Whats the average lowball price % drop for an offer.

I got an offer on a place I am selling but its reallllllly low. Just looking some ppl that have experience to let me know. I thought 2-3% was normal, this isnt near that.

2/12/2010 4:51:25 PM

You have a price in mind that you won't sell below, if the offer is below that, don't sell. Does it really matter the math behind the offer?

2/12/2010 4:53:13 PM

yes, i thought there was common courtesy in the business and this seems to be against that.

Just getting an idea.

2/12/2010 5:09:35 PM

I wouldn't be too surprised by anything up to 6%

2/12/2010 5:09:37 PM

Your assumption is that the home is in fact priced correctly.

I sold my home myself last October and had it priced at what I thought was a pretty representative value based on the comparables in my neighborhood and the first offer came in at about 6% below. I can easily see if I would have had the home "priced higher to allow for negotiating down" then the first offer would have been more like 8-10% lower.

We looked at a short sale near the coast and would have put an offer in at 10% below what it is listed at but ultimately we kept looking. It was picked up by an investor for nearly 30% below what the short sale ask price was and the investors have it listed about where we would have offered.

[Edited on February 12, 2010 at 5:29 PM. Reason : .]

2/12/2010 5:28:25 PM

I just bought some land for 26% below the listing price. What do you mean by common courtesy? You mean the Realtor shouldn't pass on offers that are some % below asking price, or that people shouldn't offer anything too low? the first I could see, especially since they take some percentage and they don't want to waste their time, the second doesn't make much sense to me. As a buyer I want the best at the cheapest price, you as the seller know what you want to get for it, if we can match those up then great. but it shouldnt be insulting if we cant.

[Edited on February 12, 2010 at 5:37 PM. Reason : more commas!]

2/12/2010 5:37:08 PM

i just got an offer for 10% less.... I cant decide if i should take it or not, as it is the first offer.

2/12/2010 10:40:23 PM

Well you can either take 10% less now or 10% less later after the tax credit expires.

I mean assuming you can get a better offer before April ends, then pass on it.

If not, go ahead and take it before you get stuck.


All this talk about the homebuyers credit is lol, it's really the home sellers getting subsidized.

2/12/2010 10:54:07 PM

If you really need/want to move, take the offer and move on with life. The thing I tell my clients is right now the rules are out the window. Your home is what someone is willing to pay for it, not what the appraiser, internet, realtor, or anyone else says its worth.

You can run math all day to come up with a price, but the fact is the pool of buyers is small and the pool of available homes is huge. If you have a ready, willing, and able buyer it can be a mistake to miss out on that oppertunity.

This game is less about percentages and numbers and more about motivations. If this person has fallen in love with your home and gotten emotionally attached to it you might be able to get away with a counter ofer. If they are not that attached and you negotiate too hard you can miss an oppertunity to sell your home, this can cost you lost time and money. If they are attached and you do not come back higher you might miss out on a few thousand dollars.

Either way its going to come down to your situation, motivations, and desires vs. theirs. Do not let your emotions get in the way at all, approach it like the business transaction that it is and weigh all of that.

There is no average lowball right now. Good luck.

2/13/2010 1:38:28 AM

Quote :

"i just got an offer for 10% less.... I cant decide if i should take it or not, as it is the first offer."

not planning on making a counter?

2/13/2010 2:11:45 AM

I just offered 4% below asking price. My offer is 6% below appraised value. Other similar houses that closed within the last 6 months have all had offers ~95% of the asking price. As always though, YMMV

Now if only the underwriters would quit dicking around. I've got a house to close on in 2 weeks.



[Edited on February 13, 2010 at 2:51 AM. Reason : .]

2/13/2010 2:50:34 AM

we just accepted 6% less. Not ideal, but we are worn out with showing the house, and i worry the bubble will bust once the tax credit expires.

2/14/2010 7:57:28 PM

Quote :

"price... common courtesy"

DOES

NOT

COMPUTE

2/14/2010 8:44:48 PM

There is no real rule of thumb here. But what I can tell you is that expecting someone to only offer 2-3% less than list on their first offer is being wayyy too optimistic in this current climate. In fact, even after countering you might be hard pressed to find people that are willing to pay 2-3% less than list without some closing cost concessions (unless the house is priced very competitively already)

There is no "common courtesy"...people offer what they are willing to pay for the house in this market. If you aren't willing to play ball(ie even offer a decent counter), in most areas they are just going to move on to another house.

I am closing on a house in <2 weeks. When I started looking I went in knowing that my first offer on any house I looked at would be at least 5% less than list + dock %s for anything "major" I could point out to them that I didn't like or that I would want to change. And as other people have said, one of the other BIG factors in this is how fairly priced your house is.

The house we are under contract with for example, it was originally listed at 219 for 45 days until she dropped it to 205 because 1) she really wanted to move and 2) a "fair price" for the house was probably closer to 200. We went in and offered 8% off of her new list price of 205 and she accepted. Compared to her first list price, that is nearly 14% lower.

2/15/2010 7:58:40 AM

Quote :

"You have a price in mind that you won't sell below, if the offer is below that, don't sell."

I agree with this, unfortunately. I was trying to get a home and INITIALLY offered >99% (just asked for $1k off) of the asking price, and they said no...

this was in April and the home is still on the market.

[Edited on February 15, 2010 at 8:29 AM. Reason : ]

2/15/2010 8:27:43 AM

yeah, i'm not sure why you think that there's any "common courtesy" in regards to this...it's a buyer's market and even if it weren't, it's business, pure and simple...they make and offer and you do one of three things:

1.) accept
2.) decline
3.) counter

it's possible that you think your house is worth well more than it really is, or it could be that they don't think it's worth what you're asking and it is, or it could be that they're cheap bastards hoping for a deal

2/15/2010 9:23:03 AM

so is there anyone on here that is a realtor in raleigh? Im starting to look for houses in raleigh now that I have a job

2/15/2010 11:45:35 AM

I am a realtor, however, I only do commercial real estate. If you have no relationship with any broker, I could refer you and make a small referral fee (assuming you close on a deal). If this is the case, I'd love to refer you to a reputable broker that I know can assist you and potentially make a dollar or two in the future when you close. Let me know if you need a name and number, or better yet, PM me your name and number and I can have them contact you.

2/15/2010 1:45:18 PM

She readjusted, we ended up with a 4% lower offer than our asking price.

just what I was thinking and hoping for.

The house was priced perfectly, in great shape and sold.

thanks guys...I got some good PMs about all this, i appreciate all the help!

2/15/2010 2:15:53 PM

good deal. grats.

2/15/2010 3:25:36 PM

^^congrats!

What's the best procedure for purchasing a first home?
1) Figure out what you can afford
2) Find home you like and make offer to realtor selling house
3) If realtor likes, contact bank and setup mortgage, closing costs, etc

1) Figure out what you can afford
2) Find realtor you want to work with and get them to help you choose a house, work out details, etc
.
.
.

I'm new to the process if you can't tell.

2/16/2010 5:29:37 PM

I'd stick a:

2) Find out how much a bank will loan you

in there. If you can afford it that's great, but if your credit is such that the bank will only loan you $10k less than that...

Just find a banker, he'll get you to fill out a pretty simple form (if you're a student/recent student then you'll need to know the payments on your student loans if you have any) and you can get "pre-approved" for a loan amount, no strings attached.

and a:

3) find a realtor that will work on your behalf.

If you have one, otherwise just approach the seller/seller's company and get involved that way.



[Edited on February 16, 2010 at 8:06 PM. Reason : ]

2/16/2010 8:05:22 PM

I would recommend that you get your own buyers agent so that you are dealing with someone that only has your interests in mind and not the sellers interests as their priority. Besides, a buyers agent is typically paid by the seller so it doesn't cost you anything to use one.

It also make it a lot easier to deal with only one person when setting up showings instead of you having to schedule things with 10 different agents.

2/16/2010 8:37:35 PM

agreed. i just went through this process (closing next week) and even with all the research I did online I still highly recommend a buyer's agent. There is almost no reason not to get one. I didn't pay 1 penny for her service and she saved me a ton of time and headaches.

2/16/2010 8:40:18 PM

^ Sure you did, you probably paid about 2% of the home's value for their service. No one works for free even though the liberals want people too.

If you don't get a buyers agent sometimes you can negotiate the rip the seller's agent takes.

That being said, a buyer's agent may still be worth it to you, I'm not arguing that. Just saying their advice certainly isn't free though it may seem that way.

[Edited on February 16, 2010 at 11:31 PM. Reason : urine]

2/16/2010 11:31:17 PM

double postasaurus.

[Edited on February 16, 2010 at 11:31 PM. Reason : pee]

2/16/2010 11:31:17 PM

The seller usually pays all of those realtors fees, closing costs etc. So it should have come out of the sellers make, and not have been added to your costs

2/16/2010 11:33:49 PM

I added that into the selling price.

you pay for it eventually, trust me.

2/16/2010 11:36:50 PM

^^ Regardless, of who "pays for it" you are still paying for it. It's like saying you don't pay shipping costs if you buy something off the rack at Wal-mart. It's still built into the price.

2/16/2010 11:45:25 PM

If you're a first-time buyer or new to the area, a buyer's agent is necessary. But if you're an investor who's been around the block, a buyer's agent might not be needed.

2/17/2010 12:13:02 AM

Quote :

"^ Sure you did, you probably paid about 2% of the home's value for their service. No one works for free even though the liberals want people too. If you don't get a buyers agent sometimes you can negotiate the rip the seller's agent takes. That being said, a buyer's agent may still be worth it to you, I'm not arguing that. Just saying their advice certainly isn't free though it may seem that way."

While that is true (since yes we all know seller's build that kind of stuff into their price), if you're someone who has never bought a house before the benefit is very real imo, ESPECIALLY if you are a first time home buyer jumping into the market right now and hoping to be under contract for the tax credit deadline.

On top of that, if you are an experienced home-buyer and not familiar with bartering over house prices etc, a buyer's agent can definitely save you money on the home which can easily make up for that.

In my specific case though, I can pretty comfortably say that the amount of money she had me save more than made up for the price the owner could have "built in" to the house. After looking at this house, we told her what we wanted to make for an offer. We looked at comps in the neighborhood and surrounding areas, knocked a good 3% off of the most favorable comps (which was about 6% lower than her new list price) and were ready to offer that lowball.

Later that day when she copied me on the email to the seller's listing agent, she took what I told her I was willing to offer and had knocked a few more thousand off for random small stuff that she made seem like it was a really big deal to us as well as asked for the refrigerator which wasn't planned to be left. I was fine with that, but was surprised, because I wanted to make sure they would at least counter, I didn't want to come in too low and get ignored since we loved the house.

She told me that after we left she had talked to a neighbor that was out front of the house next door and found out the owner of the house we just looked at was really wanting to move out pretty quickly. Based on that advice she took what we had discussed and knocked it down further hoping to get lucky with a desperate seller. The seller bit on the first offer which included leaving the fairly new ~2500 stainless steel refrigerator.

Because of her extra legwork/little bit of luck we got the house for about ~3000 less on the loan than I had planned on as well as the refrigerator which was at least $1500 saved for us (I wouldnt have bought one as expensive myself). That $3500 saved on the loan almost covers her 2% without factoring in interest. Yea I guess you could say you would have come in 8% under and asked for the refrigerator yourself, but I wouldn't have and she saved me that money.

The house appraised for $7,000 more than we are paying too Not that she had anything to do with that, but the fact she helped us drive the price so low was great because thats a free jump towards getting out of PMI sooner.

[Edited on February 17, 2010 at 8:34 AM. Reason : ]

2/17/2010 8:33:44 AM

That's pretty fucked up the neighbor sold them out like that. I guess you know who not to talk to when it comes time for you to sell.

2/17/2010 8:41:53 AM

I realize this thread is about realtors.... which I am not. Hear me out, maybe I can offer some insight.

I am in outside sales, which is currently salary+commission, but will move into straight commission starting at the beginning of July 2010. I have been in this position since July 2009. I have competition from several direct manufacturing sales reps, large distributors, and local distributors. Here are the advantages and disadvantages of each:

Direct Advantages: Immediate knowledge of new technology, no middle man mark up, one shipping bill (paid by manufacturer or buyer of goods), access to larger range of non-commodity items, control inventory, have access to many distributors that can effectively sell their goods which increases market share, and set prices of commodity they manufacture.

Direct disadvantages: Typically have 1-3 sales reps per region (i.e. southeast, mid-atlantic, northeast, etc.) limiting the number of accounts they can successfully manage/cold-call, lack physical customer service or physical technical service available to or affordable for smaller users or altogether, are sometimes not trustworthy because they will go in behind their distributors that sell their commodity to one account in large quantities (i.e. they missed a big account, and have found out about it through a distributor selling their particular product) which leads to the distributor not selling their product anymore, have too many distributors selling the product ultimately driving the set price down through deviations, possibly rely on distributors to actually sell the product, and competition from other direct sources.

Large distributor advantages: have access to other commodities that go hand in hand with other manufacturers (poor example- grocery stores sell milk as well as cereal), get direct pricing, many locations regionally or nationally easing the shipping burden of buyers with multiple locations, personal service either customer or technical, many sales reps that are able to cover a broader territory, access to multiple manufacturers of the same commodity allowing to keep prices in check, service programs that smaller companies can't offer and direct providers can't match in price or value, and experts of many many commodities as opposed to one or a few.

Large distributor disadvantages: smaller local distributors creating price wars (think Michael Scott Paper Co vs Dunder-Mifflin), direct mfg's going in behind and stealing business, limited access to all of the mfg's (you won't find Harris Teeter name brands in Food Lion and visa versa), can't truly set prices because it's based on both supply and demand, territory management, and tough growth prospects in slower economies (this is true for direct as well really)

Local distributor advantages: Typically a good ol' boy setting where the seller and the buyer know each other for years (this does happen at all levels, but mostly at the local level), local folks are right down the street and can be used in emergencies, if the local guy buys at high enough volumes then there is no shipping charge to the end user, and access to both direct mfg's and large distributors.

Local distributor disadvantages: easily beaten in price, array of commodities, array of technology, lack of trained staff, low cash flow, etc etc etc.

This is what I have noticed in my six months, I am sure there are plenty more that need mentioning. The way I am setting myself apart as a sales person is this: I go after the big accounts right now while I am new. The big accounts, if I land them, will take care of me while I am new and building a customer base. The money made off of those allows me to focus free time on smaller accounts that get me higher margins. I build up big accounts, I would like to have 5-10 of these, then get 20-30 medium accounts. If I lose 1 or 2 big accounts, the 20-30 medium accounts keep me afloat while I go after new big accounts. I don't really waste time on small accounts simply because they basically pay for breakfast or something really small.

I will say this, if you can't get a big account in the first 6-8 months (assuming you have cash flow that you can ride this long) you could be in a world of trouble. If you can get one, it will really make going after the others a lot more enjoyable and less stressful. It's simply just very exhausting wasting any time on anything other than big accounts in the very beginning. You work just as hard on the medium sized accounts and see 1/3 to 1/36 of the money in my situation.

If you have any other questions, you can PM me. I hope this helps in the slightest!

2/17/2010 9:09:40 AM

Quote :

"he neighbor sold them out like that"

lol, I don't think the neighbor realized it really. From what I know the realtor asked if she knew the lady that lived there and all the neighbor said "yea she is an orthodontist and got a new practice in columbia and already has a house there." At least thats all the realtor told me.

That was enough information for the realtor to read between the lines I guess having seen the situation the seller was in plenty of times before.

Like I said, not something I would have done on my own and it more than paid for itself.

2/17/2010 10:08:52 AM

Buuuuut, if you increase the sale price of your house you also increase the Realtor fees and closing costs you have to pay...

2/18/2010 1:42:45 AM

5% of 200k is very little money. Split between 2 realtors, 2.5% per realtor is even less money. They way it works out is that unless you can knock 20-40% off the sales price, the amount of going into a realtors pocket does not change much. I would avoid any situation where you buy from the agent selling the house, get your own representative that is looking out only for your interests, thats worth the 1-2k you might not be able to take off the asking price, and you might save money after the cost if you get a good realtor that is negotiating and looking out for your interests.

2/18/2010 6:34:35 AM

Quote :

"Buuuuut, if you increase the sale price of your house you also increase the Realtor fees and closing costs you have to pay..."

if it goes up by $2000 the agents commission might go up $34

2/18/2010 7:39:22 AM