lincoln
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Real Estate: How Much Below Ask To Offer?

Sat Jul 21, 2007 7:54 am

Just out of curiosity is there a certain rule of thumb about how much (if anything) below the asking price to offer?

Some assumptions for you
* Ask price is $268,000
* Home has been on the market for at least 6 weeks
* Home is owned by a couple and is not presently occupied
* Home is in good/very good condition and in a decent (but not great) neighborhood in Cleveland Heights, OH
* Ask price a bit high but is in the same ballpark when compared homes within a few doors lenghth -- compared to about a 0.5 mile radius it's about 60k higher
* Last property transfer was for $240,000 in 2002; county auditor "fair market value" is $170,000 (but the data they have is a little suspect)

Of course, I'm going to talk to my realtor about this, but I figure 2nd (and 3rd and 4th) opionions/thoughts are always helpful to get a clear picture.

Lincoln
[If I can keep the total mortgage obligation in the $200-$210k ballpark my monthly payment doesn't really change vs. renting; I know I can swing $30k cash down, $40k down is within the relm of possibiltiy, but if I get above $50k down, it starts to become a more difficult]
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senorcarnival
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RE: Real Estate: How Much Below Ask To Offer?

Sat Jul 21, 2007 8:31 am

I'm not a realtor but I am an assistant to one so take my words with a grain of salt:

Quoting Lincoln (Thread starter):
Ask price a bit high but is in the same ballpark when compared homes within a few doors lenghth -- compared to about a 0.5 mile radius it's about 60k higher

Your realtor shouldn't be bothering showing you comps that are obviously in another price range (and most likely not comparable to this home.) IMO decent comps are in a +/- 200sq. ft. of the home in question so stick to homes of that size in that subdivision or within a reasonable radius if it's not in a subdivision.

Ask him/her to run a market analysis of properties sold in the last six months (or a year even) to show you how the price of this compares to actual market activity and go from there. Also keep your eyes out for the average DOM (days on market) in that analysis as well if this is way too much time, feel free to lowball. Chances are if this has been on the market too long and not decently priced, and not many offers have been made, the sellers may jump at any offer if they're desperate. Also, you might want to even put in an offer a couple of grand above and ask the sellers to pick up part or all of the closing costs.

As far as the county appraisal, that really varies per market. Here in San Antonio, homes are selling for slightly more than the county appraisal but not as much as that.

And if you need another realtor, we have contacts in the Cleveland area. 

[Edited 2007-07-21 01:32:01]

[Edited 2007-07-21 01:33:08]
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CastleIsland
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RE: Real Estate: How Much Below Ask To Offer?

Sat Jul 21, 2007 9:23 am

The common technique that I've heard is that most people will ask between 10-20% over what they will settle for. If you haggle and get 10% off the asking price, you've done OK; if you get more then you've done pretty good. So, given your numbers above, if you get ~$27,000 off the asking price, it will cost you ~$241,000. With $31,000 down, the mortgage will be $210,000, plus closing costs.

So, offer ~15% or more below (careful not to insult) and haggle.

Also, don't forget to figure in taxes and insurance, but I'm assuming you've done that.
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lincoln
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RE: Real Estate: How Much Below Ask To Offer?

Sun Jul 22, 2007 9:57 am

Thank you both for your replies!

The Relator is a very close friend-of-a-friend who typically specializes in premium properties so I don't think I'll be changing but I will keep that in mind  Smile. Taxes and insurance are included in the figures I've been playing with.

I walked through the open house today with a coworker and we noticed some cosmetic issues (the largest is that the interior of the home will have to be completely repainted) and one structural issue (some significant settling affecting several of the doors on the 3rd floor)

After getting home from the open house, I learned that the asking price had "just" dropped from $268k to $255k. Would you offer 15% off of the _new_ asking price (which would be an offer of $216,750) or stick with something closer to $241,000.

Thanks again,

Lincoln
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BigOrange
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RE: Real Estate: How Much Below Ask To Offer?

Sun Jul 22, 2007 10:25 am

Quoting Lincoln (Reply 3):
After getting home from the open house, I learned that the asking price had "just" dropped from $268k to $255k. Would you offer 15% off of the _new_ asking price (which would be an offer of $216,750) or stick with something closer to $241,000.

Depends on how much you want the house!

They might go for a low-ball offer but then stipulate that they won't fix anything that comes up in an inspection, which if as you say there is some settling, then there could be more problems. At that point you need to decide if you are going to back out or go ahead with the purchase. If you offer nearer to the asking price, then they may be willing to fix things that come up in an inspection.
 
SJCRRPAX
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RE: Real Estate: How Much Below Ask To Offer?

Sun Jul 22, 2007 10:30 am

It really depends upon the market. The last few years in my neighborhood, the sale price has almost always been above the asking price, sometimes as much as 20% above. But this is Silicon Valley where the people have more money than sense sometimes.
 
RobertNL070
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RE: Real Estate: How Much Below Ask To Offer?

Sun Jul 22, 2007 6:17 pm

Quoting CastleIsland (Reply 2):
So, offer ~15% or more below (careful not to insult) and haggle.

 checkmark 

Having had some experience in buying and selling property, you can't make too much of an issue about things cosmetic. However do get the property looked at by a structural surveyor. The settling could be a clue to more calamity. It might cost some, but it might cost much more if you don't get a professional to look at it.

Before I made an offer on my current home, the first thing I did was to arrange for a structural surveyor to give it a good once over - a canal-fronted town house - potentially lots of hidden defects!

Good luck.

Robert
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senorcarnival
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RE: Real Estate: How Much Below Ask To Offer?

Mon Jul 23, 2007 1:00 am

Quoting Lincoln (Reply 3):
After getting home from the open house, I learned that the asking price had "just" dropped from $268k to $255k. Would you offer 15% off of the _new_ asking price (which would be an offer of $216,750) or stick with something closer to $241,000.

I'd go with $245,000 if they accept it, get an inspection then ask for repairs accordingly. If it shows up that there are major structural issues, run from it like the plague. Good luck with everything!
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senorcarnival
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RE: Real Estate: How Much Below Ask To Offer?

Mon Jul 23, 2007 1:01 am

By the way, who was the builder of this home?
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lincoln
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RE: Real Estate: How Much Below Ask To Offer?

Mon Jul 23, 2007 1:09 am

Quoting RobertNL070 (Reply 6):
However do get the property looked at by a structural surveyor. The settling could be a clue to more calamity. It might cost some, but it might cost much more if you don't get a professional to look at it.

That goes without saying-- Even before noticing the settling, I fully intended any offer to be contingent on a satisfactory home inspection-- kind of like bringing a used car to a mechanic before buying it.

That being said, I'm not suprised to see some evidence of settling, though the magnitude is a little dissettling (pardon the pun) -- thinking about the home I grew up in, my family bought it new and by the time it was ~5 years old (same approximate age as the home I'm looking at) there were some cracks in drywall, etc but as time moved on, they didn't get any worse/there weren't any new ones. I think to some degree it's just a natrual part of

Quoting RobertNL070 (Reply 6):
canal-fronted town house - potentially lots of hidden defects!

Wow, sounds like a great place -- the kind of property I would love to own -- but if there were any problems I can see how they would be an even bigger issue than normal!
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nighthawk
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RE: Real Estate: How Much Below Ask To Offer?

Mon Jul 23, 2007 1:10 am

How much to offer below asking price??

Jesus, come here to Aberdeen where houses sell for 25-40% OVER asking price!!!
 
S12PPL
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RE: Real Estate: How Much Below Ask To Offer?

Mon Jul 23, 2007 1:43 am

I'm not a realtor, but my dad is. I don't know much about that side of things...Only the mortgage side of things, but the little I do know about the real estate side is:

What to offer completely depends on the market you're in. The guy I umpired with last night has a next door neighbor that is moving out to Bend. They own the house here, and the house there that they cannot sell. So, the bills are mounting, basically. They had to move back there because their renters moved out. They listed the house here in town somewhat less than they could have...Their neighborhoot hasn't had anything sell less than $325,000...They listed it at $299,900. It sold in six days for I think $303,000.

Your realtor friend should be giving you a good idea what the market is like out there, and also what houses are typically going for in that area of town. Generally in town here, if you offer a little less than the asking price for a house that has been on the market a few months, you'll get an accepted offer so long as you aren't low balling them horribly. However, like in the bay area of California back in 2004, you were in a bidding war, and houses went way over their asking prices.

Talk with your realtor...Make sure s/he is giving you all the info about the area, and what is reasonable to offer. That is their job, after all. They are supposed to protect your best interests.
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lincoln
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RE: Real Estate: How Much Below Ask To Offer?

Mon Jul 23, 2007 1:56 am

Quoting Senorcarnival (Reply 8):
By the way, who was the builder of this home?

I'm having a hard time figuring that out... the original listing agent was Progressive Urban Real Estate, and it looks like the developer is/was [there's another phase going up] City Vision Development Corporation -- but I can't figure out who actually _built_ the places -- if City Vision was the GC or if they brought in someone else.

Here's a description of the property/development process behind the property:

http://www.propertiesmag.com/archives/2002-06/boulevard.htm

My root "problem" is I like the townhome format (I hate lawns and the maintenance/cost involved in keeping a lawn looking decent) ... I prefer new(er) construction, especially having seen what some of my friends/coworkers have gone through with 40-150 year old homes ... I want to be near downtown Cleveland/urban area, but our office is in the middle of nowhere ... and this is the only place I've seen that meets the majority of my criteria while being remotely near my price range. (My "ideal" home has been on the market -- but it was listed at $550k -- even I know they wouldn't accept $200k!  Sad
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S12PPL
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RE: Real Estate: How Much Below Ask To Offer?

Mon Jul 23, 2007 2:02 am

Quoting Lincoln (Reply 12):
and this is the only place I've seen that meets the majority of my criteria while being remotely near my price range. (My "ideal" home has been on the market -- but it was listed at $550k -- even I know they wouldn't accept $200k!

Well, the important thing is how much you can afford, and how much home you feel comfortable buying. Sometimes you have to spend several months looking with a realtor to find the house you want, and is perfect for you. My dad has spend up to almost a year because buyers of his were very specific as to what they wanted. He had to look on the MLS every day trying to find the house that fit their needs and desires.

It's a big purchase...The biggest one you'll ever make. Make sure you don't buy a house that isn't what you want. Nothing is worse than buyers remorse.
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checkraiser
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RE: Real Estate: How Much Below Ask To Offer?

Mon Jul 23, 2007 2:34 am

In my market homes are going for about 5% under asking price. If they just reduced their asking price they may not be willing to give much more. Be sure to have a qualified inspector check the place out. You don't want foundation problems.

Also, take advice from your realtor with a grain of salt. Even though (s)he is your agent, they're still motivated to fetch top dollar. I cant stress this enough.
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EK20
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RE: Real Estate: How Much Below Ask To Offer?

Mon Jul 23, 2007 2:41 am

Depends how badly you want the house. Go for $245.
 
lincoln
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RE: Real Estate: How Much Below Ask To Offer?

Mon Jul 23, 2007 11:39 am

Quoting S12PPL (Reply 13):
Well, the important thing is how much you can afford, and how much home you feel comfortable buying. Sometimes you have to spend several months looking with a realtor to find the house you want, and is perfect for you. My dad has spend up to almost a year because buyers of his were very specific as to what they wanted. He had to look on the MLS every day trying to find the house that fit their needs and desires.

Understand completely! I've figured out the monthly payment that I feel comfortable making (in the $1200-ballpark, roughly what I'm paying now, and still leaving a considerable ), I've determined that that equates to about $200-210k in mortgage. I know the (approximate) neighborhood I want. The place next door came up on the market a while back, then disappeared somewhat quickly -- and I'm kicking myself for not looking at that one.

Quoting Checkraiser (Reply 14):
Also, take advice from your realtor with a grain of salt. Even though (s)he is your agent, they're still motivated to fetch top dollar. I cant stress this enough.

Here's a question for you -- that has been at the back of my mind... assuming that my relator is getting ... 2.5% or whatever of the selling price ... would it be approperate for me to tell the agent that I will make up the difference between the 2.5% of the buy price and 2.5% of the asking price.

Say 2.5% of 255,000 (the asking price) is $6,735.00; say I offer and they accept $230,000 (just as a round number); 2.5% of that is $5750... Could I offer to pay my agent the $985 difference.

I wonder if that is permissable/would eliminate the (slight) conflict of interst that arises from the buyer's agent being paid from the sale price?

Like I said, though, the agent is a good friend of a friend and she's already being a bit nice to me (the homes she primarially deals in average about 5x the price range I'm looking at) so it's not that I distrust her --- or think that $985 makes a huge difference, just looking to minimize any potential areas of concern

Lincoln
(Phew! The more I talk this over with people, the less terrifying the prospect of going from 0-200k in debt is becomming)
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S12PPL
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RE: Real Estate: How Much Below Ask To Offer?

Mon Jul 23, 2007 3:30 pm

Quoting Lincoln (Reply 16):
.5% or whatever of the selling price ..

Try more. Most offices make 6% on each transaction. That means that 6% is divided up between the buyers agent's office, and the selling agent's office...And of that 3%, the agent only makes around 3%, unless they're a higher producing agent....It's all subjective.

Quoting Lincoln (Reply 16):
Understand completely! I've figured out the monthly payment that I feel comfortable making (in the $1200-ballpark, roughly what I'm paying now, and still leaving a considerable )

Depending on the company you are doing your mortgage with, you need to make sure your DTI (Debt To Income ratio) is at or below 50%

Look out for predatory lenders. There's a huge tissy in Oregon right now with a senate bill that is going to really screw mortgage brokers here in the state. There's lots to make sure of.
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lincoln
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RE: Real Estate: How Much Below Ask To Offer?

Mon Jul 23, 2007 6:50 pm

Quoting S12PPL (Reply 17):
you need to make sure your DTI (Debt To Income ratio) is at or below 50%

Assuming the assumptions I'm making as far as mortgate payments hold true, my DTI would wind up being somewhere between 23 and 25%. I've heard that under about 35% is "good"/"normal"

Lincoln
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checkraiser
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RE: Real Estate: How Much Below Ask To Offer?

Mon Jul 23, 2007 9:12 pm

Lincoln, I don't think it's worth tinkering with her commission. Just remember that they're paid for the sale. The sooner you buy the sooner she can move on to another client. Asking the realtor for advice on an offer price is probably not the best person to ask.
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S12PPL
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RE: Real Estate: How Much Below Ask To Offer?

Tue Jul 24, 2007 12:09 am

Quoting Lincoln (Reply 18):
Assuming the assumptions I'm making as far as mortgate payments hold true, my DTI would wind up being somewhere between 23 and 25%. I've heard that under about 35% is "good"/"normal"

They take into account all debt payments that you currently make...Cars, credit cards, etc. Cell phone bills, utilities, etc. don't count.

Your back in ratios need to be below a certain level, and again, it varries by loan program, and mortgage company.
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lincoln
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RE: Real Estate: How Much Below Ask To Offer?

Tue Jul 24, 2007 12:30 am

Quoting S12PPL (Reply 20):
They take into account all debt payments that you currently make...Cars, credit cards, etc. Cell phone bills, utilities, etc. don't count.

Your back in ratios need to be below a certain level, and again, it varries by loan program, and mortgage company.

Those amounts are $0, $0, and $0 respecively. This will be the first time I have gotten into any debt other than the amount that's on my CC between the time I charge it and recive the statment. On one hand it is positively terifying. On the other, at least I would be paying my own mortgage and not my landlord's!

The good (screw that, fantastic) news is that I got a call this morning and one of the mortgage companies I had applied for a preapproval with called and told me that I was pre-approved for the entire amount I had asked for, with the downpayment, etc. I was looking at.

Lincoln
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S12PPL
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RE: Real Estate: How Much Below Ask To Offer?

Tue Jul 24, 2007 1:49 am

Quoting Lincoln (Reply 21):
The good (screw that, fantastic) news is that I got a call this morning and one of the mortgage companies I had applied for a preapproval with called and told me that I was pre-approved for the entire amount I had asked for, with the downpayment, etc. I was looking

That's good to hear.

Look closely at what type of loan they are going to try and put you into. Are you looking for a straight 30 year fixed one loan? If you are, are you putting 20% down on the home? If not, expect to pay private mortgage insurance. If you aren't a fan of having a PMI payment, some companies will also wrap the PMI into the interest rate. A lot of people like paying the MI, though, because for right now, it is 100% deductable on your taxes every year.

Of course, the more you put down, the lower your MI factor will be. Even putting 10% down will make a big difference.
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senorcarnival
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RE: Real Estate: How Much Below Ask To Offer?

Tue Jul 24, 2007 5:08 am

Quoting Lincoln (Reply 21):

Way to go! Don't mess with the realtor's commission structure, most bigger name brokerages (C21, CB, etc.) don't allow that 6% to be negotiated under any circumstance.
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S12PPL
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RE: Real Estate: How Much Below Ask To Offer?

Tue Jul 24, 2007 5:30 am

Quoting Senorcarnival (Reply 23):
most bigger name brokerages (C21, CB, etc.) don't allow that 6% to be negotiated under any circumstance.

Now that's not true....
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lincoln
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RE: Real Estate: How Much Below Ask To Offer?

Sun Jul 29, 2007 1:47 am

Thanks again for all of the replies
Just to give everyone the updates from the past week
* The relator, my boss (who has far more construction experience than I do), and I met at the property on Tuesday and walked through/did a fairly thorough visual inspection. He said that he didn't see any signs of major settling just bad drywall

* Yesterday, we offered $240k including $2k in closing costs (I wanted to go a little lower but the relator strongly encouraged going no lower than $240k*)
* Today, they counter offered $250 with $2k in closing costs
* We counter counter offered $245 with $2k in closing costs
* They counter counter counter offered $245 without closing costs
* I have verbally accepted the $245 (contingent on disclosures, financing and accpetable home inspection)

It's more than I'd _like_ to pay, but actually about what I expected. I feel better about it, especially after looking at the comps because recently homes have been going for slightly less than $10k below asking and I'm getting it for basically exactly $10k below the revised asking [and $20k below original asking]... plus it is a little less than what they bought the place for and I don't feel really good about being a hard ass on that front (no, I would never survive in a financially-oriented business position)

I'm meeting w/ the home inspector at 6:00 on Monday... and if all goes well, we're closing on the 14th.

I'm excited, apprehensive, and ready to pass out all at the same time (this purchase will be aproximately 200x larger than the next largest single purchase I have ever made...)

Thanks again!

Lincoln
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EK20
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RE: Real Estate: How Much Below Ask To Offer?

Sun Jul 29, 2007 2:08 am

Quoting EK20 (Reply 15):
Go for $245.

Isn't that what I told you in the first place?  Wink
 
lincoln
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RE: Real Estate: How Much Below Ask To Offer?

Sun Jul 29, 2007 5:38 am

Quoting EK20 (Reply 26):
Isn't that what I told you in the first place?

Yeah, but I figured if I actually offered 245 they'd counter offer higher ... I think I've figured out this is all just one gigantic mind game  Wink

Lincoln
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