Thursday, June 12, 2008

How LOW can I offer on a house I want to buy?

We get this question all the time. It's only natural. And you know what? As real estate agents we really want to get you the best deal that we can. That usually means for a honkin' low price!

BUT! It doesn't necessarily work out as simple as it sounds.

When you find the house you want to become your home , you need some professional advice. So you need to turn to your Realtor and say, "What do you think would be a good price for this house?" Your Realtor is going to answer you in one of many ways.

"I think this is a really good price, and you should probably jump on it." This is when a property just got listed, within a day or so of you looking at it. Your agent has studied, and is familiar with the market so he/she knows that this house is a good price and it's going to sell quickly. You know it too, but maybe you still want to try for a "lowball" offer. Well, that's OK, but remember... if you and your agent know it's a good price... so do other folks. And if they put in an offer that is closer to and maybe even ABOVE the asking price, your approach of, "Let's lowball and see what they come back with." just might backfire.

"You know what? This property has been on the market for quite a while... and we know the market is healthy..." Here is where the agent is telling you and observing one or more factors. Why has it been on the market so long? Is it overpriced? Is there an adverse condition that is not immediately apparent? Did it go under contract and then get placed back on the market? If so, for what reason? Is there a structural issue with the property? A good real estate agent is going to look into these possibilities and provide you with in-sight, so you can put together an offer.

Some people... buyers and agents alike, try to look at the overall market statistics and find out what percentage of the asking price do these properties sell for. BE CAREFUL! This could be a mistake, in that if a property is substantially overpriced even an average % of asking price to sale price could be paying too much!

Sometimes with new construction, the builder is at the end of a phase and is anxious to close it out and get going on the next phase. So, they might be more open to taking a lower offer, just to get the phase closed out.

I often give my buyers this type of scenario: If you had to pay X dollars for this house, it would be an OK deal... If you get it for under this price... WOW! Alert the media! And if you pay more than x dollars, it would be my and most anyone in the industry's opinion that you paid too much for this house. That all being said, the biggest question when planning a negotiating strategy, is "How badly do you want this house... and... how would you feel if someone else got it at a price you would have been willing to pay?"

There's no real answer to the questions of how much is a fair offer, so you and your Realtor need to get on and stay on the same page. And more than anything, you will need to trust your agent. And if you get to the point where you don't trust your agent, you need to have a pow-wow about your level of confidence, or you need to get a new agent!

No comments: