Is there any point to offering less than the low end of a seller's asking range?

Asked by Derek, 92103 Wed Jan 2, 2008

There is a nearly 400k range (!) in asking price for the property I'm interested in and it's been on the market for >1 month now. I have read the advice to check the recent sales in the area to gauge the reasonable-ness of my offer, but nothing has really been sold in the area for almost 6 months. Will the seller be insulted (and refuse to deal with me again) if I give him/her an offer below the lowest asking price?

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19
Melanie Nard…, , San Francisco, CA
Wed Jan 2, 2008
BEST ANSWER
It is certainly more difficult to determine an appropriate price when there haven't been any recent sales. I don't think that a seller would be adverse to a reasonable offer -- even with a wide range of $400,000 -- the property could be slightly over priced for the marketplace given that it's been on the market for awhile, although a month is not that long. You could gauge your offer against the 6 month comparable -- it's the only one you have and appreciation has been flat or declining since then -- and calculate the $ per sq foot to base your offer on this property. A seller would most likely not consider you serious if you offered say 50% their lowest range, but I think if you're 1-5% below that may be a reasonable offer.
I'm with Don in finding a buyer's agent to help you craft a successful offer and also do a little more research for you. Feel free to email me at melanie@condocontessa.com -- I have several agents I know in San Diego that you could interview.
0 votes
J R, , New York, NY
Mon Jan 7, 2008
#1.) make sure you meet the seller (more than once) .. and it doesn't hurt your process if you just happen to be in the "neighborhood" for a second or 3rd look without the realtor, you'd be amazed what a seller will tell you about his family, job situation and point out all the niceties of the house ..... ever notice the vast majority of sellers sell to buyers they like.?
~~~~~~~~~~~~~~~~~
Ever notice that sellers (and buyers both!) tend to disclose waaaaay to much about their financial situation when they talk to each other, even with the agent present? I'm sure other agents here have noticed that. I certainly have.
3 votes
Betsie Taber, Agent, Lakewood Ranch, FL
Mon Jan 7, 2008
Ever heard of market price? This is the price that the market is willing to pay for a given product. Just ignore the range and bid what you are willing to pay for the place. The seller should not be offended by the fact that you are making an offer. At least you are making an offer and letting them know the bottom value of their property. What you are actually saying to them is "Mr and Mrs Seller, I am pleased to let you know that in my eyes your property is worth at least X dollars and I am willing to buy it for this price". Offer them to counter if they are not satisfied with what you presented to them. You might want to remind them that many sellers nowadays feel like slapping themselves silly for not accepting offers that were made 6 months ago. They would love to get that "ridiculous" offer back but unfortunately for them, the buyers are already long gone. It's always a good idea to do some homework and find out the monthly costs of carrying a property. If you can get an idea of what the existing mortgage payments are, what the various taxes and local fees are and what their utility payments are, you should be able to point out how much it will cost them to carry the property each and every month. Knowledge is power. Use it to your advantage. Good luck.
3 votes
Tman, , 30642
Mon Jan 7, 2008
Never ever be shy ... and never worry about insulting the seller, remember they can only be insulted once..l.o.l..

Believe me, sellers want to sell and buyers want to buy .. it's the folks that get in the way that can demolish a deal.

#1.) make sure you meet the seller (more than once) .. and it doesn't hurt your process if you just happen to be in the "neighborhood" for a second or 3rd look without the realtor, you'd be amazed what a seller will tell you about his family, job situation and point out all the niceties of the house ..... ever notice the vast majority of sellers sell to buyers they like.?

#2.) When it comes to the offer, make sure you're there with all the deciding parties and already have a 2nd and 3rd offer in your mind ... this nonsense of faxing a figure and waiting for a response is absolutely ridiculous, it's your money and your time and it's your future and these realtors work for you .... nothing is worse than a sellers agent calling back 3 days later and saying "I told you so" - how would they know.? they weren't there.

Remember, always keep negotiating with the seller on a daily basis if the first meeting isn't successful .. when you stop negotiating and the communication ends the game starts all over again.



Good luck.!
2 votes
Cindy Greenw…, , San Diego, CA
Sat Jan 12, 2008
Derek, I should also ad that you are attempting to purchase a home in one of the most desireable areas of San Diego 92103. If you or your agent has done the homework you should know exactly what the sales price should be. If you're dealing with unrealistic sellers, move on...there will be plenty more homes to chose from in the coming months. Cindy G.
1 vote
Roberta Murp…, Agent, Carlsbad, CA
Sat Jan 12, 2008
Derek:

Your offer may not be what the sellers hope to see, but they should certainly appreciate you making one. I would give it a try and see what happens. I would also try to make the offer as attractive as possible in other ways:

1. Shorten contingency periods.
2. Offer a closing date that meets the needs of the seller.
3. Offer a generous move-out period (a few days to a week?)
4. Consider writing a kind letter justifying your offer.

Good luck!
1 vote
Tman, , 30642
Mon Jan 7, 2008
JR,

That's funny, I've never none anyone I've ever coached to have that problem ... but then again, I'm sure you've seen all kinds of things - real and perceived.
1 vote
J R, , New York, NY
Mon Jan 7, 2008
1 vote
J R, , New York, NY
Mon Jan 7, 2008
Andrew asks: Can someone help me understand the meaning of an asking range?

~~~~~~~~~~~~~~~~~~~~~
Google is your friend! :)
http://www.realtor.org/rmomag.NSF/pages/feat2jan06
1 vote
Tom Swell, , San Diego, CA
Mon Jan 7, 2008
An associate did it this way. She looked over the property, decided she wanted it, but knew she couldn't afford the asking price. She came back to the seller (not the agent) praising the house and the seller's good taste, but suggesting a much lower price. She made it clear that she could do no more and it wasn't a reflection of her opinion of the property. The owner refused politely but firmly. She continued to inquire 2 days later and frequently after that, each time getting to know the seller better. She supported the seller saying that she of all people knew the value of the house. "If you get another offer, take it and I'll be happy for you. But just in case you don't I'd love to be the first on your list at this price." She did try to find resources to buy it and gave honest progress reports to the seller, even though her efforts failed. She asked if the seller would mind if she took another look. It wasn't for the look that she returned, but the opportunity to know the seller better.

After seven weeks and many discussions they agreed upon her price. That was years ago and they are still friends.
1 vote
fredeckert, Agent, San Diego, CA
Wed Jan 2, 2008
Derek,
If you go to http://www.sandicor.com/statistics, you can see the market trend in a particular zipcode. You can go back a few months to check the longer term trend. Often sellers don't realize that in a declining market, they may be turning down offers that they would have accepted, had they known what the market was going to do. I suggest using a cover letter to show the seller why your offer is sound.

Sample-Offer to purchase memorandum-Sample

We are very interested in buying the property at

We are attaching our own appraisal (A), a licensed home inspector’s report (B), a contractor’s estimate of needed repair costs (C) and a market trend analysis summary for the subject property zip code from the San Diego MLS (with support documentation) (D).

We know that there are _______months of inventory in the _________ zip code and an average market time of _____________ (see circled items on #D support documentation). The cost for maintaining this listing will increase over time, so we are willing and able to close in 60 days or less. Our financing is in place (E) and we will provide other information as needed.

We feel that based on the attached information and in this declining market, our offer of _____________________, is fair and reasonable. We do want to purchase this property, so please accept our offer or counter, so we can negotiate further.

Sincerely,


Fred Eckert
Chicago Title
619.507.5688
supmanx@aol.com

Note: Use appropriate portions of this as needed and feel free to modify as necessary.

I can provide you the excel worksheet to use with the MLS statistics. The link below has more statistics and buyer/seller information
1 vote
Cindy Greenw…, , San Diego, CA
Sat Jan 12, 2008
Absolutely. This is a "buyers" market, and you're a viable buyer. Key word "viable". Include with your offer a preapproval letter from your lender proving to the seller that you are "golden:" Try to limit your contingencies to just those that really matter. Make your escrow period as short as you are comfortable with. Be sure your agent presents your offer "strongly". This means that the sellers need to know that you are a solid, serious buyer who will complete the transaction! Just be sure you are such a Buyer! Good Luck. Cindy Greenwald Prudential CA Realty 619/435-0101
0 votes
J R, , New York, NY
Tue Jan 8, 2008
I'm sorry, Tman, I have no idea what you're saying? You've never none anyone you coached to have what problem? What problem and what are you talking about when you say "coached"? If you're talking about me observation that sellers and buyers both talk too much....why would you suggest the buyer get ahold of the seller with out the realtor so that the buyer can "talk to the seller". All of your suggestions, telling the seller they will probably regret turning down this offer, pointing out to them the continuing to make mortgage and tax payment for the next few months etc will cost them more than selling now...what do you think WE do when present an offer? Tell the seller "he wants you to take X" end of conversation. We explain to them that sometimes your first offer is your best offer, you may not GET any other offers for some time, it will cost you more than the difference between you two if you own the house another 3 months.... If the seller doesn't want to hear that from US, do you really think they're going to want to hear it from a stranger who just made an offer that they most likely consider "giving their house away"?
0 votes
Mike Kelly A…, Agent, Santa Rosa, CA
Mon Jan 7, 2008
I can understand Tman suggesting you by-pass the agents in the transaction as he's either naive, unethical or doesn't know the process and legalities of a listing in force on the subject property. But Mr. Swell should. This is the stuff of lawsuits Mr. Swell. I agree with JR, by-passing the agents to the transaction to get a better deal is a FSBO routine which is best left to the FSBO marketplace.
Derek, What is the listed price of the subject property? Is it $2,000,000? Therefore your offer would be in the 20% range in offering price. Not uncommon in this price point at all (of course, depending on your market conditions--don't try this in Pacific Heights in San Francisco or Tiburon in Marvelous Marin County across the Golden Gate Bridge!!) but if the listing price is $800,000--now you're talking 50% off. A harder pill to swallow!!
I would make a larger search area for your comparables. If you've got NO sales for 6 months then I think you're searching a very finite area. Expand your search. If you take the advice of Mr. Swell and Tman and start going directly to the Seller to get the best deal then you risk alienating the Listing Agent and maybe the Seller also. I think a stronger strategy would be to see the property WHEN the Seller is present. But you're there to gain rapport, make a connection with the Seller so when your offer is presented S/HE remembers who you are. I had a client who was a rare book dealer. I showed him a home when the market was red hot and all offers where being "faxed" in and a time for presentation 5 days in the future. My client noted some very rare books in the library where Mr. Seller was seated. I directed my client to chat him up about the books. Turns out he also was a rare book dealer and collector. They hit it off like crazy and I had to drag him out of there! His wife also sat in the kitchen with Mrs. Seller and talked about teenage kids. When I presented the offer via fax I had my buyer send a letter (with photos) of HIS library, teenage kids, etc. Suffice it to say--of the 15 offers received WE got the property! The agent, a friend of mine, said "I don't know what you had on my Sellers but they raved about your Buyers. You got the house for $10,000 less than three other higher priced offers!"
But please-be careful with the strategies of going directly to the Seller. A ticked off listing agent would slam your offer! The Seller may think your actions illegal or unethical. Get a good, hardworking buyer's agent who knows what s/he's doing!!
0 votes
Andrew, Home Buyer, Chicago, IL
Mon Jan 7, 2008
Can someone help me understand the meaning of an asking range? A novice like me would interpret an asking interval as an invitation to bid the minimum number, but not lower, and with no guarantees that the minimum will be accepted (for example if there were multiple bids, or too many contingencies in offer, etc.) Otherwise, the entire idea of an _interval_ makes no sense to me, and even in this case I don't see the point of an upper bound (would they not accept more if the price were bid up beyond max)? Can someone please educate me on what I'm missing, and if putting a range around asking price is common? I don't think I've seen this in my own searching
thanks!
0 votes
J R, , New York, NY
Mon Jan 7, 2008
Tom are you advising the seller to bypass the agent?
0 votes
Team Forss R…, Agent, Temecula, CA
Sun Jan 6, 2008
Bottom line is DO IT!! Don't be shy Derek.

I can't decide if the exclamation point in your post is because the price is too high for the neighborhood or its over your affordibility index . But I will go with the fact that you think its too high for the neighborhood.

Assuming you have already decided on which Realtor you will have represent you, have them pull up the comparables for that home and more importantly, pull up all the cancelled, expired, withdrawan in that neighorhood. Because Don has a very good point, you want to decide before writing the offer if the its just that the sellers in that neighborhood think that a decling market doesn't include them so they are steadfast on 2004 prices, or that the neighborhood is so great that no one ever puts their house up for sale.

Have your agent figure that out first and go in educated. A house is only worth what is buying is willing to pay for it or what two parties agree to exchange it anyway.

If homes are expiring or cancelling, then pull up the real comps around the area and include them with your offer and send a cover letter explaining such.

If nothing has even been on the market because everyone loves it and won't sell, make sure you include a cover letter stating your committment and ability to close along with your flexibility to meet their moving needs. Also be sure to introduce yourself because in a neighborhood like this, people want to sell to people that would get along well with their neighbors/friends that will remain. It's a "family" in neighborhoods like that, not just a house. Ok, I don't mean prejudice or red lining or anything to that effect but you have to look at all angles and this will be one of them if nothing has even come up on the market before.
0 votes
J R, , New York, NY
Wed Jan 2, 2008
I've had buyers offer lower than the lower range and we have negotiated to a deal close to or slightly above the lower number. Be aware though, that many buyers will only counter an offer at least at the lower number. Can you share what the asking range is?
0 votes
Donald J. Le…, Other Pro, Tacoma, WA
Wed Jan 2, 2008
Hi Derek,

Yes sellers can get upset, but rare is it that they will not deal with you or look at a better offer. If there have been no sales in an area you are interested in within 6 months... that could mean its a great neighborhood and no one wants to sell, or are waiting for the market to change. In which case prices could go up again. Its been my experience that poor or bad areas seem to always have lots of homes for sale, but then that is subjective to who you are and where you live of course.

Why not find yourself a local San Diego Realtor who is savvy and can negotiate for you? They will not charge you, since sellers pay commissions/fees and its already been agreed upon when they listed the house. How are you looking now..., by yourself and just calling the selling agent? I hope not. Call a Buyers Agent ASAP. You will be glad you did. :)

Don
0 votes
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