Home Buying in Boynton Beach>Question Details

Kate, Both Buyer and Seller in Florida

How much below list price should a first offer be?

Asked by Kate, Florida Thu Sep 6, 2007

Are most sellers today willing to give concessions to help with closing costs? If so, what is the average amount?

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I would recommend having your realtor do a CMA (Competitive Market Analysis) for you just for SOLD homes that are a close match of the home your making an offer on going back no further than 6 months. At that point depending on how long it's been on the market.

For my recommendation - under 30 days on the market - no more than 5-6% of the CMA low end price
30-60 days on the market - no more than 6-7.5% of the CMA low end price
60+ days on the market - no more than 10-15% of the Original List Price
Keep in mind the price reductions the sellers have done and also put yourself in the sellers shoes for a second also to give you an idea of the sellers feelings. Also keep in mind the sellers have a lot in closing costs to pay. Hope this helps you out.
Web Reference: http://www.agentjustin.com
4 votes Thank Flag Link Thu Sep 6, 2007
Look at the property as if it did not have a price tag. What do you think it is worth? Typically, if a buyer and seller both do this, the buyer comes up w/ a lower number and the seller comes up w/ the higher number

Each seller will make his or her decisions independently. It certainly is more common for sellers to cut prices and offer concessions. There are still some sellers who simply are only willing to sell if and when it fits their price and terms. There is not a blanket motivation level that applies to all sellers.

Look at comps, market trends, current inventory, absorption rates, average list/sell ratios (be careful here becaue it is not always what it initially seems), and how does the property of interst stack up? A motivated seller may have priced under market. In today's market, a buyer could pay over list and still be getting a fantastic deal if the seller priced under market to sell fast.

Mortgage companies may pay closer attention to concessions, particularly on lower down payments. The property must still appraise. If a mortgage company, via appraisal, sees the value at the offer price less the concessions of closing costs paid, etc., the underwriter will factor that into the approval process.
2 votes Thank Flag Link Fri Sep 7, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
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In this market I would offer 5% to 10% beneath asking price. Of course any realtor worth their salt will do a comp first. Also how long it has been on the market is something else that you take into consideration.
2 votes Thank Flag Link Thu Sep 6, 2007
Hi Kate:

How much anything is worth really depends on the price, the goods, and the supply and demand of the goods. This is the same for houses.

Since you did not give us much detail about the specific property you are talking about; it will really be difficult to tell you the strategy.

If you have not already done so, please ask your Realtor to do a comp for you (although any good realtor would have already done that) for the house you are interested in. Is the house priced comparable to the houses on the comp? When were the houses on the comp sold? How long has the house been on the market? Anything special about the house to make it more desirable than others? Anybody else that's interested in the house? In general, sellers are more open to help the buyers with certain things, but it also depends on the offer you are making. Will the offer be on or near the asking price?

What's important to the seller? The bottom line? The close date? As Is Sale?

So, as you can see, there are many variables in this question; and no, there is really no average amount. Your Realtor should be able to give you a more educated answer.

Since you are both a buyer and seller, I think you will be able to objectively look at both sides and decide what is the best to do.

Best,
Sylvia
2 votes Thank Flag Link Thu Sep 6, 2007
Sylvia Barry,…, Real Estate Pro in Novato, CA
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As long as your lender agrees with sellers contributions to your closing cost and you have a motivated seller it should work out. A local realtor would help you determine the market price of the property based on the price of the last ones sold in the same neighborhood, and your mortgage broker, banker or lender should be the best one to inform your about the possibility of seller's contribution towards your closing costs.
Web Reference: http://www.karinaleal.com
1 vote Thank Flag Link Tue Nov 20, 2007
Be happy paying 97% of the listing price if the numbers make sense. Don't get hung up on discounts. Lee's theory of adding appreciation is flawed. It would assign the same value to a home that was well maintained with upgrades as the home that had no upgrades and deferred maintenance. Stick with recent sales and factor in for depreciation for each month that passed since that property closed.
1 vote Thank Flag Link Fri Sep 7, 2007
You might want to read this string...
1 vote Thank Flag Link Thu Sep 6, 2007
Erin Stumpf, Real Estate Pro in Sacramento, CA
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Kate - it's important to work with a Realtor that is proficient in the area you are interested to buy in. That Realtor should be able to pull comparable sales and help you make an educated offer without offending anyone. Although we do tell all of our sellers not to be offended and to expect low ball offers, there are some that do.

As for concessions, it really depends on the offer, it depends on how serious your terms are and it depends on the amount of concessions. There are Fannie Mae and FHA guidelines that are pretty straight forward about what's allowed when it comes to seller contributions and not abiding by those guidelines is mortgage fraud, a felony.
If you are willing to pay full price for a property and ask for 3 to 6% seller contributions, your contract and pre-approval better be strong, since the mortgage industry is going through a rough time.
Take a look at this article to get an idea and good luck.
1 vote Thank Flag Link Thu Sep 6, 2007
There is no hard and fast rule - anyone that tries to reduce it to a mathematical formula is making a grave mistake!
Your Agent will review the recent sales with you - you'll see what similar homes have sold for.
It all comes down to: What do YOU think it's worth?
In a case where you find a home that is EXACTLY what you want, you'd be smart to go a little higher to seal the deal.
0 votes Thank Flag Link Tue Oct 16, 2007
Jay really gave you some great advice. My opinion is to make sure you are with a FULL-TIME Professional Realtor that really knows the area. When it comes to the financing end all the Mortgage companies really care about is if the house will appraise out.
0 votes Thank Flag Link Sat Sep 8, 2007
Determine the value of the property by doing a mathmatical progression starting with the owners purchase price. Estimate the yearly appreciation rate. compare that number with the sold prices of comparable properties over the past year. Offer a tad less than the figure you come up with.
0 votes Thank Flag Link Fri Sep 7, 2007
Kate,
Have your realtor pull a CMA for you this will give a snap shot of the market for this home. Then view the home and see what improvements need to be made. Thee home should be priced top 1/3 in price & Condition againts it's competition. You then make adjustments to your offer price taking this into consideration. Quote other properties, market stats and showing pictuyres of other homes makes your offer more credible and the cahnces of success higher.
Web Reference: http://www.TeamRenton.com
0 votes Thank Flag Link Fri Sep 7, 2007
Seller want to sell.
How much below list is up to your Realtor.
You have to remember two things. People can only sell what they have, If they have equity they can sell their home, or it`s ashort sale, lets not go there.

If you come in 10% below their asking price it only make sense for them to lower their price 5% and offer the home to all the potential buyers out their.
Sellers will offer incentives, again it is up to the negotiation skills of your Realtor.

Good Luck
0 votes Thank Flag Link Thu Sep 6, 2007
Mr.P, Other/Just Looking in Arizona
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