General Question

laureth's avatar

Is it proper to bid lower than asking price on real estate?

Asked by laureth (27174points) July 22nd, 2011

It’s a buyer’s market, and we’re looking for a new place. I am of the opinion that since the market is glutted with homes for sale, if we see one we really like (but which is slightly out of range), it’s OK to offer something less than asking price. They just might be eager to sell and be done with it.

However, Mr. Laureth has been treating asking prices as being more engraved in stone. You wouldn’t walk into a store and say, “Hey, I’ll give you two bucks for this gallon of milk, take it or leave it!” and the same is true of land.

Which is closer to the truth? If we bid, say, $5000 less than the posted asking price, will a seller (usually a bank owning a foreclosed property) be likely to laugh in our face, or be glad to get some kind of offer in a down market?

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27 Answers

Seaofclouds's avatar

I think it depends on the seller and how many other people are interested in the property. Some people might be set it stone with their price, while others may be open to taking less. The only way to know is to go for it. If you find a place you really like and you make a lower offer and they refuse it, you can then offer their asking amount. They may even offer a middle ground between their asking price and your offer.

Personally, if I was shopping around right now, I’d probably try to go a little lower starting out it seemed like no one else was interested in the place at that time. If someone else was interested, I’d probably go with their asking price if I really wanted the place.

jrpowell's avatar

They will work with you. They want your money and won’t be insulted. My buddy just got a house for 80% of list.

intrepidium's avatar

Everybody in a transactive relationship would have their own interests signaled in what they’re willing to offer/take. I agree with @Seaofclouds – no harm in starting lower and taking things from there. Even if they won’t take your lower offer, you might still be able to negotiate for them to cover other related/incidental fees associated with the transaction e.g. surveying etc.

Tropical_Willie's avatar

Ask a realtor not connected to the property or get a “Buyer’s agent”. They can help get the best price for you. We used one about four years ago and paid 14 % less than the price when it went on the market (new house) plus we asked for and received several thousand dollars of add-ons like rain gutters…

Neizvestnaya's avatar

If you surmise most everyone is desperate to sell in a glutted market then it all depends on how much of a loss the sellers can afford to take to avoid a Short Sale or Foreclosure on their credit records.

Offer what you feel is fair and/or what you can afford on the houses. An agent is going to get their percentage no matter what but most of them want as quick a turn around as possible because it’s all out of pocket for the agent to run around showing houses and submitting paperwork, no one is paying for that part.

Adirondackwannabe's avatar

Bid whatever you want. The worse they can say is no. I’ve gone into appliance stores and offered less than full price and they said yes.

marinelife's avatar

Definitely you can bid less than the asking price for a house. $5,000 less would be likely to get taken.

Consult with your real estate agent (make sure you signed with a buyer’s agent) on recent sales of comparable properties to decide what to offer.

chyna's avatar

You can go in asking if the price is negotiable. Most houses I’ve looked at are negotiable, it’s pretty much a given. Unless of course if it states in the ad that the price is “firm”. I’ve seen a few of those, but not many. If it is firm, than they have pretty much priced it at what they need to get out of the house.

plethora's avatar

Always, always, always offer less than the asking price…..especially on real estate and cars, and almost any other market too. The grocery store is not a bid/offer market, however, it would become a bid/offer market if you were making an offer on all the merchandise in the store.

YoBob's avatar

Buying real estate is not equivalent to buying an item at the grocery store. Not only is it OK to haggle, it is to be expected. In fact, in a buyer’s market it is standard operating procedure is to put in a “low ball” initial bid, which gives you some room to negotiate, if not for final price for other items.

From a tactical perspective, if you put in a low ball bid there are several possible outcomes:

1) The seller might just be anxious enough to sell to accept the offer – Result: you get a great deal!

2) The seller isn’t willing to accept your offer but might make a counter proposal that is at least better than the initial asking price – Result: you have the opportunity to play “let’s make a deal”

3) After the seller finishes laughing (s)he tells you to take a flying leap off a short pier – Result: You are no worse off than when you started and the seller is still stuck with a chunk of real estate that (s)he needs to sell. This does not preclude you from making a better offer, and if you made the bid through an agent the buyer doesn’t even have to know that both offers came from you. Further, that first low ball offer might just get the seller thinking that they should be a bit more flexible, thus making them more receptive to your second offer.

So… let’s talk about scenario #2. You have a seller who doesn’t like your low ball offer but is at least willing to negotiate. This leaves you room for any number of options including things like negotiating for them to pay the closing costs, getting them to take care of some repair items, etc…

Good luck!

Dutchess_III's avatar

It is expected that you will offer lower than the asking price.
Come buy our house. We just reduced the price by $5000.

wundayatta's avatar

I would offer at least ten percent below asking. @johnpowell‘s friend got it for 20% off asking price. So you might start there or even at 75% of ask in order to give wiggle room to get up to 89%. After all, the seller needs to feel like they got something out of you.

JLeslie's avatar

Definitely bid lower.

gondwanalon's avatar

Nothing ventured, nothing gained. It is standard operating procedure to make an offer lower than the asking price for a house. If you really really really want the house and you know that other people are also interested, you may make an offer that is slightly higher (like $500) than the asking price and you will more than likely get the house (if you can get a loan that is).

JLeslie's avatar

Oh, about foreclosures and short sales. Sometimes the agent has listed too low, and when the bank finally does an appraisal is might ask for more than the asking price, that is annoying when it happens. Short sales take a while to happen, be warned, unless they very recently had a sale fall through and are ready to close immediately.

Mariah's avatar

I think you’re right.

JilltheTooth's avatar

I have bought 3 houses and never offered asking. I paid about 15% less than asking on all three, different states, different markets, different time periods.
Good luck!

lookingglassx3's avatar

My brother and Uncle both just bought houses, and paid less than asked for. So it’s absolutely fine :-)

Lightlyseared's avatar

It’s almost expected. The price is usually listed as a guide price anyway.

john65pennington's avatar

First, this is not Mexico where they haggle over the price of everything.

I have never asked the manager of a store, for a lower milk price. These items are price standards and what you see is what you pay.

No so, in real estate. Most of the time, the asking price is not the selling price. The owner of the “for sale house”, can haggle with the price, since the house belongs only to him. The key here is “only to him”. In stores, everyone has a higher boss and this is why haggling is not possible.

Say, I have my mothers house for sale, in which I do. We are asking a certain price for it, but as time goes by and the house has not sold, I would lower the price about 10%, just to make a sale.

You can haggle with me all you want to.

Dutchess_III's avatar

It’s more comparable to a garage sale. “Will you take $.50?” because you’re dealing with individuals, not a company.

bkcunningham's avatar

@laureth, yes, you can make an offer lower than the seller’s asking price. Short-sale or bank sales are usually, not always; but usually, less likely to got very far below the asking price. This type of real estate sale also takes much longer to close.

I would suggest you get a buyer’s agent. They don’t cost you anything as the buyer. They are very informative on real estate pricing, locations and all sorts of demographics on the area. Good luck.

CaptainHarley's avatar

It’s “proper” to offer what you’re ready, willing, and able to pay.

laureth's avatar

Thanks everyone! I think I have convinced him that haggling is an acceptable house-buying strategy. :D

srmorgan's avatar

This might be a little late in the answering process but a lot of what you are discussing depends on the market you are in.

Some anecdotal evidence:
I bought my first house in suburban New York in 1991. The asking price was $379,000. Our agent explained to us that there was a “great deal of flexibility” in the asking price. So our initial bid was $269,000. This was in a buyer’s market in the 1991 recession and the sellers were in the midst of a divorce.
They countered somewhere, we countered and gave them a “highest and best of $313,500. We ended up at $315,000 after they agreed to a faster close than planned.

So in that particular marketplace, asking prices bore absolutely no resemblance to the sale price.

Fast forward a few years to our relocation to North Carolina. Saw a great house, asking price was $305,000. Our real estate agent was “shocked” when we offered something like $285,000, telling us that the asking price was supposed to be right at the market.
We ended up at $299,500, when they wanted $300,000. I was really firm on the last $500.

My attorney also commented that there was usually no bargaining in this market.

We are still in that house so I don’t know what the market is like now.

But as you said, it is overwhelmingly a buyer’s market and you should take advantage of this. Do not be “embarrassed” to submit a low bid, even 20% below asking price. There is no shame in saving money. If your offer is accepted then the asking price was 20% too high. If not, make another offer. If the seller won’t come off his price, withdraw the offer, make another bid in a few days. Houses are not moving and unless this house is a rare find, it will still be on the market next week.

Make sure you have an experienced attorney, familiar with real estate in your area, review the offer to purchase along with any documents prepared by the real estate agent before you sign anything.
If you get stuck in the negotiating process, figure out what you want like furniture or a quick close or a concession at closing of some of your fees. Maybe the seller wants to see a certain number as a selling price but for some reason will rebate or pay some of your closing costs. When I sold my first apartment, we were stuck some $1,500 apart. So we split the difference and I threw in a piece of kitchen furniture that they wanted and would not fit into that first house that we bought.

It never hurts to ask.

SRM

greenergrass's avatar

I think, like most others have said, it depends on how much less you’re planning on giving
and how flexible/desperate the seller(s) is/are.

Hey, I’ve got friends who wouldn’t pay the asking price, but finally came to a middle ground with the sellers and decided that they would pay something a little less than the asking price, but get the sports car the seller had also!

Maybe you’ll get lucky!

Happy fluthering!

roderickdavidson78's avatar

Ya you can bid on the real estate. But, this depends on the place where the concerned property is situated and the condition it is in. One thing you need to remember while bidding is that you don’t lessen your price to half. If you do so, you will be unsuccessful. Just think about the place and condition of property and then make your bid.

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