Question Details

Bindu Menon, Home Buyer in Cupertino, CA

Listed price Vs Offer price

Asked by Bindu Menon, Cupertino, CA Tue Feb 26, 2008

I was wondering if anybody on this list could please guide me.
There are some hoems which we really like, however they seem to be beyond our budget. Therefore how much below the listed price can a offered price be. We don't want to sound unreasonable when we make an offer.
Thank you and I look forwardto your response

Help the community by answering this question:

Answers

8
Your offer price needs to be based upon comps that have validity. I fully agree w/ all poster who state the list price need not be your gage. You need not be concerned about sounding unreasonable if your offer has substance to support it. You need a quality offer (you are qualified, have a preapproval and can fulill the contract terms reflected in the your offer) and the offer you make should be supported by comps and recent market trends.

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.
1 vote Thank Flag Link Tue Feb 26, 2008
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
Good post Don Tepper,

Knowing the comps is very important, but walking through and actually seeing and feeling the comps is ~~ priceless.

-
1 vote Thank Flag Link Tue Feb 26, 2008
Bindu....

Ask you realtor to do comps for you so you can determine what the market value is on the property. When making an offer that is the most prudent way to price the property.
0 votes Thank Flag Link Tue Feb 26, 2008
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
Contact
Bindu -

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.

Good luck,
CJ
0 votes Thank Flag Link Tue Feb 26, 2008
All agents use comps( homes of similar age, location,etc. ) to determine what a home should be priced for. Comps are homes which have already sold. Therefore, the price is usually very close to what the seller will take. On the other hand, depending on the reason a person is selling their home, a lower offer may be considered. We all want to pay as little as possible for anything we buy, but when you say all the homes you really like are priced above what you can afford, I would wonder why your buyers agent is showing you these homes. And if you are not using an agent, I would advise you to contact one so you will be seeing all homes in your price range. Agents are your friend and will do all they can to help. We also have resources available to search for you that you may not know about. Give it a try and hope this helps.
0 votes Thank Flag Link Tue Feb 26, 2008
The best place to start is with a good , educated agent that knows the market. Here in Cal. days on market has alot to do with how far under list price to go. I don't show my clients anything over 10K above there purchase price. Than I offer 10K less on the top list homes. But that is in my market. If you would like to be referred to a GMAC Professional in your area contact me and I will produce a referral. Cheril
0 votes Thank Flag Link Tue Feb 26, 2008
Here are a few things to keep in mind. First, do not worry about "sounding unreasonable" when you're making an offer. The seller can either accept the offer, reject it, or make a counteroffer. And what one seller will consider unreasonable, another will consider reasonable. You're not a mind reader; I'm not a mind reader. I have no idea what a seller considers reasonable, nor do you. You should make an offer based on what you can afford, based on the value of the house to you (if you love it, you might offer more; if you're ambivalent about it, you'd probably offer less), while at least taking into consideration what the comps are. So, yes, if all the comps are coming in around $500,000, an offer of $250,000 would strike most sellers as unreasonable. But I'm not going to try and guess whether the seller would consider $500,000 unreasonable, or $475,000, or $450,000, or $425,000.

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.
0 votes Thank Flag Link Tue Feb 26, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
What kind of prices are you looking at, and what is it you would like to offer? My listing prices are always very close to the selling prices because I don't take overpriced listings. You ought to get your own buyer's agent to guide you by educating you about the market you are looking in. The first thing you must do is learn what IS a good price in your area.
0 votes Thank Flag Link Tue Feb 26, 2008
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer