You made a statement that the houses you like are above your budget. Does that mean that the comps support near or at the ask price, but you simply cannot afford it? If so, you might find yourself set up for many rejections and disappointments. Unless a seller is highly motivated, a seller will not sell drastically below marekt value. It does happen, but its more akin to finding a needle in a haystack. If your goal is to find the needle in a haystack - the seller willing to sell substantially below market value....you will need to broaden your flexibility about the properties. Some Realtors may find the search for a needle in a haystack too time consuming or non-productive. But, there are Realtors out there who will work with you. It will be best for you and the Realtor if you are upfront about your objectives.
If you find a property you like, and the comps supprt a price substantially less than the seller is asking, you should not hesistate to structure your offer accordingly. A confident buyer agent will prepare a CMA to support your offer, and even present it in person to the seller (with the lisitng agent present).
A strong buyers agent will know the inventory and be able to support your offer in discussions and negotiations. In addition to comps, a strong buyers agent will be able to discuss inventory levels, buyer acitvity, and how those trends are affecting your marketplace.
Best of luck.....and don't hesitate in writing an offer based upon what the market data supports.
T-man is spot on. If you have walked through the active listings, looked at comps for the area, studied the stats of "values over time" for the neighborhood, you will know the best price to offer. It doesn't really matter how that relates to the list. Unfortunately, there are many homes on the market that are priced in a way that is not reflective of the market or the current value of the home.
I pulled the stats the other day for West San Jose /Cupertino and there has been a 63% drop in total sales volume compared to last year this time. That means, there are not that many buyers and sellers that have to sell, must look at all offers. If you love the home, check out the numbers, walk through the comparisons, and make sure your agent is presenting all the information he/she can on the value of this home.
And if you do "sound unreasonable," so what?
There are statistics out there, by market, on sales price as a percentage of list price. They'll vary, but often will be in the 92%-95% range. But that doesn't mean a thing. It doesn't reflect the original list price. Someone starts out at $600,000...drops the price to $500,000 over a 6 month period, then sells for $475,000. Did it sell for 95% of list? Technically, yes. Practically, no. Or...does the selling price reflect seller subsidy? Depending on the loan program and permissible limits, sellers sometimes are "kicking in" 3% or more to the buyer. So the $500,000 house sells for $475,000...but there was a $12,000 seller subsidy. Now we have a house that started off at $600,000 that someone actually bought for $463,000. Furthermore, those "95%" figures are averages. Some houses may have sold for 100% of the asking price. Others sold for 90% or less.
I do agree with JR that you need to know what the comps are, what the good prices are. Realistically, if you offer 60% of what comps suggest the property is worth, you'll probably get pretty frustrated by the rejections. Still, I'd suggest using those figures as the ceiling price you offer. You don't want to overpay, especially in this market. So, know what the prices are, know what you can afford, determine how much you want the house, and then determine your offer.
Hope that helps.