Home Buying in Seattle>Question Details

Amy, Home Buyer in Seattle, WA

How much can I under bid on a house?

Asked by Amy, Seattle, WA Mon Aug 18, 2008

I am looking at a house that is listing at $650K. It just came on the market and is fully updated. The sellers aren't motivated since they still live there and the house just came out on the market. However, they are selling at not the best time, so they must be somewhat motivated. I am wondering what is the lowest initial bid I can offer without being unrealistic.

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15
The true market value for this home may be $650K or could be higher OR lower. You sound like you need the education that a realtor can give you. Your Realtor could look up past sales of similar homes in the area and give you an idea of the true market value for this home today and then you can decide how much you want this particular home and make an offer that you're comfortable with. If you are going to live in this house and make it your home for a few years, a few thousand dollars one way or the other really shouldn't matter. Good Luck---Tom Berg, Windermere, Woodinville Wa
2 votes Thank Flag Link Tue Aug 19, 2008
Amy,

Most of the answers here are from real estate agents. There are some valuable comments and some not so much. First you need to determine the true value of the house based on the recently sold comps. Then offer 10 to 15% less. Remember this is a tough market for sellers. Even for Seattle - believe me. There is a lot of leverage for a genuine buyer. If the seller is willing to negotiate, be firm and do some arm wrestling so you land a better deal. There is a general consensus that if market is headed anywhere in the coming few months, it is in one direction - down. So factor in possible loss of value of your property in the short term.

Now some of the agents here talked about seller being offended in the event of a low ball offer. Who cares if he/she is offended? What you are after is the best deal for yourself. So my advice to you is do some tough barging and chances are you might end up with an incredible deal in some situations. I know people who went down even up to 20% of the fair value. It all depends on how deep the seller is under water.

Try your luck and let us know how it goes. Remember - there are plenty upon plenty of choices out there. Smart sellers and agents do know that. In many cases for them any offer at all is considered great.
1 vote Thank Flag Link Mon Sep 1, 2008
Lowest bid is often about not changing the first number. Anyone listed at 6 something is most offended if the offer number is not 6. That gives you more room to negotiate than if the asking price was $629,000 or $619,000. Not that they will be happy with $600,000, but don't make the mistake of offering $590,000. If your analysis suggest it is worth less than $600,000 then waiting for a price reduction might be better than making an offer of less than $600,000 now.

Time is often a factor. How many showings they are getting. Remember, you are not really negotiating with a seller as much as you are with other potential buyers. If no one else is around to buy the property and your offer is the best they can get, you will be successful...in time.

Last but not least, the answer is not NO until someone else buys it. This is a market where many sellers are looking back at an offer they had in the first 30 days, and wishing they had that same offer back on the table. Don't settle for a house you like less until this one is sold to someone. The seller's no today could become a yes to the same offer in the not too distant future.

It's not over until someone buys it or the seller decides not to sell it at all.
1 vote Thank Flag Link Tue Aug 19, 2008
Amy
You have some great answers so far and all are correct in that offer to asking price depends on how close the asking price is to the realistic selling price. Some homes are a fantastic offer near to full price and other homes are not a good price with as much as 20% under asking price. As suggested an agent will be able to help you with this with other comparable sales. If you are choosing not to hire a buyer's agent you will have to do the research on your own, checking tax records of comparable homes in the same of similar neighborhood, call the buyers to see if the price the property sold for had buyer concessions, ask the buyers the condition of the home, what amenities does the home have that may not be in comparable homes like new roof, heating system, plumbing and electric. If you are getting a loan on the property remember the lender is taking a greater risk that you are and that is why an appraisal is necessary to prove to the lender that the value is there. I always ask my buyers before they decide on an offering price "how will you feel if I come back and the seller will not counter your offer because they are offended and/or there is another offer simultaneously and the seller takes that offer. If they say it doesn't matter than that helps determine their offering price. If this is the house of their dreams then they need to consider that in making their offer. Does this home have something that would be hard to find again? If so, the value may be higher to you than to another buyer. There is always one buyer that will pay a much higher price than any other buyer but they are not always in the marketplace when a particular home goes up for sale. How many homes have you seen before deciding to make an offer on this one. If you have been looking for a long time or have seen many, many homes than you may be one of those buyers who have few homes that meet their needs and if you miss this one then it will be a long time before another home that interests you comes on the market. Good luck.
Mary
1 vote Thank Flag Link Tue Aug 19, 2008
Amy,

I agree with Bryan. Every property is listed under different circumstances. There are plenty of homes listed that are near foreclosure with the very motivated owner still living there - so you really can't tell much by appearances.

Don't base your offer on what you think will insult the seller. Base your offer on what your area-savvy agent tells you is a fair price for the house. Figure out what your "walk-away" price is - (the price that you are absolutely not willing to pay more than with no regrets later) and stick to it. If your walk-away price is way too low, your agent will tell you so that you don't waste your time writing offers that go nowhere. If your walk away price is higher than what your agent thinks the house is worth, then start lower. Remember, if the house is priced aggressively to sell, someone else can get an offer accepted while you are busy waiting for a "good deal" on your dream house! Try not to let something that is already good slip away!

Good luck!
Meredith Laws
Anacortes
Web Reference: http://www.lawscraig.com
1 vote Thank Flag Link Tue Aug 19, 2008
Every home owner has different reasons for moving. Often times you will find that just because a home is new on the market, it may not mean they expect to get full price. In this market sellers generally expect to receive a lower offer then their listing price.

The best thing you can do is have a professional real estate agent get a good sense of the seller’s situation by having him visit with the listing agent.

Unfortunately there is NO magic number of what you could offer. They may want 650K or they may be just fine with a 600K offer. The only way to know is to make the offer you and your agent feel is a fair offer.

One other point, if you are already attached to the home, you have likely given up some of your negotiation ability. Experience has proven that when I work with a buyer that HAS TO HAVE that home, it is very likely that the buyer will not get the best buy on the home they purchase.

Getting a bargain usually takes writing up multiple offers on more than one home.

It is hard to advise precisely what you should offer without knowing the specific home and the area around the home. Add that to not knowing more about the sellers and their needs and anyone here really can only give you some ideas.

I hope this information has helped in some way. Please let us know if you have any other questions.
Web Reference: http://www.homelantern.com
1 vote Thank Flag Link Tue Aug 19, 2008
Don't offer more then 95% of MV (not the asking price), but it really depends Amy. Do you like the house? Are you going to occupy it? If that's the case, don't lose your chance at a really desirable house over a few thousand dollars. 50k might make a difference, but anything less than that is really not such a big deal unless your an investor planning to flip the property As long as your not overpaying for the house, you should feel good about your purchase based on the house, not on your purchase price. Money isn't everything, and in practical terms, anything less than 50k won't make a huge difference if you occupy the property for a long term. True market value for properties are generally low anyways, so you'll probably end up with some profit when you sell. Just focus on buying a home that will make you happy.

If you ARE focused on the numbers, than shop for short sales. You'll easily get a 10-30% discount, but your choices will be VERY limited.
0 votes Thank Flag Link Sat Sep 27, 2008
You need to determine how much they owe. Although that doesn't determine value, someone who doesn't owe much will be more likely to drop their price.

You also need to try to determine whether they've already bought something else. People with two mortgage payments are more likely to cut their price more.

Finally, you need to determine whether they are in foreclosure, and if so, whether you can close more than 20 days prior to the foreclosure date. If not, then walk away. And in any case, have your agent use Form 22-NFW to protect you from the possibility of such a foreclosure situation.
0 votes Thank Flag Link Mon Sep 8, 2008
Amy,

Since we are considered to be in the "age of information" it is expected that we use available data to validate our position. Therefore, offers should when possible, be backed up by information that supports your position.

Access the comps for the most recently sold similar properties in your target area. This should shed some light on where your numbers should be.

To say discount the price by 5, 10, 15 percent would be a good representation of the current market numbers. With access to accurate information we can do much better.

Good luck,
The "Eckler Team"
0 votes Thank Flag Link Sun Aug 31, 2008
Your questionis very broad. It depends on the seller's reason for selling, the time on the market, how much you want the house, whether or not the house is well priced. If the house is well priced based on recent sales and compared to current inventory, it will sell quickl, and is likely to sell at full price. In this market as in every market, the houses that sell within 30 days, sell very close to list price. That is because they comeon the market priced right and the buyers who are in the market know a good value when they see one.

Be aware that what you read in the national media or in the newspapers, does not reflect what is happening in niche markets. The Seattle area in general, with its huge volume of exports and its current mode of adding jobs, is doing comparatively well economically.

As always, the only contracts that close are win - win, and that includes a myriad of scenarios. YOur agent, who is experienced in negotiating can give you advise on what to offer and then where to counter offer, so that you get what you want, the house you want to live in or the property in which you want to invest.
0 votes Thank Flag Link Sun Aug 31, 2008
you should offer the lower of these two: 1. the comps in the area. 2. What the home is worth to you. also, just because the seller is living in home, does not mean they are not motivated.
0 votes Thank Flag Link Wed Aug 20, 2008
Hi Amy. You know, I really love the answers from the other agents in here. I would just add that each home is unique, so we can't really answer your question because we don't know which house you're talking about. Your agent should be able to help you come up with your best offer price.
0 votes Thank Flag Link Wed Aug 20, 2008
Making a bid on a house can be tricky, especially if its new on the market. Use a Realtor and let her do a market analysis on this home, that should give you a reasonable price range to work from. If you bid an unreasonable offer you will insult the seller and than they wont be amiable to work a deal with you.
Also it depends on which part of the country you are living in, some areas have maintained their value through a rocky market, but this is why a good Realtor can guide you in making a good decision on making a bid.
Good Luck
Dianne Mitchell-Satriano
RE/MAX RE Enterprises
Wyckoff, NJ
0 votes Thank Flag Link Tue Aug 19, 2008
Bidding on a house takes some skill. For one, if you plan to under bid then you have to be careful how low you go because you may insult the seller to the point they don't want to give you a chance to give another bid. Also, bidding to low from the asking price may knock you out of the running if there is another buyer right on your tale.

If you are working with an agent have the agent print out some comparables to similar homes in the area that recently sold. This way, you can have an idea of the price range and can put in a bid that the seller may agree to or at least be a starting point.
Web Reference: http://www.KandHhomes.com
0 votes Thank Flag Link Tue Aug 19, 2008
Have you asked your agent to do a market analysis on this home? That will give you a place to start. If a home is over priced, an offer made at a more realistic market value can't really be considered a lowball, although that doesn't mean the seller will see it your way. An experienced agent will know how to get you the best price on this home.
0 votes Thank Flag Link Tue Aug 19, 2008
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