Derek, Home Buyer in 92103

Any advice about how much below asking a reasonable first bid is?

Asked by Derek, 92103 Fri May 23, 2008

I'm looking at a property listed at $1M but I can really only afford 900K. Is it even worth making an offer.?It's been on the market more than 45 days.

Help the community by answering this question:


Derek...there is nothing wrong with making an offer. If $900k is all you can afford then you don't need to worry about upsetting the Seller because you will not be coming back to the table with a higher offer anyway. The worst that can happen...Seller is upset and says "no way", you are in no different of a position than you are now. The best that can happen.....Seller is really motivated to get this home sold, was pushing the envelop on the pricing and says "yes" or counters with something closer to your target price. Go for it.....great deals are not found, they are made! Let me know if you need help.
1 vote Thank Flag Link Sat May 24, 2008
Hi Derek,

It will also be helpful to know what they owe. If they've owned it a long time and have a lot of equity they are usually more motivated. But, if they've refinanced or recently purchased it, they don't have a lot of room to negotiate unless they are going to try to short sale. It doesn't happen as much in this price range, but it is a possibility. If it's priced well below the market value already don't let that deter you. If the seller is truly motivated and needs/wants to sell it now, make your offer but check comps first to make sure you're not overpaying. I wouldn't pay for an appraisal at this stage, but I'd definitely price it against the comps. You'll have to pay for an appraisal again if you put a loan on it.

Good luck!

Diane Conaway, RE/MAX United, (760) 749-2888
1 vote Thank Flag Link Fri May 23, 2008
Glad to see *some* people giving real answers instead of just "oh - talk to a pro - here's my number!"
THere's hope for some of you yet!

A few people hit the nail on the head. Before you determine how much below asking is reasonable, determine if the asking price is reasonable.

If the asking price s 15% above market value, and you knock 5% off the asking price - you're still paying too much for the home.

Inversely - if the home is priced well below market value, knocking 5% off the asking price might be asking to lose the house.

Worry about actual value first - and price your offer with that in mind.
1 vote Thank Flag Link Fri May 23, 2008
I think you really need to look at the comps are and base your offer what you think the price is rather than go for a flat percentage. It would depend a lot on the property.
Web Reference:
1 vote Thank Flag Link Fri May 23, 2008
Check what is happening in the zip code that the property is in. At the site you can find the average and median list / sale prices for every zip code in San Diego County. You will also have number of listings, number sold, months of inventory and days on market. The data there should help you in deciding if your offer makes sense. I have an excel worksheet that you can use to arrange and quantify 4 months of the data from the site I mentioned. You also might condsider getting an appraiser to do a "buyer's appraisal" for you. Having an appraisal that shows the value of the property from a professional, can give you a decided advantage in negotiating. I can give you the name of a good appraiser. I can also send you a copy of my article "the art of contrarian investing" that has more useful ideas for buying. Just send me an e-mail and I will forward the article and/or the worksheet to you.
1 vote Thank Flag Link Fri May 23, 2008

Get help from someone to give you a valuation. Doesn't matter what you can afford, nor what the asking price is, you need to know what the home is worth. 45 days is not long for a $1M property, but again, what's it worth. Is there a reason you don't have an agent representing you?


1 vote Thank Flag Link Fri May 23, 2008
Find other comparable properties in the area which sold between 2001 and 2003. Check to see what those sale prices were. That is the price range for the house your looking at. In this type of market, you can forget about what the seller 'wants' or what he paid for his home, or what other homes are selling for. It is a mixed bag. I have seen the same home/same plan, similar amenties with a few hundred thousand dollars difference on the same street. There is no rhyme or reason to how a seller prices his home. I have asked agents repeatedly 'on what basis is a partcular home priced?', or 'has there been a very recent appraisal?' Agents all give pretty much the same answer: "well just a couple years ago, this home would have sold for $XXX so you can see that now it is a bargain." Please don't fall for that.

Again, look to the 2001 to 2003 price range. What did that home, or homes similar to that sell for in that period? That is where housing prices should be right now. Values gained from 2004 and upward are phantom. For example, if the home was bought in 2003 at $675,000 and now the seller wants $900, you should only offer slightly above. The owner barely has 5 years into the property and since then, the housing market has crashed. There is absolutely nothing to support the asking price of $900,000 unless that is what he paid between that period. And don't fall for 'well the owner has to get his money back, or the owner has a second he has to pay off.' Be patient. If you can, wait until the fall, and my best guess is that prices will fall another 15 to 20%. Be firm, be hard nosed and tell yourself you are out to the get the best price you can. You're not buying groceries, you are buying a HOUSE. This is the most epxensive purchase in your life. Be careful, be cautious and RESEARCH, RESEARCH , RESERACH and do not take the word of a realtor....buyer beware. Good luck.
0 votes Thank Flag Link Thu Jun 19, 2008
Derek, my recommendation is to have your buyer's agent do a market analysis on the home before making any offer. If you are not working with a buyer's agent, you should seriously consider hiring one. Most often, they are paid by the listing agent who has already agreed to share brokerage fees with the buyer's agent. A good buyer's agent will provide a range for the market value of the home and that should be your reference point. I never recommend going in "ugly" as it usually infuriates the seller and doesn't get you anywhere. Most often, a home is a personal and to insult someone through a bad faith offer only makes the process adversarial which it need not be. For example, last fall I worked with a buyer that insisted on making an offer that was 50% of the asking price on a home that was priced fairly. The offer was rejected and not countered and the home was sold days later for close to its list price. The buyer insisted on her plan for future offers and I let her know I would not be working with her anymore. The question you have to ask yourself is do you want the house or not? If you do, make a good faith offer and enjoy. A few thousand dollars here or there won't make much of a difference in your monthly payment and you may need a favor from your seller. For example, you may find out that your landlord has a new tenant and wants you out sooner than later and you need to move your closing date up a few days or you may want the seller to leave you the yard tools. If you have already made the transaction adversarial, the seller may tell you to take a hike.
0 votes Thank Flag Link Sun May 25, 2008
Hi Derek! Thanks for using Trulia! In this market, making a first offer conservative is a smart strategy. Many sellers have external pressures that are unrevealed and the best way to determine thier motivation is to make an offer on paper. A good representing agent for the seller will help them understand the importance and value of any offer as a beginning point. If they insist on their asking price you walk away
satisfied that you did your best. If they counter you can decide the merits of the property and continue to
work with them and raise your offer. You are in full control of the situation and you know the old saying "nothing ventured, nothing gained!" If you don't try, every time you drive by that house you'll wonder,
"Could I have been living there"? :) Nobody remembers the first offer anyway if the transfer comes together successfully for everyone. Go for it! Terry Ballantyne
0 votes Thank Flag Link Sun May 25, 2008
Derek, if your realtor tells you it's priced okay and he/she can support that opinon, then I'd offer the $900K, in this market why not?? I'd also support it with a nice cover letter to the seller explaining the reason this is your best and final offer. Now if you don't have a Realtor representing you, then you've got a bigger problem......hire one...again why not, in your case it's free. Good Luck. If you need a recomendation for an Experienced, Successful Realtor in your area, let me know, my address is below.
0 votes Thank Flag Link Sat May 24, 2008
Hi Derek! Terry Ballantyne here. You hit the motherlode of anxiety for buyers with this question. "will I leave money on the table if I go to high or will I lose the deal or irritate the seller with a low bid"?
How do you know for sure the value of the property? You only know after it's sold. The buyer establishes
the value by plunking down cash! My advice is to discuss with your qualified, knowledgeable agent what
the home might sell for. (this is much easier in sub divisions and like quality neighborhoods, much harder in Santa Cruz where I work, due to the variety of styles and quality) Make an offer that would make
you do backflips if it were accepted and see what the seller does. A good seller's agent will always respond to your offer. Good luck and get going. This is a great market! Seas Your Dream!
0 votes Thank Flag Link Sat May 24, 2008
Myke's right. You need to know the value of the property. What it's listed at doesn't matter. Once you have a solid idea of what it's worth, that's your ceiling. You pay no more than that for the property, and probably/hopefully less.

As for being on the market more than 45 days: I don't know the San Diego market at all. Check with a Realtor. However, in many parts of the country, even for mid-level homes properly priced, 45 days on market isn't unusual. So, don't take 45 days on market as an indication that the owners are desperate, or that the house is vastly overpriced. Now, they may be desperate; the house may be overpriced. But 45 days on market says nothing.

Once you've determined the property's true value, then make an offer (if it's below your affordability ceiling). It's always worth it making an offer. The worst that can happen is the owner rejects the offer, and you don't get the house. Well, that's exactly your situation today if you never make the offer.

Hope that helps.
0 votes Thank Flag Link Fri May 23, 2008
Don Tepper, Real Estate Pro in Burke, VA
As many have said below, obtain a realtor. The Realtor can tell you what the comps are and the basic sales forecast and teh looming foreclosure picture for that surrounding area. Who knows, maybe the owners have their home priced unrealistically. Maybe they don't. But I strongly suggest getting with a Realtor who can help you. What can it hurt, you don't pay the realtor, the seller does. If I can help you in anyway feel free to contact me:
0 votes Thank Flag Link Fri May 23, 2008
I will assume you are looking for a home for yourself and possibly your family. First determine what your needs (absolutely have to have features) are and then your wants (those things I/we would like but don't absolutely have to have) as well as taking into consideration those things you do not want (ie busy street, known drug area, too near power lines or railroad tracks, etc). .Step two is to determinine your purchasing power. That would be how much you have saved toward down payment and closing costs and how much a reputable lender has pre-approved you for to borrow as a mortgage. Step three would be to look in the neighborhoods you are interested in at the homes falling into your criteria as to needs and affordability. While your agent is showing you properties that fit your needs, budget, some of your wants and excluding the "absolutely do not wants", have him/her share info on what has recently (within the past 6 months) sold in those areas. You will start to notice a pattern that homes in excellent condition tend to sell for approximately so many dollars per square foot, those in poor condition you will find are selling for considerably less. Analyzing the sold data will give you a very realistic approach to value. With that information in mind, base your initial offer on what the property is worth to you "where is" "as is" taking into consideration any seller concessions you are asking for. Always keep uppermost in mind "what is my goal?'. If your offer is for a property you really really like, you may not want to try to negotiate as hard as if it was a property that you would accept but are not overly interested in. You do not want to aleinate the seller. They have also studied and know what the market is doing.
0 votes Thank Flag Link Fri May 23, 2008
Have you actually seen the property Derek? If you are working with a realtor, make sure to see it and then you can better determine what your next step is. If you are working with a professional realtor, togeather you can come up with the right answer.

Robert Miller
(858) 437-2400
0 votes Thank Flag Link Fri May 23, 2008
Hi Derek,

I would recommend that you have your Realtor (if you are using one) pull comparables in the area. What you can afford and what the home is worth is two different things. If you still feel you want to make an offer, than you should and at that point you will know where that sellers motivation. It sometimes depends on how much this seller needs to get out of his home. But as stated earlier 45 days on the market for a home over $1M is not a long time in this market. Homes on the average are on the market over 120 days+

Good Luck in your home search....Catherine Barden, San Diego Realtor (760)815-3866
0 votes Thank Flag Link Fri May 23, 2008
Hi thee Derek, First thing you do is talk to to a professional who can help you with a strategy for your offer. Review the comps, active Inventory , days on market, Active vs Pending vs Sold Properties .
When you have all this information you will be in a much better position to make an intelligent informed decision. In todays Market I would have no problem in heling you write that offer.
Please let me know if you would like more information. I will be able to save you about ana additional
$ 25,000 when you write the offer.

Kind Regards
Michael Barron
First Team Estates
(714) 552-6817
0 votes Thank Flag Link Fri May 23, 2008
Hi Derek,

You can always make any offer you feel comfortable doing; however have your agent prepare a market analysis for you. Showing you comparable properties... considering the size, condition, location, and view. This will show you how realistically the home is priced.

Currently the average market time for the 92103 zip is 80 days for the 43 sales that have sold in the past 3 months. The difference between the average list price and the average final sales price was just under 5%. However these are the average figures.

See if your agent can find out the sellers motivation and if there has been any offers. Based upon this information and the market value your agent gives the home, this will guide you in the right direction as what you can offer.

Good luck, Denise Gleavey
Coldwell Banker
#1 Company in the Metro Area
Web Reference:
0 votes Thank Flag Link Fri May 23, 2008
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