I have touched on this subject before, but, feel that it needs to be addressed more fully. First, everyone gets advice from Uncle Bill and all of these countless online advisors, but the truth is, the only person who can advise you on your offer is your Realtor.
" I read somewhere that you should always offer 5% less than list". Ok, Mr. Buyer, what if the property is listed 10% over market? Then you have paid too much! At the same time, if you are in a hot area, it could be that you'll have to pay over list to get it. How much are you asking the seller to pay for closing costs? I once had an agent tell me that her offer was full price. No, it wasn't full price, as she was asking the seller to pay $7500 in buyer closing costs. The terms have a lot to do with it, as any seller is looking at his bottom line.
Many times, especially first time homebuyers can get a mortgage, but they may not have the funds for closing costs and escrows. Essentially , what they are doing is putting their closing costs into their mortgage. There is nothing wrong with that, as long as they understand that they will pay more for the home, if they do that.
There is no magical formula that covers all offers on all properties. What the realtor does, is pull up comparable properties that have sold in the area and compare them to the subject property. If the property is priced above market value, or at or below market value, you write the offer accordingly.
Much of my business is new construction and we are in a hot area. My builders don't play "the game". If a home is listed at 359k. That's what it will sell for. If someone wants $10k in extras, the builder will throw a couple of extras in the make the deal. The rest goes on top of the list price.
Long and short, it depends upon the market. In areas that are dead markets, slow moving, sellers will work with buyers more. If a home has undesirable attributes, the same is true. However, in my experience, in 100% of the cases, when a buyer agent writes an offer that is way below market, the response from the seller will not be as liberal as a fair market value offer.
Buyers, put yourself in the shoes of the seller. If you have a desirable property in a desirable area, why would you take a loss knowing someone will come in with a better offer tomorrow?
Thanks for reading, Steve Houck, ABR,GRI
Comments(5)