tman, the snotty little "poke" at the end (someday you'll make an average employee...) really takes the air out of your otherwise excellent response... Totally unnecessary.
Take the lowest number--value of the house, what you can afford, what you can qualify for--and this becomes your MAO (maximum allowable offer). You should spend no more than that. Your actual offer depends on multiple factors--what the house is priced at, what your MAO is, what the spread is, your desire for the property, etc.
One tip: In America, people who negotiate tend to "want to be fair." And that often means "splitting the difference." It's a lousy way of negotiating, but it's frequently done. So, let's say your desired property is priced at $500,000. Your MAO is $475,000. If you bid $450,000, and the seller chooses to counter, there's some likelihood that the final price will end up around $475,000. So you might decide to make an offer at slightly under $450,000. Or more under $450,000. That's up to you. And if the seller is insulted, so what?
Hope that helps.
I encourage my sellers to respond to all offers. Having represented both buyers and sellers i truly believe that it is better to start a negotiating process than none, even if it is from a lower price point. Hope this help you and good luck!
Don't you just love it..? .l.o.l..
" If there are other reasons to why you NEED the price discounted "
Translation: I'm really a poor negotiator and I'm not accustomed to buyers even haggling over the price - I'm an order taker.
Other than Nico saving thousands of dollars in interest and lowering his payments by a few hundred dollars a month -- no NEED.
First off .. "buyers market" is a general term, what goes on in Washington versus Detroit is a huge spread .. also once you've narrowed it down into your preferred area there can be a huge spread between this house and houses 1.2 miles away.
That said ... if you've really done your homework, studied the market for the last 4/5 months and not firing blanks, then 20% is a good starting figure .... the issue is, getting the sellers agent to present the offer correctly without the Little Lord Fauntleroy attitude - and in person.
Keep in mind ..... buying and selling real estate is structured in one of the worst forms of communication on the planet, thats because it's all done 3rd party - no face to face ... ... you tell your agent, agent writes offer, agent calls/fax offer to sellers agent, sellers agent calls/fax to buyer -- and then you have to rely on an agent that you don't know and probably a worse negotiator than the one who's been driving you around .. (not all) but most are very weak.
A good negotiator will always come back with a counter, even if it's five dollars, keeping the ball in play is what it's all about ... see, it's much easier to convince "you" of a price.
If you feel a little insecure about the early negotiations, have the agents make an appointment with the seller, everyone is there - and do them yourself ... you would be truly amazed on how much backwater can be removed when you don't have a translator speaking for you ..
Good luck and happy hunting.!
I live in the worst part of "bubble country", the SF Bay area, where average homes went from 300k in 1999 to 1.2-4MM in 2007. Does this make sense? No.
So what is happening now? I see average homes(built in 1960's, 2300 sqft with minor updating, but still a dump to the rest of the country) in nice neighborhoods priced at 1.3MM sitting around without a price reduction, slowly being reduced 50-100k every month or being taken off the market. Well...if you put 20% down on that house at full asking price you will have lost your downpayment and be upside down on your mortgage. And to add insult to injury, chances are you will have financed this house with an I/O jumbo ARM.
This will leave you feeling poor and desperate for the next 10 or so years while the seller walked away with a 500k-1MM profit, depending on when he bought the house, thanks to your politeness and not wanting to insult the seller.
Do you really think the seller cares if you he insulted you??? Doubtful.
Offers are the residual of interest ... no offers, no interest ... no interest and they'll sit there for 4/6/15 months.
Like Sean just mentioned "I don't think any seller who is receiving an offer in a buyer's market should be insulted" .....
Not to worry, you'll make somebody an average employee someday ...
The price range also plays a role... Your best bet is for your Realtor to do a market analysis on the home you like and that will tell you how much other similar homes in the neighborhood have recently sold for so you can decide on how much to offer.
No offers, no sale.
In our area, once a home has found it's 'sweet spot' in terms of price (after, typically, many reductions) we are seeing an average of 95%-97% list to sale price difference at closing. (Bellingham/98229 sales since 11/07)
Is this remarkable? I don't think so. There is simply so much information available to buyers these days, that they can spot a deal a mile away, and in our area, they are willing to pay for those deals without trying to go deeper with the seller.
This could be unique to our area. We are not encumbered by over-built subdivisions, and our city and community value the natural qualities of our area over growth. (very anti-sprawl) Because of this, many of our communities have been more insulated than many other markets around the nation. (Although, we have pockets in the market that are experiencing a much different reality.)
Hope this helps!
Mimi Osterdahl / The Muljat Group Realtors / Bellingham, Washington / http://www.LiveGoodBeHappy.com
2008 President, Northwest Washington Women's Council of Realtors
To be fair look at the recent comps for the area and base your offer on that without worrying about insulting any one. If you really, really want the home, make an offer that is fair to both the seller and you........WIN, WIN!
The "Eckler Team"
Century 21 Almar & Associates
Venice, Fl 34285