What is a resoanble offer to make on a house?

Question

It would be especially helpful if there are any agents out there to answer this:

In today's market, what is a reasonable discount % off of the ask to offer? Also, if you were acting as a seller's agent, and the offer was lower than you might have hoped for (say 70% of ask), but came with a higher than normal down payment (30%) would that affect your decision? This property needs some work and TLC both inside and out, and is in central MA, if that matters. Obvi, each situation is particular, but just looking for guidance. Haven't been having much luck with my offers lately. :( Thanks for your help!

Answer 1

The down payment has nothing to do with the asking price, that is your banks decision. You may want to be prequalified, alot of times owners won't even consider an offer if you are not prequalified.

Asking price discounted % really depends on the home and the comps available in the area. It is hard to say without knowing what compriable homes in the area are selling for.  70% sounds low. I would try 10,000 off the asking price if you really want the home and negotiate up from there. There are so many factors involved, what they owe and how bad they want to sell.

Answer 2

We just sold our house after only 30 days on the market and for just 3% below asking price (we were not desperate sellers).  We would not have even countered an offer that was 30% under, we would have just turned it down.  Now, if you're in a market where there's so much inventory that you can just shrug it off and move onto the next possibly desperate seller then it might be worth a try.  But before any offer have your agent do a market analysis to see if it is priced right to begin with because sellers all have different strategies (that you won't be privy to) for pricing.  Some price high just to see if anyone will bite and some price right to get it done with fast.

Personally, I don't think the amount of the down payment would matter at all if it was going to be bank financed.  Regardless of how much you put down I still get the same amount in the end.  The only reason I would even look at the down payment amount is to try to judge the likeliness that your actually going to be able to secure the loan you are applying for (the closer to 0% down the more I would assume you are stretching your finances to buy my house).  There may have been some other difference between the two offers the seller received that made the other offer more attractive such as no contingencies or more attractive closing date.

Answer 3

It is very fair to offer 30% under the ask if the house needs TLC, you never want to start too high. Most of the time you will get a counter offer, then you will know where you stand.

Answer 4

The down payment would only matter if the seller was doing owner financing.  Regardless of the down payment, the seller gets the price of the house less costs (for example, if the price after costs is $200,00, that is what the seller gets in his pocket whether you put down 30% [$60,000] or 0%)

Second, the seller's agent has to present your offer to the seller, so your offer will not make a difference to him.  He may,however, suggest that the seller reject the offer, but that is up to the seller.

Third, the amount of discount you can ask for will depend first on the going prices in the area, then how much work is needed, and last, how much of the work needed is factored into the price.  Example - a $200,000 house (based on area sales) that needs $25,000 in repairs and is priced at $175,000 is priced correctly and unless the seller is desperate, a 30% discount will probably be rejected (and possibly no counter offer made, shutting down negotiations).

Remember, if you offer way under what the seller feels the house is worth, it may insult the seller and they will be disinclined to even accept another offer from you or negotiate.  Your best bet is to do your homework.  Ask your agent to get a list of recent sales in the area and find comparable houses.  See what they sold for.  Make an estimate of the work to be done and see if the seller has factored it in.  Then, determine how much discount you can really ask for.

Answer 5

The reason that you've not had any success is based upon your notion of offering 70 percent of asking price.  That isn't going to fly, regardless of what you read in the assorted nonsense on the internet and elsewhere.

The value of your earnest money is irrelevant, if you are bidding against another buyer who only puts down 5 percent, but is totally and fully qualified for a mortgage for the remainder.

Relative to your inquiry as to what percent to offer OFF of asking price ?  You need to find out first what the property is worth.  I've dealt with foreclosures (and other types of sales as well) where the asking price was a STEAL.  I handled one just a few months back (unsucessfully) on which the asking price was $174,900.  The buyer asked for price guidance, and I advised that he should offer $195,000.  He was shocked, but took my advice and tendered the offer.  The property sold for $198,000.  It was GROSSLY underpriced, and it was apparent that the other offerors realized the same.

Do not ever assume that the asking price reflects proper market value, and that you can discount such price.  You need to know the market value of the property, and then gauge your offer accordingly.

Your error is in assuming that all prices should be discounted.  Nothing could be further from reality.

Answer 6

No way to give a blanket answer - depends on whether the house is overpriced, priced reasonably, or underpriced.  And unless the owner is financing it, your having a big down payment doesn't really matter to them.