Home Buying in Germantown>Question Details

Lanna, Home Buyer in Maryland

I have a question about negotiating a price with the bank. We put an offer in on a house that was originally

Asked by Lanna, Maryland Fri Feb 15, 2008

listed for $349 but has come down to $275 (it's been on the market for 6 months). We put our offer in at $235...they came back with $270. We really want to end at $250-255. How many times do you usually go back and forth with the price? And any suggestions on what to offer next...we were thinking anywhere from $240-243 (which is us going up more than they came down.) The house is a foreclosure and I know they have had a couple of really low ball offers in the past and completely denied the offers without any negotiating (for example, when the house was listed at $305 someone offered $235 and they denied the offer.)

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Keep negotiating. It's a good sign that they didn't reject your offer, but instead countered. You can go back and forth a number of times. They do have a bottom line, but you won't know it until you get there. And I agree with you: Don't offer your top number, even with some "This is our best and final offer" language.

Make sure you know what the property is worth. That is, that you wouldn't be overpaying at $250,000-$255,000. From the figures you provided, you probably wouldn't be, but some markets are very, very soft and still dropping fast. Assuming $250,000 or so is a good value, and that's as much as you can afford, then, yes, counter. And my gut instinct is that the number you're thinking of is pretty good. Heck, they only came down $5,000. You're coming up $5,000-$8,000. Just keep at it. And, though it's an old negotiating ploy, make the number you offer an odd one. Something like $242,860.

Be patient. Don't overspend. And don't pay more than you can afford. Sounds like you're heading in the right direction.

Good luck.
2 votes Thank Flag Link Fri Feb 15, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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Go up on your offer by 5000 each time until you get to your bottom. If it is not accepted by let's say you get to 245000, but in your offer of 250000 and state highest and best and explain to the bank in writing why that is your highest and best offer. Mention in your written explanation, the condition of home, the amount of time on market, include support comparative sales if necessary.
0 votes Thank Flag Link Sat Mar 8, 2008
First you have to decide what is your "magic number." By that I mean, in three months when you drive by and see someone else living happily in the home, at what price would it not bother you? If they paid up to, say, $255k as in your offer, you would probably feel a twinge that you could have gone higher. There is a certain number that you would say, "Good for them, but I wouldn't have paid that much."

There are really only three numbers- what you can afford, what you are willing to pay, and what they will take. The bank could not care less about what you want or can afford- but they have a magic number too. What is the difference between your monthly expenses between $255k and $270k? I sure hope you are working with and talking to your agent about all this!
Web Reference: http://www.headforhome.net
0 votes Thank Flag Link Fri Feb 22, 2008
Banks have formulas for what they are going to do with asking prices. They got a BPO (Broker price opinion) to begin with and it looks like they have lowered about $11,000 or so, a month. You can't negotiate with most banks. They are not emotional about it. They won't dicker with you. They can't. If the number is within their parameters ( and who knows what they will take off the asking price this month) then they will accept. If not, they won't. Don't think that you are going to bargain with them. I have written many contracts with foreclosures for clients who want a deal. It is not happening right now. You would think they would be more anxious, but I have found that they stick to the formula that they started with. Keep an eye on it and in a couple months it will be down to your price of $255,000. Maybe next month try it and see if they will come down. Good luck.
0 votes Thank Flag Link Mon Feb 18, 2008
If the value is there at 250-255,000 and that is where you would like to be, why not go back at 250,000. As a previous agent said, the banks have a lot of foreclosures and no one wants to keep playing the game. If they are not willing to come off of the 270,000 then you need to know because you can't go that high. Then you can move on knowing there was nothing more you could do. I always ask , what is it worth to you? It is a buyers market but don't get hung up and miss something that works for you because they won't negotiate as much as you want them to. Chances are you will pay more for your second choice. I hope it works out for you. Good Luck!
Web Reference: http://www.kimandrenie.com
0 votes Thank Flag Link Sat Feb 16, 2008
Well...they denied the $235 in the past when the house was listed at $305....not $275 as it is now. And they flat out DENIED it...and did not allow the buyers to come back with a counter offer. They are letting us come back with a counter....because it is now listed at a lower price (hence our offer isn't as outrageous as the previous offer.) We don't want to automatically come back to $255 because that is our final, top offer that we can afford and we are afraid that they will just counter again. Our thought process is...we counter at 243...they either accept or counter again...and hopefully meet in the middle around 250....We CANNOT go higher than $255...so we don't want to over extend ourselves with making it our second offer!
0 votes Thank Flag Link Fri Feb 15, 2008
An escalation clause?? Are you working with a Realtor? Based on the information you provided, an escalation clause really does not come into play. Banks are overwhelmed w/ foreclosures, have only so many staff to deal with cases, and are trying to redeem some reasonable portion of the money they loaned on the property. What is this house worth in todays market? You said they declined an offer of $235K in the past. They declined your offer of the same. If you think $255K is a great deal, why don't you go back at $255k and make it your final offer? Nobody wants to keep playing the game.

Good luck!

Teamreed@comcast.net
Web Reference: http://www.teamreed.info
0 votes Thank Flag Link Fri Feb 15, 2008
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