter.
I have found that I have had best results when my clients have stayed with in 10-15,000 of the asking price.
Finally, Consider how you feel about the home and how serious you are about the offer.
As far as time constraints, You can have your agent resend the offer if you decide to move on to another property prior to an agreed contract.
Keep iin mind during your house hunting many sellers are emotionally attached to their home. If you find a home that is the one for you consider things carefully prior to making an offer.
Making offers conditional on time can be very effective if you are in hot market and competing with other similiar offers . However, you look to be presenting what could be precieved as a low offer by the seller and having a very flexible attitude about what property you end up with, your closing date etc. I don't think i would recommend that strategy - (what if one of the sellers is unreachable for 48 hrs and accepts - your offer become void at the 24 hour mark - are you telling me you would not accept it?)
I am in California, so I will say what's common in Northern California.
First, Making a condition where the offer is only valid for a certain period of time, such as 24 hours, is quite common. On top of that, as long as you don't have a signed, agreed contract from the other side in hand, you are allowed to withdraw the offer.
Second on the question about 10-15% below asking really depends on how realistic the price is set, the location, the specific house, how many days the house has been on the market and most important thing, the local market condition...., etc.
With everything that's done right, we still see multiple offers in Marin; so there goes the automatically mark down by buyers, sorry!
If the house is only worth $800K, and listed at $1M because of the seller's unrealistic expectation, even if you negotiate it down to $850K, I think we will all agree that this is not a good deal. .
So, ,find an agent who has experience, great track record, knows the local market, the inventory and with good negotiation skills to help you with your offer and negotiation to get you the best deal. Once you made an offer, there are also potentially other things to negotiate, e.g. the repairs, if any, and what not. So, just keep that in mind when you make the offer.
If you are in a "buyers market" a 10% below asking price offer should be well received.
I agree with your thinking, in a high inventory market with a cash offer, you should have significant leverage. The short time frame could work for or against you, but the thinking is sound.