General Question

Twocatkitten's avatar

In today's Real Estate market what percentage under the seller's asking price would be reasonable to consider knocking off when making an offer on a house?

Asked by Twocatkitten (18points) October 3rd, 2007 from iPhone
Observing members: 0 Composing members: 0

9 Answers

bpeoples's avatar

Largely depends on where you are—in California the question is “What should you offer over the asking price”, since the asking price is considered (even in this market) a minimum-bid.

So, Twocatkitten, where do you hail from?

dust's avatar

bpeoples, that may have been the case two years ago, or even six months ago, but it’s changed. I just made an offer on a house, and it was nearly 25% less than the asking price. They countered with just a few percent higher.

Many houses are sitting on the market for months with NO offers, and with the inventory so high, feel free to make an embarrassingly low offer. The worst case scenario is they don’t counter offer, and then you go look at the other 5000 houses for sale. Good luck!

dust's avatar

I should note: I am in California.

Fallstand's avatar

I think it depends.. Here in NJ sellers are already lowering their asking prices in favor of today’s market.. but buyers are getting a little greedy and throwing offers 5–10k under the asking price.. Atleast in NJ this is. I always tell my buyers that their getting a house at a good price but that doesnt stop’em

Twocatkitten's avatar

I should mention I live on the East Coast in Pennsylvania-Market in my area is slow. The listing price on the house is $325,000. I appreciate the advice!

bpeoples's avatar

@dust: good to know!

My folks just bought a place in Santa Barbara, and there was some waffling on that point.

hossman's avatar

Part of the reason the market got in this mess was because realtors, loan officers, etc. were encouraging consumers to use that type of reasoning in the first place, and a lot of questionable appraisals were being used to prop up an unreasonably increasing market. (I’ve done a couple thousand real estate closings, so I’ve seen some of the worst).

The only true measure of a fair price is what you are willing to pay for it. It’s that simple. If you really love the house, then paying even over the asking price (if you have competition) may be worth it. If it’s just an adequate place for you to be for now, then the asking price is outrageous FOR YOU. Get a fair appraisal to know whether the asking price is reasonable for the LOCAL market. Remember that percentage based commissions mean your loan officer and realtor have an incentive for you to pay more, fee based arrangements, if you can find them, might be better for you. Then decide what you can realistically afford to pay. Stay away from adjustable rate loans. Don’t forget it does you no good to buy a great house you can’t afford to maintain, redecorate, or end up surrendering in a foreclosure or bankruptcy (I’ve done a lot of those too).

The current market does mean now is a good time to buy, although my “guesstimate,” contrary to what some realtors and lenders want you to believe, is the market will drop quite a bit more in many areas before it gets better. The foreclosures are just starting to hit the market, and will continue to depress prices for a while. After all, do you want to pay full price to the guy who needs to make a profit on his sale so he can buy a bigger house with a decent down payment, or a lower price to the lender trying to dump the house for what they can get to cover their loss? Builders are already cutting prices on new construction in some areas to well below what earlier homeowners paid a few years ago. This makes resale of new construction in those developments very difficult, as who is going to pay more for a used house than a brand new one?

In a lot of areas, paying 5–10K below asking price is not unreasonable at all, but merely reflecting the recent elimination of the outrageous expectations sellers had re the appreciation of their property. Everybody believed prices would keep going up, so they did. Prices will continue to drop as long as people believe they should drop and there are desperate sellers out there, which is going to be for a bit longer. While I understand there is a lot of cheerleading going on by professionals in real estate trying to prop up the market, some of that is entirely an effort to keep their incomes at prior levels, and does buyers a disservice.

If you don’t have to buy now, I think you’re more likely to find prices dropping than going up. Some of the people who can’t unload their houses don’t really need to sell. Some are desperate. Being able to tell the difference between the two will make a big difference in the price you get. I see no reason you should pay more because someone says that is what you should pay. Decide what you want to pay, and if it’s not accepted, move on. After all, right now there are plenty of houses out there.

The wisest advice I ever heard was my former partner, who always said you don’t make money on real estate when you sell it, you make money when you buy it. Unless you have to buy now, or really have fallen in love with a must have (and I’ll bet there is another property just as nice or close to as nice in the area), then now is the time to wait for a good deal.

Twocatkitten's avatar

Hossman, Thank you for your insight! The seller is the listing agent. I do love the house but I Believe it is not a property for every which could give me some leverage… The house was built in the 1700’s, only has 2 bedrooms, is close to a road & not slot of square footage though it does have 11/2 acres. Hard to get a true comp on it ! The house has been completly rehabbed and has a lot of charm. I believe the reason she is selling it is because she just had twins and the house does not lend it self to children. Seller is open to any settlement date. The house would not be easy to sell so far it has been on the market 50 days…

hossman's avatar

Since there is a professional on the other side, I hope you have one working for you, that DOES NOT work in the same office. No sense in creating the appearance of a conflict.

This sounds like a tough buy. Definitely hard to get a good comp, so you’re probably down to what it is worth to you. You might get a great bargain because of the circumstances, but remember, if you can see why this is a tough property to sell quickly for her, the same thing is likely to happen to you. If it is foreseeable you might ever have to sell in a hurry, this might not be a good choice for you at ANY price, especially since fewer and fewer people want anything more than planned development, cookie-cutter houses. This sounds to me like a house that you need to love, get a good price on, AND suits your needs.

Actually, it sounds a lot like a house I am familiar with that was owned by a widow. When she died, a whole town had literally grown up around this old farmhouse. Her children were finding it practically impossible to sell, started to sink some money into it, then the town came in, declared it an historical landmark, and now forbid them from putting in things that will affect the “authenticity” of the house. Like electricity. And a modern bathroom. And vinyl siding. And the town isn’t interested in using eminent domain to take the house, which will probably end up being forfeited for property taxes and the town will end up getting the house cheap from the county. Which may very well be why the whole thing was set up this way.

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