Property Q&A in 03801>Question Details

John Cottom, Home Buyer in San Francisco, CA

What price would you propose if you were going to place an offer on this property? 15% below asking?

Asked by John Cottom, San Francisco, CA Sat Jan 17, 2009

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This question is about this property: http://www.trulia.com/property/1048461621-149-Odiorne-Point-…

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6
John,

You have to look at properties on an individual basis. What is heard on the nightly news and posted in national papers & magazines does not ring true for all markets. Some local areas have maintained their values while others have dropped 20% or more and there are markets nationally which have lost 50% of their values where foreclosures make up more than 70% of the market--fortunately that hasn't happened locally. Another thing to consider is that because some values have dropped drastically, some agents and sellers have taken that into account in their pricing (while others have not). It becomes an issue of lets compare apples to apples. Your agent should sit down with you, look at the comparable homes which have sold locally and then either discount or increase an offer price based on those other sales. Hopefully what happened when the listing agent listed the property was that they did the same thing and the price the listing agent and your agent should come up with are very close. That's not to say there aren't overpriced listings in the market right now (roughly 80%) it just means a blanket question of do you feel offering 15% below asking is a gray area. There are several other factors to consider when coming up with an offering price which I share with my clients, but I think this gives you a better understanding of what would be considered a reasonable offer vs possibly alienating a seller.

Joshua Matthews, Licensed Realtor in NH & ME
Director, Strafford County Board of Realtors
Keller Williams Coastal Realty
501 Islington St #2, Portsmouth NH 03801
(603) 781-4030 Cell
0 votes Thank Flag Link Thu Jan 22, 2009
john your best option when making an offer is to find the value of the home in todays market. then base your offer on that instead of a blind percentage. You dont know what they based their listing [pirce on so you dont know what percentage it is in relation to the actual value of the home. It could be priced way above todyas value if they owe to much or could be priced way below and meant to sell fast. A good buyer broker can asist you in providing you with listing sheets of comparable sold properties to obtain this value. i hope this helps and as always please feel free to email me with any further questions or if you need assistance. good luck with your search.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Mon Jan 19, 2009
Hi John,

You ask "What price would you propose if you were going to place an offer on this property? 15% below asking?"

I am getting the feeling that you don't have a "Buyer Agent" to discuss this with. That would be a good start, find an agent you trust and ask him or her that same question. I have been in the real estate business for 20+ years and every deal is different, every motivation is different (buyer and seller), and so I don't think you are asking what is the right price, but rather what is the lowest price I might think would be acceptable to the seller...

So, again, I am unaware of the sellers motivation. But I know the selling agent to be a good Realtor, meaning that the house is probably priced to sell. All that being said, properties are not selling quickly in this market. What helps them sell is a low price.

So you need to ask yourself, how high would you go for this one? Then determine the difference between the asking price and your top dollar. Subtract that amount from your top dollar, round it off and start there. So if you are willing to go to $750K, and can show financing ready to go, then do this: Take their asking $825, subtract your $750 (top dollar) and you get $75K. Then subtract $75K from your top dollar, getting $675. Offer $675 as is, quick close, no contingencies except financing which is already in place. When they counter, increase your offer, and add in your contingencies (home inspection, oil in tank conveys, maybe a house still to sell etc...) You may go back and forth a couple of times, each time splitting the difference, until you both arrive at $750K. You are not wasting the sellers time if you are genuinely anxious to buy the house. Just don't kick tires in this market, you will quickly become persona non grata.

Good luck,

Dane Hahn
0 votes Thank Flag Link Sat Jan 17, 2009
It's hard to answer this question without more details.

Also keep in mind that this is a luxury home; luxury home values haven't declined as much or as fast as the low to mid range home values--outside of CA, FL, AZ, and NV--at least in many of the markets that I actively track. However, there are some indications that this might change relatively soon--the operative word is "relatively".

Do (or order) a CMA, and get an inspection/appraisal to determine the current market value of the property. Regardless of the value for which this house has been assessed, 15% might not be enough of a deduction if the property has various issues (ie a bad foundation, environmental issues, water damage, bad plumbing, bad/outdated wiring, etc).

Also keep in mind that many luxury home sellers feel they can wait out this storm, so don't be surprised if you get bad or no feedback as a result of having made that offer. Nevertheless, if you've determined that's the offer you'd like to make, then go for it and present your offer.
0 votes Thank Flag Link Sat Jan 17, 2009
Hi John, without having been there it is tough to tell. The house is assessed for $890,000 or so and they were asking in the low nines to start. The average sales price to list price in the past year came in at 96%. If you offer too low, I suspect at this point at least, you'd be insulting the seller---however, a good buyer's agent should be able to direct you on what approach to take....
0 votes Thank Flag Link Sat Jan 17, 2009
I would not go that low. I would seek the advise of my buyer agent and ask him/her to review with me the sold homes and offer suggestions as to stragedy on offer pricing.
Web Reference: http://www.justlistednh.com
0 votes Thank Flag Link Sat Jan 17, 2009
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