Profile picture for JenC87

First Time Buyer - Seller Refuses to Negotiate on Price.

I am a first time buyer, and after looking at many homes, I came across one I love. The asking price was recently reduced to $119k, so we made an offer of $110k, thinking that was perfectly reasonable given the fact that it has been sitting on the market for several months. They came back with a rebuttal price of $119k. We asked if they had put any work into the house to justify their refusal (Seller paid 112k in 2009), and they did not. It has only been depreciating since they owned it. After asking if they put any money into it, they sent us a condescending email stating that $119k was their absolute bottom price and would not negotiate, and if there were any other issues found in the inspection, they would still only come down to $119. Is this a bluff? By the way, ours was the only bid they had received since listing the home. They claimed they needed to sell for no less than 119 to break even, but I don't understand how someone who sells a home after only 2 years doesn't expect to take a loss. We really want this house. If they already stated they would not come down any further, and we walk away from it, is there a chance they will come looking for us? Honestly, I'd pay $119k, but I refuse to pay for the seller's bad financial decisions. It's the principle of the matter I guess.    
  • March 22 2011 - Grand Rapids Township
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Answers (23)

Profile picture for hpvanc
Walk, it is extremely unlikely that it will appraise for what they are telling you is the absolute bottom dollar.  Your loan amounts will be contingent on the appraisal.  Unless you want to bring additional cash to the table you either can't buy at all if you are putting a minimum amount down, or if you are going the traditional route mortgage insurance may be required.  If you are putting more than 20% down it is your call, but it is a matter of principle and you use your principles to minimize the amount of financial principle you would lose in the transaction.

If they come back with a more reasonable counter later you can take it under advisement at that time.
  • March 22 2011
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Profile picture for wetdawgs
If in your shoes as a buyer, I'd consider several options:

a.  Have your buyer's agent do a CMA on the house, so you know what has sold recently in the area that would give you a hint of fair price.

b.  Offer what you consider you are willing to pay, but include appraisal contingencies, inspection contingencies, and seller contribution to closing costs.

c.   Walk, saying "thanks".     It is likely a house that is going to have to go to short sale, or seller will have to come to closing with money.  Therefore, will be a very difficult property to purchase.

  • March 22 2011
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Is this a for sale by owner property?  If you are dealing with the seller directly it sounds like it.  What make you think it has been depreciating since they have owned it.  Are there like properties nearby that have asking and closing/selling prices for less?  If you can replace it with a like property properly priced walk.  Or walk if you think the value is not supported in the market.  If you decide to swallow your pride and go into contract the most it will cost you is appraisal and inspection.  If you don't have an agent make sure an attorney reviews any purchase contracts prior to signing.

Best,

Eric
  • March 22 2011
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Profile picture for B Mike West
The last comment is right on.  Remember that the seller can ask for or accept any price that they want.  There may be loans on the home that you are not aware of.  It is their right to be unrealistic and it is your right not to play their game.  If the home remains on the market for another 90 or 120 days they may be more realistic and they may not.

Start looking for another home.  If you don't find one in 90 days, and that one is still available, you might have your agent call the listing agent to see if the sellers are ready to accept your offer-if you resubmit it.  Note that the seller has already told you that they will NOT pay for any repairs.  That is NOT a good sign. There are many homes on the market,  Live is too short to tear yourself up over that one.
  • March 22 2011
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Sellers often have unrealistic expectations of what their property is worth and often base prices on what they NEED to sell for to as to avoid taking a loss, rather than what the property is really worth. Its wrong, but not uncommon. Unfortunately, the market doesn't care what people need to get in order to break even. The market price is the market price.

You should have your agent do an analysis of what the property is really worth based on recent sales. Only then, can you decide what you should be willing to pay.

The sellers have every right to refuse to negotiate their price, even if it means they will not sell their house. If the house is worth it and they refuse to negotiate you might have to meet their price if you really want the house. BUT you need to have some analysis done to determine what the property is actually worth. You won't be able to get financing if the house doesn't appraise properly.

If the house isnt worth it, or you don't want to pay that much. Find another house. Plenty of options out there from people who are willing to be reasonable.
  • March 22 2011
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Profile picture for JenC87
Hi. Thank you all for your advice. To clarify, I am dealing with the woman's agent, so it's not for sale by owner. We are getting an FHA loan and plan on putting about 4% down. Similarly priced homes within the area are larger and on bigger properties. This house is 55 years old and has water damage in the basement. However, it is a lake front property with a lot of charm and in a great location. Charm can only carry you so far though. The home's Zestimate value is 147k to 199k range, but I don't trust Zestimate's values at all. It's difficult to tell, because the home sold for 210k in 2006, 85k in 2008, and 112k in 2009, so it's kind of all over the place. The agent said that we need to not worry about what the seller paid because it sold for $210k previously, but that was at the peak of the housing bubble, and the idiots who paid that much defaulted. I'd imagine it's been a while since anyone was in that home who actually took care of it. If they had, there would not have been water leaking into the basement for years. I'm just wondering if the "seller can't sell for a penny lower, and we've already lowered it as much as we can" line is a common bs line used by agents to pressure buyers or if it might actually be true...    
  • March 22 2011
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Profile picture for the_country_hick
"I'm just wondering if the "seller can't sell for a penny lower, and we've already lowered it as much as we can" line is a common bs line used by agents to pressure buyers or if it might actually be true..."    

They may believe that is true. However, it is not true. There have been many people who owe more than their house is worth. To sell the house they had to take a loss. There have been people who rejected an offer only to take another offer $50,000 or more lower a couple years later.

When a house must be sold the price can change. If that owner refuses to accept a slightly lower offer they may end up either losing the house to foreclosure or being stuck in it.

Agents do throw out B.S. lines often. You never know if they are being honest or not. They could say we need your highest and best offer. Yet you could be the only one trying to buy that house. You never know.

For myself, I would walk away. In another few months come back and offer lower. See what happens. Time can make a seller really hungry. When they get hungry a lower offer can seem fantastic.
  • March 22 2011
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Profile picture for MichaelPRU
Jen,

"We can't sell it for a penny less" is a commonly uttered phrase in real estate.  Sometimes it's the truth and sometimes it's a negotiating tactic.  When it comes down to it though does it really matter which is the case?  I say no.

My advice is to focus on what's really important here.  As your agent stated, what the current owners paid is irrelevant.  What the house sold for before that and before that is irrelevant as well.  Have your agent provide you with recent comparable sales to determine what the home is worth now.  If the owner is not willing to sell at a price near that value then I would suggest you walk away.  The ability to obtain financing is heavily based on what the home is worth now and if you can't finance your offer there's no point in moving forward even if you were willing to meet their demands for a higher offer.
  • March 22 2011
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You're off to a bad start!

Experience teaches us that things that start off bad, usually end the same way.  Why go there?

There are plenty of fish in the sea!

  • March 23 2011
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Profile picture for klarek the realist
Offer $110k.  They counter with $119k.

Then Offer $105k.  If they counter with more, then offer $105k.  Let them know each time they make you resubmit, it will cost them $5k.

Or you can just walk. 
  • March 23 2011
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Profile picture for Blue in d Nile
No seller is obligated to negotiate nor lower their price.

If you don't want to pay what they want, they don't have to sell it.  It doesn't matter how long it has been on the market.

It sounds like you don't want it for what the seller wants to sell it for, so find something else.
  • March 23 2011
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Profile picture for CallTheSisters
Let them sit for 30 days and try it again. 

It was also unclear to me if you were dealing through an agent or directly with the seller?

If you are dealing directly with the seller - don't sign anything until you have an attorney review it.  There should be a mortgage contingency and an inspection contingency in the contract to protect yourself.

When they already tell you they won't pay anything after inspections that scares me.  I'd be concerned that they knew more than they were telling you.
  • March 23 2011
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They are telling the truth about coming out even on the deal at 119,000.  If they are paying agent commissions on top of the sale price and adding in their closing costs.  It is not your fault they are moving after only 2 years. This is a very common problem with the market right now, homes have decreased in value and people who purchased at market value in 2009 have not gained equity over the past few years.  They may be unwilling or unable to come up with the cash to close.  My question is whether or not the listing agent is also representing you as the buyer. Usually having a Buyer's Agent represent you is free.  I would highly recommend using a different agent to represent you and asking your agent to run a market analysis.  If the value is there and you love the house go for it. If not it is better to walk away.
  • March 23 2011
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You may try looking for options instead if you won't arrive at a common ground. Buyers have always the privilege to give their prices or make a bargain. On the other hand, sellers have the same privilege and they may refuse your offer.

Fhil F.
Social Media Manager
on behalf of Derrick Sakai
  • March 23 2011
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Profile picture for Dunes....
LOL

Bob Ferapples
Social Media Manager
on behalf of Dunes
  • March 23 2011
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It's still a Buyer's Market, there are a lot of properties out there.... You say you're in "love" with the house, and interest rates are LOW....have your lender give you the numbers on the full price, and the price you wanted to pay. Is it worth it to you to pay the few dollars more per month or not? If not, there is a lot of inventory out there to choose from.....if you don't find another house, then maybe that is the house for you, and it's either worth the price for you or not..... Seller's have MANY reasons for sticking to their prices these days..... Remember, although it is a Buyer's Market (lots of inventory), many times Seller's are coming down to their bottom line, as they are competing with bank REO's..... Most houses (in our area) are selling within 3% to 5% of asking price, and sometimes full price or higher!?? Hard to try to guess what a Seller is thinking.....every situation is different. BOTTOM LINE: Try to take emotions out of it, yours and the Seller's..... Is it worth it for you or not? Is there something else out there that will work? Answer these questions, and then do what is right for YOU! GOOD LUCK!!
  • March 23 2011
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It sounds like the sellers aren't very motivated.  They may be looking to come close to their break even point and therefore will not come down any further.  They might not need to sell, but they would like to sell if they can get what they want for it.  Not everybody prices their home above what they expect to get for it.  I encourage sellers that I work with to price their homes very close to the minimum price they would accept because you get more potential buyers to see the listing this way.  If you really want the house, accept their counter offer.  If you are just trying to get a deal, find a different home.
  • April 22 2011
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Just tell them that this is your final offer. Tell the sellers agent that you will leave the offer on the table and you will continue to look for a home that meets your needs.  as soon as you find a home that you want to bid remove the offer on the other house, simply call and take it off the table.  some advice for you, as you search for another home try to find a good buyer's agent to reresent you in your search . Remember a buyer's agent will be there for you throughout the transaction. The inspection, the sales agreement and most important the intail bid and the negociation.
Good luck
  • April 22 2011
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If you really want the home then pay the full price and don't lose your dream home over $9,000.00  If it doesn't appraise out they will need to come down.  I'm sure they are telling the truth in that they need to pay closing, etc.  It shouldn't be more than $63.00 a more in month for you because it will be 6 - 7 dollars more per every thousand on the price. 

If it does appraise out and you plan to remain in this home long term you will be glad at the end of the day that you are happy.  Money isn't always everything.  However, no one can make this decision but you.  If I wanted a home that much I'd do it.  Good luck!

  • April 22 2011
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Profile picture for klarek the realist
Just because it's been on the market for a while doesn't mean you should low-ball them.  You said so yourself, they just reduced the price.  Low-ball them if that price is too high, yes, but not just for the sake of screwing with them.  They're probably taking a loss on the house as it is, paying out of pocket to cover the costs of selling.

Personally I don't want to buy from a "normal" seller since they are all delusional.  If I had to explain to them the rationalization behind my offer - what I think their house is actually worth - they would probably take it personally.  They shouldn't, since it would be more reflective of my pessimistic view of the market in general (as well as houses being way overpriced), but they wouldn't appreciate knowing any of that, even if it were to ultimately save them time and money.  People like living in their own little fantasy world.
  • April 22 2011
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NEVER work with an agent who says things like "dream home" and "don't lose it..." [see above] 

Homes aren't dreams, true love might be a dream, but homes are places to live, and there are always more coming for sale. 
  • April 22 2011
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Profile picture for Jim REeBroker
It sounds like they could be very close to their lowest price. If they bought at $112K just a couple years ago and factoring in their cost of selling (Realtor Fees, Title, Escrow, etc.) they pretty much are breaking even, or at a small loss.

Still, you don't need to give them what they want as you pointed out.

If you're working with an agent, ask him/her to contact them and try to feel out details of their situation. If you're solo, try to do the same. Be honest. Tell them you like the place, but can move on if can't reach an agreement. Tell them you'd like to reach an agreement. Then explain that there are many ways to find a win-win situation. Ex. You could come up on the price, but only if the seller will help you with some things. Try to figure out what they want/need most and why. Be sensative to them as they will open up more to you. If they refuse to go below $119K, but will cover all buyer costs and perhaps give an allowance for some needed work (a credit at close of escrow) this = money. If you wind up paying $119K but they essentially give you $7K in perks so to speak, you really got it for $112K from your point of view, but gave them $119 as they wanted (note, you're tax roll will be as $119K). Check w/ a Escrow person first to see what items are permissable. Some lenders reject what looks like a kick back from a seller.

After you've done your best, if a deal isn't struck, politely ask that they call you if anything changes. They may call back with some info. you can use to figure out a win-win solution. Best of Luck!
  • April 22 2011
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It is their home and they get to decide what to sell the house for.
If you really want it, what is stopping you from paying $119K
You said they just reduced the price, so in they already came down.
Are you not buying it because you really believe the house isn't worth it, it won't appraise  OR  are you just upset that you don't want to pay list price?
The seller decides what he will take for his property, you decide at what price you will take it and own your new home, or walk away.
  • May 04 2011
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