Write an offer for over list price on a regular sale? Why? Why not?
On Trulia, a buyer in San Ramon CA asked
“For a regular sale, my broker is asking me to make an offer 15K more than asking price. I feel this is the wrong way to negotiate. Am I wrong?”
Several questions come to mind:
- What is the market like where the buyer is writing an offer? Is it a seller’s market?
- Are properties selling quickly in competitive situations?
- What are the comps?
- How do the actual cash outlays and monthly PITI compare at certain sale price points? Here’s an example, assuming 4% interest rate, 10% down payment, 1% loan origination fee. Are the differences that significant that one would jeopardize getting the property by insisting on a lower offer than what the market would bear?
|
$350,000 |
$375,000 |
$400,000 |
|
|
Cash outlay for downpayment and closing costs |
46,735 |
49,814 |
52,888 |
|
Monthly PITI (principal interest taxes and insurance) |
2,109 |
2,260 |
2,411 |
- Does buyer really like this property or can he afford to wait and find something else?
- Take a look at this blog by Steve Karney on Buying a Home? The COST Is More Important Than the PRICE
- Who will know better how to write an offer in this situation ---- an experienced broker, or a first time buyer?
- Why hire a professional if you won’t listen to his/her advice?
Still want to write an offer for over list price on a regular sale? Why? Why not?
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