If you want to make a "serious offer,' you need to work with a professional in order to give you the data to make that serious offer.
Know the condition of the property, as well as the most recent sale prices of homes that are similar and in the closest proximity. Also know that you need to understand sale transactions that are sold in arms length. Some are not.
Although the internet is a good place to start your research, know that it is obvious that sometimes we can not totally rely upon that information. Just as we can not totally rely on the words of the media. It is too general.
Each and every market is different, even if the general or whole appearance is labeled as being a "Buyers Market." Locally, each and every township or subdivision can and will be different. What appears to be a "Buyers Market" could very well be a "Sellers Market" in a "Very Specific Area."
Most importantly, speak to experts in your specific area,.
My best suggestion would be to ask the REALTOR you are working with for a detailed report of the specific area that you are interestedin, along with the current market conditions.
(ANSWER)... The more knowledge you have, the better the offer.
As you know, this is a buyer's market. So you can really make any offer you'd like. There is no set rule of thumb, and every city and even neighborhood will have a different set of statistics. But for Volusia County Florida, my sales for the last 6 months sold for an average of 9.26% off the purchase price. Bearing in mind that negotiations occurred, you would make an offer for less than that and end up around that percentage.
Wendy Taylor, CRS, GRI
deasy/penner & partners
150 South Rodeo Drive
Beverly Hills, CA 90212
If this is the case w/ the seller of this property, there may be little you can do about it at this time. A seller comes to acceptance of market data on their schedule, not yours. Your choice is to either meet their expectation, or move on. Keep in mind that a lender must also agree w/ the numbers or financing will not be approved for the property.
First, I have not read the responses below, so I may be repeating or in conflict with what other pros are saying.
However, the reality is sometimes the whole world of CMAs will not do any good if the seller is not willing to sell for the price you are offering; especially if the seller has a good reason for that - for example, a unique place in a very desirable neighborhood.
There is also seller motivation involved; and I am not saying whether it's right or wrong, all depends on the situation. If they are not in any hurry, they just might be willing to wait for that 'one pefect' buyer to show up; and if not, they will accept a lower offer.
In real estate, numbers is one thing, the other big part is the emotional value of a property to a person; whether it's seller or buyers. As agents, we can show tons of CMAs and explain them all alway to buyers or sellers, but if they don't want to do it, they won't.
The question to you is, knowing the seller is not willing to sell close to the new asking price, how attached are you to the property?
Do you think you will be fine if you lose the property tomorrow to somebody else who is willling to pay for this 'overpriced' home or will you regret for a long time if you lose the proeprty because of this $XX you are not willing to part?
If you are fine with losing the property unless you get it at the 'fair' price in your mind, they go ahead and wait. If the price is close enough and you will regret losing it, then you might to seriously consider your agent's advise.
Let me know what you think.
My agent did provide me with the market comps & that's where I got my idea that the property is overpriced. The comps have sold about $380 per sq foot & this house is $420 a sq foot. My offer was under the $380 a sq foot but I thought they'd counter & I'd offer more to be competitive with what else has sold recently. With their $20k deduction, we are closer in price but I don't want to "insult" them with another offer too low nor do I want to leave any money on the table.
Other noteworthy items may be, it's be on the market a little over 60 days, it is vacant but the sellers are local & there is probably about $20k in upgrades/remoding that is needed.
Thanks again for the help. I find all of the responses very informative!
Christine ... the 1st time homebuyer :)
You said, "Sellers didn't even respond." Does your agent have documented proof that the sellers ever saw the offer? Did your agent present your offer in person or was it faxed? The sellers have already lowered the price by 20K, but what dollar amount is 10% of the listed price?
There are many factors that your Realtor will consider while conducting research to suggest an offer that you make on a house (remember, YOU are the one who will agree a price to offer, not the agent). Some of these factors include finding out how long the house has been listed, finding whether this is the house's first listing, seeing how much the current owner bought the house for, finding out the upgrades the current owners have made to the house since they bought it, the overall real estate environment for your area, etc.
The fact that the owner's of the house have already dropped the price by $20,000 certainly shows that they are willing to negotiate, so that is a good sign.
Ask your agent for a CMA (comparative marketing analysis) to help you determine a good offer to make.
If that is the case, there may be stipulations that the listing agent is not divulging for privacy reasons. If that is the case, the bank may not be willing to accept an offer for less than the amount owed until the property is actually REO. This may be why you have not heard back on your offer.
I would check with your Realtor to see if he/she has heard back from the listing agent. If the offer had to have bank approval, the buyerâ€™s agent should be in contact with the listing agent to see where everything is in the process. Bank approvals on pre-foreclosure properties often take longer than expected.
You are right I am not sure as I do not know comps (if there any recent sales less than six months old) or anything else but if they wanted to make a deal the selling agent would have made the seller reply even with a counter at $10k below asking which is the first price reduction. I just went through the process with a seller that needed to sell (empty house and 2 escrow that did not close) and I am in contract at 28% below last asking price (after a 11 counters) and at 30% less per sq ft from the last comps. I heard so many agents including mine recite comps that were a year or older, especially since transactions have become nonexisitent this past summer.
The buying and the selling agent need to talk and figure out how to make this work and not waste time. That is the only way to get this done efficiently. Also now that the buying agent knows what this buyer really responds to then they should get to to work and find a similiar floorplan to show them. Unless the house was custom there will other homes int he area to look at, even if it means knocking on doors. Time to get to work!
Thanks for asking this question. When seller's price their home, the general rule of thumb is that they price they ask truly is the one that they want/hope/believe their home is worth.
When you are looking to purchase a home, I agree that the first thing that your Realtor needs to do for you is run a CMA (Comparative Market Analysis) on the desired property to see if the pricing that the seller's want is in line with what the market is doing.
If the CMA shows that the home is priced appropriately, then asking for a 10% markdown is truly out of line. If the CMA shows that the home is inappropriately priced then you need/should submit the information you used to determine appropriate pricing when you send in your offer. It is one thing to say "This is what I want to pay" and quite another to show that "This is what the market says I should be paying."
In your case, it appears that the market is indeed speaking to these sellers by the fact that the property has had price reductions and is still available so your making a market appropriate offer (and your 10% reduction on the original list price may indeed have been just that - without the facts in front of me I can't evaluate your situation).
Ask your agent to run a CMA that takes into consideration the variances in value that can be attributed to the unique nature of neighborhoods in that area. I lived in your neck of the woods for a considerable length of time before my marriage so I am quite aware that all Spauldings, Genesees and Fairfax's are not created equally and don't even get me started on poor Santa Monica Bl., but I digress...
Ask your agent to run the CMA and then use that to support your offer and you may indeed have better luck and won't feel that you have left anything on the table except the varnish :-)
Take care, good luck and have a wonderful day!
Tisza Major-Posner, Realtor, Keller Williams (909) 837-8922
So How do you find the "RULE OF THUMB?"
Well, you need to do a comparative market analysis on the home and the neighborhood in general. You should know the price per square foot, what is the average discount given by the sellers (this can not be found without MLS access) including closing costs and overall discount (depending on your state), you should also notice trends based on Days on Market and Market Swings.
For example, if your home is $500K, but based on Square footage it should be at $490K ... THEN .. you discover that most sellers in this neighborhood are paying 3% for closing costs AND Discounting their home by another whole 1% .... THEN you discover that homes that have sat on the market for more than 90 days will discount on average another 1% ... THEN you discover that the seller has a 50% equity position on their mortgage based on the tax records AND that during the months of November and December that sellers will give another 1% if they have a solid contract but closes right after Christmas ... THEN YOU HAVE YOUR OFFER!
Gee that's almost 10% discount.... hmmm have we found a rule of thumb... sort of.
So, the Rule of Thumb is this -> Do your research to find out the trends, then start low and work on the seller. There's a win/win solution out there for you both, a good Realtor will help you maximize your terms and the price also.
If you don't have an agent that is looking this much in-depth into the situation, you might consider hiring a PROFESSIONAL.
Go ahead, get the selling and asking prices for the past year in your area and check it out. I think the ratio is now on the low end of 94% for selling/asking, but over the long run it's accurate -- at least here.
In LA, houses can be overpriced, underpriced, or priced just right, but the only way to tell is to take a few hours and really study the comps. Ask your agent to help you with this.
You are right I am not sure as I do not know comps (if there any recent sales less than six months old) or anything else but if they wanted to make a deal the selling agent would have made the seller reply even with a counter at $10k below asking which is the first price reduction.
You can't MAKE a seller reply. I've had sellers not counter.
Then get a list of all comps that actually sold.
This gives you the perspective of the appraiser.
In your offer, you should say the appraisal should be the same or more than the offer...just like the bank will probably demand.
Have your thoughts based on the facts/actual solds....if you are still not sure, check the assessors office to see what sold and for how much.