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First Time Buyer's Dilemma

Posted by Sandeep00 (My Page) on
Thu, Dec 15, 11 at 17:42

Hello! My apologies for putting forward a relatively dumb first time buyer's question. We are planning to offer for a house listed at 265k. We like the house but it seems over priced. The comps suggest it should sell for around 245k. What would be a good price to offer. I was thinking of 237-238k (incl closure) for a start. Is it okay or too lowball?


Follow-Up Postings:

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RE: First Time Buyer's Dilemma

Sellers pay realtor commission, so it is only fair for buyers to pay closing costs. I think this lowball offer plus expecting them to pay closing will piss them off.


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RE: First Time Buyer's Dilemma

WHen you present your offer, also attach the comps that support your offer. it will then not be considered a low ball offer. Remember, if you are asking for closing costs to be paid by the seller, then realize that the NET offer is what the seller is looking at. Sounds like you are on track to me.


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RE: First Time Buyer's Dilemma

Sellers pay realtor commission, so it is only fair for buyers to pay closing costs. I think this lowball offer plus expecting them to pay closing will piss them off.

Doesn't sound like the OP is using an agent, or s/he wouldn't be asking the Internet.

Sandeep00: Are you using a Realtor? If you are, they should know your area and what is a reasonable approach. If you're not, you do realize that it doesn't cost you anything since, as cas66ragtop points out, the seller must pay the commission to the agent. Especially as a first-time buyer, you can benefit from their knowledge (and no, I have no connection with that field!)


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RE: First Time Buyer's Dilemma

I sold a house in July for full asking price and that was the value on the tax rolls; (used a realtor) and paid a portion of the buyer's closing costs - I was just ready to get rid of the house, having spent months without a renter and months repairing/renovating in order to sell. I was 'bleeding' about $1K per month and just wanted to 'be done with it'.

I think the prospective buyer (OP) needs to let us know what the market is like where she wants to buy before we can be certain that she should or should not ask for help with closing costs.

Carolyn


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RE: First Time Buyer's Dilemma

How many days on the market. I don't think that offer is necessarily low-ball. There are other things involved. Make sure you have correct comps. People over-price all the time.

If the house has been sitting for a while and is vacant, you might get it at a good price.

Jane


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RE: First Time Buyer's Dilemma

Why should a seller care if they pay for the buyer's closing costs? As long as the NET amount is greater than or equal to what the seller's bottom line is, then all is a win/win. Keep emotions out of it.


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RE: First Time Buyer's Dilemma

We do have a realtor. They mostly give you all the required data but would not quote you a figure. I googled and found that realtors dont give u a offer price. They give you information to come up with that magic number.


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RE: First Time Buyer's Dilemma

The only way a Realtor can not suggest an offer price is if they are also the listing agent.


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RE: First Time Buyer's Dilemma

I'm not impressed with your Realtor if they're just giving you the comps and making you decide. To me, providing helpful info (such as what to offer) is a big part of the Realtor's role.

At least that has been my experience. When buying my current house, my Realtor suggested offering $270,000 on a $300,000 asking price, which I would never have known to do. The seller accepted.


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RE: First Time Buyer's Dilemma

Thanks for the info. That helps. I will ask my realtor to suggest a good price.


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RE: First Time Buyer's Dilemma

Do not forget that your realtor makes nothing if you don't close on the house. A bias exists to 'make the deal' or there will be no commission. The commission won't be measurably different, but your cost could be thousands higher. (Of course, YOU want to make a deal too, but not at any price.)

Erase the asking price from your mind. What have comparable properties sold for in the last three months? How high will your mortgage holder assess the property? How long has the house been on the market? What did the seller pay for the house? Is the seller under any pressure to sell? Are you bringing a 'no contingencies' offer with a sizeable downpayment? (There are lots of variables.)

YOU need to decide what the house is worth to YOU. You can always sweeten the offer. Few buyers follow the strategy of one of my friends uses when buying *anything*. He makes an decent offer and tells the seller his next offer will be "X" percent lower.


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RE: First Time Buyer's Dilemma

"What did the seller pay for the house?"

This is irrelevant. The house is worth what it's worth now, regardless of what the seller paid.


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RE: First Time Buyer's Dilemma

If the difference in commission between $238,000 and $245,000 is not great,about $87 for the one agent, then why do you suggest that the "bias" to make the deal happen at a higher price is significant?


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RE: First Time Buyer's Dilemma

Sandeep00, please do consider chisue's point.

"Your" buyer's agent is incented to suggest or lead you to the highest offer price you are willing to pay rather than the lowest price the seller will possibly accept. If you must close on this particular house in a timely fashion, your interests may be aligned with your realtor's interests. If you are looking for the best deal, and willing to take some risk of losing the deal and the house - beware! Your realtor makes nothing if the deal does not close, so may end up working against you and may scare you with high comps and warnings of "offending" the seller.

While there may be buyers agents out there who consider their "fiduciary duty" to you more important than their fiduciary duty to themselves, I have yet to work with one.

My last house purchase, my buyer's agent suggest I offer 10% above the final purchase price I negotiated!

To answer your question, $237k seems reasonable / high as between 10% and 15% discount to list. Your asking price should be based on 1) how much you want/ need the house vs. how important a good deal is, 2) Typical sales price as percent of list price in your area (your agent has provided right?) 3) Your feel for how much competition there will be for the property and how desperate the seller is.

Good Luck!


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RE: First Time Buyer's Dilemma

What you guys are forgetting is that sucessful agents are sucessful because of their past clients referrals. Plain and simple. No agent that I work with is going to compromise the relationship over $87.
I for one also do not like to give my buyers a concrete # to offer. What I do give them are the facts... market trends, I valuate the home in question and let them know what a fair market price for the home is, I give them the avg. list price to sell price ratio for that neighborhood, and I pull up past MLS history on the property(to help determine the sellers motivation), I give them the # of days the home has been on the market, and other useful facts. By the time the buyer has all of this info, very rarely do they still feel like they need me to tell them an offer price.

InvisibleHand wrote:
"Your" buyer's agent is incented to suggest or lead you to the highest offer price you are willing to pay rather than the lowest price the seller will possibly accept." Not true for me or the many agents I deal with on a regular basis. We are incentivised by giving good sound advice that will keep that buyer and their friends, family and coworkers being referred to me.
Your agent that suggested an offer price was more than likely giving you a fair market value for the home. The sellers were just ok with letting it go for less.


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RE: First Time Buyer's Dilemma

"What you guys are forgetting is that sucessful agents are sucessful because of their past clients referrals. Plain and simple. No agent that I work with is going to compromise the relationship over $87. "

But plenty will when the numbers get up to $100,000+.

It took me many years to find the agent I use pretty much all the time, and I give her plenty of referrals.
I even work with agents she is training (she is actually a licensed broker) knowing she is still watching everything.

I have repeatedly been asked for feedback on the newer agents.
Most are very good, but still make 'green' mistakes.
Between the long term agent and myself we have not had any escapes though.

My long term agent looks out for properties I might be interested in, and her many years of experience in the area and large contact base really helps.

I am often the guy who pays well for older places in need of renovation.
The seller gets a decent price, my agent gets a good commission, and knows there will be another commission (on a nice price increase) in 6 months to a year usually.

Even if things drag out, the commission is going to happen eventually.

Twenty plus years using the same agent has payed off well for her, my attorney, and me.

Even in the downturn she has taken smaller commissions on REO (banks are notoriously cheap, especially when they are losing money) knowing there will be more to come.


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