Profile picture for tennbad70

Home buying negotiating question

I see this situation a lot for everything we are interested in.   The seller has their home priced 10% above the previous sold homes in their subdivision.

If I make an opening offer say 10% below what similar homes have sold for, I would be offering almost 80% of the asking price.  But If I offer 90% of the asking price, there is no room for us to negotiate since we are already offering a reasonable price.  What is the best strategy for this situation given that the house is been on the market for 3 months and no other information about the sellers is known?

thanks.
Dave
  • July 16 - US
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Answers (11)

Profile picture for tennbad70
Hi Sharon,

To answer your question (I'm sorry but it will sound very cynical).  I don't trust an agent because we have a conflict of interest. Their pay depends on the purchase price.  Besides why wouldn't the buyer's agent and sellers agent talk and ask the question "What's the highest price we can make a deal".  They won't wast their time if there is likely to be a price gap that can't be bridged. 

When I sold my home because I lost my job and had no income, my agent communicated to me without saying the actual words. (don't accept, this isn't their final offer).  Still lost a lot of money on the home because I was desperate.    So I want my agent to think any offer I give is my final offer.  And I want access to the full MLS information rather than trust what they give me. Don't get me wrong,  I think being an agent is difficult, you have to put up with a lot of crap from people.  I just wish their income wasn't tied to a sale price or speed of making a deal.  I don't know how that could work, but the conflict of interest and lack of me being able to have full access to the MLS info bothers me.

The lesson I've learned is there are no ethics in business, only legal and illegal.  It's only illegal if you get caught. 

Sorry again, I'm a bit frustrated with the process and needed to get that out of my system.
  • July 19
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Profile picture for Sharon Lewis
I don't think your buyers agent will tell the seller what your highest price  is, if you have a buyers agreement with her, that would be putting his/her license at risk. However if you do not trust him/her, don't tell him. I would suggest that you put something in the contract to offer that if the house doesn't appraise, the seller will meet the appraised value though.
I don't understand why you don't  trust your agent. 
  • July 18
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Profile picture for tennbad70
thanks everybody. 
  • July 18
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Your best plan of action is to consult with a real estate professional.  They will be able to pull recent sales comparables and determine fair market value for the home you intend on purchasing.  Advertised sites that are available to the everyday consumer offer a general and legitimate idea of the value of a particular home, but a licensed agent has the ability and technology available to go more in detail and access all of a homes features, upgrades and amenities, to offer you the most accurate price per square foot market value of a home.   
  • July 18
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Once bitten, twice shy.

In a rising market, sellers have reason to think that their property is worth more today than the neighbor's was when it was sold. But regardless of that - my advice to all buyers is to pick on properties that you can actually buy; trying to negotiate with sellers on the basis of "we think their price is too high" is a losing proposition. Much better to wait them out, or, even better, look at properties that are priced to sell.
  • July 18
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Your agent is your representative. I doubt that she will share your predicament with the other side. 

Houses were over-priced in my neighborhood because almost anything was selling regardless. But now that the schools are opening in a month. Number of buyers has reduced. That is the reason, over-priced houses are sitting on the market. Have a conversation with your agent. Come up with a strategy. You like this house; it is worth trying. And if you are trying then might as well try with full commitment.
  • July 18
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Profile picture for tennbad70
Thanks for all that responded.

It seems that the homes that we like all seem to be priced well above what homes have sold for in the subdivisions.  I looked at pictures/MLS info on the sold homes and they were comparable to what is now on the market.  Maybe they will start start selling for more money, but I see no evidence of that yet. My biggest concern is buying a home that sold for the most money in the subdivision.  After losing money buying a house twice before, I swore I would never get taken again.  I don't want to feel bad watching homes sell for under what I paid later.

I feel like I shouldn't tell my Agent the highest I'm willing to go on a home because she will just tell the selling agent to run me up to that amount. I mean I figure I shouldn't ask my Agent anything that would give information.


  • July 18
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Dave why is this property priced 10% higher? Is there something different, does the house have a feature that stands out over the sold property? Why does this seller think his house is worth 10% more? These are questions you should be asking the seller or your Agent. Offer the seller a fair market price on the property don't worry about the percentages above or below the asking price.

Best of luck to you!
  • July 16
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Profile picture for wetdawgs
If you are "seeing this a lot with everything we are interested in", perhaps prices are moving higher or perhaps you are interested in a group of houses at a higher price point.  You have a number of options:

Offer them what they are asking, chances are good they will take it.

Offer them what the true comps have sold for in the last two months.  Maybe they'll take it.  (Has your agent pulled these for you and described why they are real comps). 

Offer 80% of what they are asking, and very remote chance they'll respond but most likely the deal will be dead in the water and you'll never hear back.   While some will chime in "it never hurts to try", your agent may refuse to waste their time writing up the offer.  

If your target is to pay 90% of asking price, a 10% difference between that and your offer is a huge difference. 
  • July 16
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Market was hot a few months ago and now it is not the case. Seller's agent probably understands the current market. He/she would know that it is unlikely to reach that number.

Have your agent talk with them and discuss what would be an acceptable initial offer. You don't want to offend the seller but you also would not want to overpay just to please the seller.

Don't wait and let anybody else take the opportunity. I would try and start negotiations.
Good Luck!!
  • July 16
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The best strategy, Dave - if you really want to buy a house - is to find something that's properly priced. If these houses are overpriced, then I think that there should be comparable houses fairly priced.

All the best,
  • July 16
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