First Time Home Buyer Seeking advice on Negotiation

Asked by ATHomeBuyer, Long Beach, CA Sat Nov 24, 2007

I am in the process of searching for a condo in the Signal Hill,CA area. I was able to find one today for about 289k. I think it is priced too high and I would like to make an offer but I am not sure how much I can low-ball so that I can get the best deal. Any thoughts on this???

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Francesca Pa…, , Monmouth Cty NJ
Sat Nov 24, 2007

Before you even begin to negotiate this property, ask the following questions.

(1) Do you have a seller's disclosure (a signed legal, binding document wherein they attest to any known latent or material defects in or around the property)?

(2) What are the association and working capital fees due at the time of closing?

(3) What are the monthly maintenance fees?

(4) If this property was built prior to 1978, do they have the legal, binding "lead based paint" documentation? and the required informational brochure for you to read.

You can certainly find ways on the net to determine the fairness of the price. However, it is a realtor who is familiar with the area (the existing inventory both interior and exterior) that can give u the most accurate assessment.

Relying on an attorney to get this info will cost you extra in attorneys fees. And if you haven't recognized any obvious items beyond their useful life (furnace, water heater), it will cost you a home inspection fee of $300 to $500 to get those answers . . . I just had a friend go FSBO on me and in the end it cost her extra attorneys fees and the cost of the home inspection to realize it wasn't worth it.

While I believe this site is about sharing information rather than saying get a realtor, get a realtor . . . I honestly feel you would be better served in this case by using a realtor. In the end, you may just wind up saving money!
2 votes
Christopher…, Agent, Hemet, CA
Sat Nov 24, 2007
Hire an agent to represent you and provide this advice directly. As a first time buyer, attempting to do this on your own may be a serious mistake. Especially in the Long Beach area where 1 street can make a world of difference in the future value of your investment. The same holds true for most areas and would be a hard lesson to learn on your own. Find a great agent and stick with them. It may be one of the most important decisions you make. Good luck to you in any case.
2 votes
Sylvia Barry,…, Agent, Marin, CA
Sat Nov 24, 2007

Congrats on your big first step of owning a home in CA.

Sounds like you have done some research before finding this home and you also have some ideas about how much the house is worth, which is lower than the asking price.

Unfortunately, negotiating on a contract is very specific to the property you have in mind and there is almost an art form when doing so;; it also depends on the interaction, feedback and general feeling during negotiation to determine the best approach to do so - I am not trying to be elusive, but one size does not fit all, especially in real estate transactions.

Which brings up the fact that it is best for you to be represented by a buyers agent, who will help you withe comparable of the homes on the market, whether the property is priced right or too high, whether there are equity in the house to work with, whether this is a seller (weak, strong, medium), balanced, or buyers market (opposite of the sellers) and where the local market is heading in the coming months, what the local buyers are looking for (whether this is a hot property or not), etc. The negotiation does not stop here, once you get into escrow, there is a whole new set of negotiations shall there be repairs required for the property.

Having an agent as a middle person also softens the negotiation stage - we are trained and experienced to negotiate the best deals for our clients. This is a a great advantage for you when dealing with the emotional aspect of selling a home for what the sellers perceived as not such a great price.

And yes, the sellers will be paying the commission (actually it is a predetermined amount for whoever that brings a buyer for the house), so there will be out of pocket agent fee for you.

Callifornia being a pro consumer state, there are regulations, disclosures and advisories of which trained Realtors will make sure our clients do receive those - condo has it's own set of disclosures, CC&R and statements which are required - Added benefits for you.

Since you are very close to making an offer, if you need referrals, I am sure one of us can help.

1 vote
Lorie Gould, Agent, Duluth, GA
Sat Nov 24, 2007
Congratulations on being a first time home buyer! It sounds like you are not utilizing a buyers representative, is this correct? It is a free service for you. I would recommend that you utilize a buyers agent especially because you are a first time home buyer and also because condos need many stipulations within the contract to protect you so that you are not broadsided with unseen expenses. Condominium associations are very important to check out and an agent knows what to look for and what to ask. They know how to protect you.

With that being said. Lets talk about asking price. Whether you think it is priced right or too high, you want to do your research. You want to look at the condos within the building that have sold within the past 2 months and those that are currenty under contract. How do these compare in location in building including floor level, size, and condition? There is a difference in cost per level on a mid-rise or high rise building. The higher the unit the higher the price. If your market is declining, you will want to look at the trend this year. How much has it dropped per month so that you can make the proper deductions to your comparables. In a strong buyers market you will want to purchase this unit for less than those that have recently sold. A buyers agent can really help guide you with your numbers not to mention gather all the data and dissect it for you. They can also dig to find out the sellers urgency and desperaton or lack there of.

Do not think low-ball and do not put too much thought into what they are asking because a seller can list without any support in price. Put your energy into the comparable mentioned above and you will know what the price right to offer and what the right price to pay for the unit is. As long as your offer is supported you will not warrant an offended seller. Keep in mind this is a tough market for sellers... support your offer and be sure to pay compliments to their home. Knocking down a home to get a better price does not sit well with most sellers. Make them want to sell to you...they will negotiate more!

Best of Luck!
1 vote
Alex Montelo…, Agent, Seal Beach, CA
Fri Feb 6, 2015
I realize that this post is old. I am going to chime in anyways. You should really work with a Realtor in your area. Advice from a Realtor that is familiar with the latest market trends in the area is invaluable. Especially when using an Realtor on a purchase. The cost to you is nothing. Have someone work with you and guide you through the home buying process.

Best of luck,

Alex Montelongo/Broker
Coldwel Banker Star Realty
562-810-7387 Cell
BRE Lic #01456982
0 votes
Julia Huntsm…, Agent, Long Beach, CA
Tue Nov 25, 2008
Hello, Are you still searching for a condo in Signal Hill? Please feel free to continue your search on my website below. It's important to know about the homeowner association as well as the condo, I can give you more help on what the lender will want to know, and what disclosures you should expect to receive, about the HOA and the condo. In the meantime, please feel free to contact me.
Julia Huntsman
Broker Associate
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0 votes
Melinda Elmer, Agent, Long Beach, CA
Wed Oct 29, 2008
The best bet is to follow much of the other advice provided. Make sure you are working with a professional agent, who is experienced, who can help you review comparable condos, market trends and all the information you need to decide on a good price that YOU feel comfortable with. Also, you can view other comparable properties as well to determine if you are getting a good value. If it's a fixer, you can also get help determining the cost to repair items as well, as those are some of the "hidden costs" of getting deals. And it's VERY important to find out what you can about the Home Owner's association. Make sure when you get the CCRs and everything you read all of them, so that you know what it is you are buying and don't be afraid to ask questions if you don't understand something.
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Don Tepper, Agent, Burke, VA
Wed Dec 19, 2007
Lots of good advice here. Best to use a Realtor...know the comps...know the condition of the property, etc. And, as pointed out below, "low balling" won't necessarily get you the "best" deal. However, let me add a bit more to the mix.

You won't be absolutely able to determine the seller's bottom line, but in order to get the lowest price (which, as noted, may not be the "best" deal), you need to know as much as you can about the seller and his/her situation and motivation. So, in addition to the information presented below, find out what the seller paid for the condo. Now, he/she may have refinanced, but...if the seller paid $260,000 for the condo, it's fairly likely that that's the seller's bottom line, net, even if pretty seriously motivated. You build in the Realtor's commission, and there probably isn't too much seller wiggle room. On the other hand, if the seller paid $80,000 for the condo 10 years ago, then there's a lot more downside potential and a lower offer might be more readily accepted.

How eager is the seller to sell? Again, it's impossible to tell for sure. The agent representing the seller isn't supposed to reveal that sort of information unless the seller has authorized it. But it doesn't hurt to ask why the seller is selling. And that can reveal degree of motivation. "Well, he'd like a larger unit so he can have a computer room" is quite different from, "His company relocated, and now he's got a 2-hour commute each way, so he's looking for something closer to work." The more motivated the seller, the better deal you probably can cut.

Most agents will advise you not to offer too low a price because the seller may be insulted and won't even counter. That's true. On the other hand, investors have no problem making really low offers, knowing that most won't be accepted. I know you're not an investor, but if you're really looking for the best price, after taking all the advice here from everyone into consideration, make an offer that works for you.

Hope that helps.
0 votes
Fred Dawson, , San Pedro, Long Beach
Tue Dec 11, 2007
Great job locating a property that you want to write an offer on. If you're working with an agent they should provide you with enough empirical data to make an educated decision for the pricing of the property, this will allow you to make an offer that's beneficial to all parties involved in the transaction. If you have any further questions you can give me a call or send me an email.
Fred Dawson, Realtor
First Team Real Estate
(310) 678-3247
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0 votes
Douglas Moore, , 94598
Sat Nov 24, 2007
You must find a realtor who can walk and talk you through the use of seller credits. That one tactic will save you lots of money and leave the seller better off from not giving up too much on the price... this is a critical tactice that you must go learn more about so get to work and find a good realtor who can help you.
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