Is there a rule of thumb for making an offer on a house?

[SewLittleTime]

We found a house that we like. It meets all of needs including my dream list of formal dining room, a front window to display my Christmas tree, place for the piano, big kitchen, and all the kids to have their own rooms.

 

It does have a few issues. The house is still owned by the builder. It has a few issues that the builder went back and corrected with the foundational walls in the basement. He rented it out for 2 years to make sure the the issue was corrected. No more issues since the fix.

 

There are slight little things that need fixed, but things that dh and I could do in time. It is at the top end of our budget, and so we would be willing to make an offer, but we won't go above X amount because it will stretch our budget just too much. Plus, with the things that need to be done, we don't think we should pay what is being asked.

 

We don't want to make a lowball offer either. So, my question is is there a rule of thumb for making an offer on a house? The builder has reduced the price $7,000 just recently.

[Halcyon]

:bigear: We are in the same situation. Homeowner just reduced the price on a house we want, but it's still on the upper end of doable. And it too needs a bit of work, over time.

 

I had heard, depending on the comps and your area's RE market, that you could offer 20% below. Then you negotiate to a middle point, if they're interested. How long has it been on the market? Is it overpriced compared to other similar houses in the area? What does your RE broker say?

[SewLittleTime]

It's been on the market 5 months. The agent we looked with works with this builder. I'm a little concerned that she may have bias for the builder. But she has shown it twice (once to just dh before I got here and now to both of us). I feel like to go get another agent might be a little underhanded--but maybe not!:confused:

 

It's not overpriced in comparison to other homes. But it does need some things. The laminate counter in the kitchen is coming off in one spot. There is a spot in the foyer that needs the tape & float repaired. Those are minor fixes for the builder. The vinyl floors are just plain ugly, but that is my issue. Dh and I would plan to tile those eventually.

[gardenmom5]

you really need more information. some houses are poorly priced (high or low) - and some are priced "just right" for what you are getting. You also want to look at recently sold comps to get a better idea of the market to see if the price is fair or not. this is one reason why you do want an agent, and not just a "diy" sale.

 

we sold my mom's condo - and we had our very first offer presented by an agent stating "sale prices here are ___ below list, so that's what we're offering". honestly, it wasn't even worth responding to. btw: we sold it for nearly what we were asking - significantly more than the first agent offered. (I really wanted to tell the buyer to find a new buyers agent because the guy was obviously a dork.)

[Mama Geek]

What is your opinion of the realtor? Do yo have a good feel for this person or not? I can usually tell if someone is being straight with me or not.

 

Also most cities have real estate assessments online and you can usually find out when houses sold and for what price on those sites. It is some work, but it can be done on your own.

[ma23peas]

I hate to sound jaded, but he did not take renters to make sure everything was good with the house..he took it b/c he could not sell it 2 years ago!! He can not afford to carry so much debt....builders have been gobsmacked!! I feel for them...

 

To give a fair offer, find all the most RECENT comparables in that area...find the per sq. footage SELLING rate, not ASKING rate...make sure you are seeing the full picture (no extra incentives at closing for carpet/roof/etc.)...with the market the way it is now, YOU are in the driver's seat. It is business...not personal. I would offer 10-15% LESS than what comparables have sold for...he has the option to come back to negotiate. It can go back and forth 3-4x...even if he does not come back with a counter, you can always recounter with a higher offer. But, that is the best way to handle these kinds of transactions. And, sadly, I don't trust a lot of realtors...some will only pull the high end comparables, you want ALL the comparables...throw out the ones that are not 'comparable' (15 years or older or not the same number of bedrooms etc.) and then take an average of per sq. foot sales.

 

Houses that sold for $100 per sq. foot 5 years ago are sellling as low as $75 per sq. foot now... a large chunk of change on a house.

 

Just read you looked at it with the realtor who represents him...this is a big no-no. She will only pull positive comparables...I would call a separate realtor and have them represent you, UNLESS she is willing to only take 3-4% realtor fee since she is representing both parties...it is usually never recommended to do this (we did, but we worked out a better deal b/c of it)..many things can be written into the contract that are for the builder not you, at the minimum get a 2-10 HOW warranty...ask him to correct those items, get an inspection and make the contract contingent upon it, do not use the inspector she recommends..at the very least, contact other realtors and ask for the names of 3 inspectors...you can even call teh county builders office (where permits are pulled) and ask them which inspector they recommmend.

Edited March 4, 2012 by ma23peas

[SewLittleTime]

(I really wanted to tell the buyer to find a new buyers agent because the guy was obviously a dork.)

This made me chuckle.:lol:

[ThisIsTheDay]

I would say there is no rule of thumb. It is dependent upon many other things, including your specific area, and how well the house is priced to begin with.

 

In the past two years, three houses have been sold on my street. Each was up for sale for 10-12 months, and each sold for 82-87% of the original asking price. None of the sellers were particularly desperate to sell, and each lowered the asking price at least three times before attracting buyers.

 

You mentioned the possibility of finding another real estate broker. You might check with anyone you contact. The agent that showed you the house initially may have a legal right to any commission on the house, as they were the first to show it to you (although if you had a valid reason to switch, they may give up any claim to funds).

Edited March 4, 2012 by ThisIsTheDay

[SewLittleTime]

I hate to sound jaded, but he did not take renters to make sure everything was good with the house..he took it b/c he could not sell it 2 years ago!! He can not afford to carry so much debt....builders have been gobsmacked!! I feel for them...

 

To give a fair offer, find all the most RECENT comparables in that area...find the per sq. footage SELLING rate, not ASKING rate...make sure you are seeing the full picture (no extra incentives at closing for carpet/roof/etc.)...with the market the way it is now, YOU are in the driver's seat. It is business...not personal. I would offer 10-15% LESS than what comparables have sold for...he has the option to come back to negotiate. It can go back and forth 3-4x...even if he does not come back with a counter, you can always recounter with a higher offer. But, that is the best way to handle these kinds of transactions. And, sadly, I don't trust a lot of realtors...some will only pull the high end comparables, you want ALL the comparables...throw out the ones that are not 'comparable' (15 years or older or not the same number of bedrooms etc.) and then take an average of per sq. foot sales.

 

Houses that sold for $100 per sq. foot 5 years ago are sellling as low as $75 per sq. foot now... a large chunk of change on a house.

 

Just read you looked at it with the realtor who represents him...this is a big no-no. She will only pull positive comparables...I would call a separate realtor and have them represent you, UNLESS she is willing to only take 3-4% realtor fee since she is representing both parties...it is usually never recommended to do this (we did, but we worked out a better deal b/c of it)..many things can be written into the contract that are for the builder not you, at the minimum get a 2-10 HOW warranty...ask him to correct those items, get an inspection and make the contract contingent upon it, do not use the inspector she recommends..at the very least, contact other realtors and ask for the names of 3 inspectors...you can even call teh county builders office (where permits are pulled) and ask them which inspector they recommmend.

You don't sound jaded. This is why I asked. The HIVE is great at telling it like it is. This a huge decision! We want to make the right one!

 

We have already discussed getting an inspector independent of the builder. I don't want bias in that area. Dh has pulled the tax records and some comparables. It is amazing what you can do with google!;) We would definately ask for a home owner's warrenty.

[gardenmom5]

The agent we looked with works with this builder. I'm a little concerned that she may have bias for the builder. .

get a different agent. this agent is representing the builder.

[Mrs Mungo]

You need your own agent. It depends upon many, many factors.

 

When we sold our house? We had two offers: one for below the asking price and the other full price+buyer was willing to pay closing costs. Guess which one we took? My agent said that the first agent wasn't experienced enough to know what her clients should have offered.

[higginszoo]

Definitely get your own agent. You won't pay for this, the seller will. They will be able to give you much more accurate information about comps, your local market, and make sure that you're legally covered where you need to be.

[KidsHappen]

The current agent legally works for the seller. Her obligation is to him. She wants him to sell the house for as much as he can possibly get as her comminssion is based on the sales price of the house. You need to hire your own agent and they will advise you on the best offer to make.

[Happy]

I'd ask the agent who she represents in this transaction. Agency is a very big deal in most states...laws have tighten in the past several years.

 

Be informed.

[Guest steamboatdad]

there is no rule of thumb for making an offer. The simple rule is this: don't offer more than you can afford. Figure out how much you can afford after factoring in the repairs that need to be made. Offer that, or a little less to allow for closing and moving costs. If that is more than you think the house is worth, then offer what you think the house is worth. This is business, not personal. If the seller gets upset with your offer, he's not a real seller. Never go above what you can afford if this is a house you are going to live in for more than 2 years (that is, you're not doing this to try and beat the market and make money).

 

I don't have enough information to tell you if you can, or should, change your agent. If you have signed a letter of representation, you may owe a commission to that agent if you buy that house with another agent. The seller may just refuse to take the offer from another agent if he/she knows there is a legal claim.

 

If that agent has "worked with" the seller, but doesn't work for the seller (through a contract relationship), then it's a matter of using good business sense to get the information you need to make the offer you feel meets the criteria above. I find it amusing that people assume real estate agents are uniformly corrupt--does that mean they would act in duplicitous ways if they were the agent?

 

Final word: there is always another house, especially in a buyer's market like this. If you fall in love with one, then you may very well pay more than you might if you take that attitude. If you have a good agent, s/he will tell you this and keep working with you to meet all your needs. If s/he bails, then the decision to choose another, harder-working, agent is made for you.

 

Happy hunting.

[Mrs Mungo]

I find it amusing that people assume real estate agents are uniformly corrupt--does that mean they would act in duplicitous ways if they were the agent?

 

I just don't see that in the posts. There are buyer and seller avers for a reason-to avoid a conflict of interest. People tend to work in their own best interest. That isn't corrupt or duplicitous; it is just human nature.