Profile picture for jmpata

Is putting down an offer 17% higher than the listing price normal in my market

I am a first time buyer that lives in southern California and I am planning on putting 5 offers down on separate houses later today. The houses range in listing prices from $215,000 to $249,000. The max my lender will give me is $250,000. My realtor I am working with is strongly suggesting I put down an offering price of $250,000 for all of the 5 houses. I know it's very much a seller market in southern California in my price range and there is a shortage of inventory but is putting down an offer 17% higher than the listing price normal in my market. I can't ask my realtor this question because she has an incentive for me putting down higher offering prices.
  • July 18 2009 - US
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Answers (9)

Profile picture for Mr Caveat
SO cal is a big place and we have alot of coverage there... what area are you considering?
  • July 18 2009
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Profile picture for jmpata
The areas are Chino, Ontario
  • July 18 2009
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Profile picture for real estate mike
First of all the asking price is a poor place to start with regards to an offer. Your buyers agent should prepare a cma for you. Then you want to start below market value and ask for seller concessions. I would fire that agent immediately, not tommorrow(but thats just me). Do you have earnest money to cover all five offers; and why would you want to risk losing it? Technically your offer isn't accepted until you receive in writting that it is but why risk all five sending written confirmation at the same time and having to fight over your earnest money? Below market value is your objective, period. Otherwise just keep renting, that's what I would do..
  • July 18 2009
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Actually, your buyer's agent has a fiduciary duty to you. I would ask her rationale for offering 17% over list. It may be necessary to get the house. I would also ask if there were other terms that would make your offer more appealing. If you are in a multiple offer situation, you are already at a disadvantage by using a mortgage instead of cash but that doesn't mean you can't win. As for putting in offers on 5 houses when you barely have enough to pay for one, that could be considered unethical behavior. If more than one seller signs the offer/contract, then you have committed to buying more than one house. Yes, you can break the contract but that's the unethical part.
  • July 19 2009
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Hi JMPata,

If you are working with a "Buyers Agent", they should be working for YOU.  That means that their job is to get you a home at the lowest price possible, regardless of the commission.  I am not in your state but what you say is a bit alarming to me as an agent.  IF offering above the list is the norm in that price range, I would want to see 5 MLS Sold Comps that show where properties have sold in that area for above the list price in the past 6 months.  Yes, some homes DO sell above the list price but if that is the norm, then your agent should easily be able to show you by pulling comps and letting you see the data from MLS.
Writing 5 offers at once and only being able to afford one home.  That is something I would never do, it's sure to cause you to lose earnest money.  If you are offering above the list price on 5 homes, you put down Earnest Money on all 5 homes.  If any or all of the sellers accept your offers, you will lose 4 of those Earnest Money Deposits.  Why would you risk that?  Why would your agent direct you to do that?  Plain and simple, Earnest Money is what is says, you are EARNEST in your offer.  You can't be EARNEST on 5 offers if you can only afford to buy one home.  Don't lose your hard earned cash.  Make one offer at a time with short expiration dates/time limits. 
Also, if there are 5 homes in your price range that you are interested in, the inventory cannot be that low.  I have clients that I wish I could find 5 acceptable homes for in their price range.  Our inventory is high and my clients expectations are even higher.  I would at least try to put in an offer below the list price and start by asking for 3%-6% sellers concessions.  If they counter above the list you can counter them back.  If they don't accept, try the next home.  It's never good to be in a time crunch when buying a home.  Your Realtor's job is to negotiate for you.  If your Realtor is the listing agent as well, you need a buyers agent that is looking out for your best interest. 
  • July 19 2009
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Profile picture for rjon.101
I know of no place in southern california that is a sellers  market  and Chino is not a sellers market not at any price range, Do some more research , Unless you know your market very well to know that the house is worth more than asking  there is no reason to offer more than asking It sounds like your buyers agent is full of it.. If you dont know what the house is worth stop and learn, prices are not going up any time soon read all about the economy, unemployment in SoCal and Chino area and foreclosures a lot more than have been seen so far etc etc.  or at least do not get into a bidding war or offer over listing. there is no reason to in this market in SoCal and esp chino.
here is a site for numbers on foreclosures coming in Ca and dont forget that there is a moritorium on foreclosures in Ca from June 15 to Sept 15 which means activity picks up after sept 15 and these will start hitting the market in Jan 2010 after the house is taken and processed
http://www.responsiblelending.org/search/search.jsp?query=foreclosure+by+state
  • July 19 2009
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"I can't ask my realtor this question because she has an incentive for me putting down higher offering prices."

Based on this comment alone (without regard to some of your other recent questions) you should not be buying at all yet.The decision to buy or sell is an individual one and should never be influenced by a salesperson or reading headlines in a newspaper. rjon.101 barely scratches the surface of the housing market and economy, but he/she is right on target. You should be doing individual research into all the factors that come into play and determine what is actually best for you. Don't let things like the $8K tax credit overwhelm your intentions or actions. Finally, your pre-approval is for a loan up to $250K. Look at the numbers. Why would anybody max out? Especially in today's economic environment.
  • July 19 2009
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Profile picture for AdellF
JMPATA- An agent receiving an incentive based on the amount of ernest money you submit with your offer???!! I've never heard about that; at least not in my neck of the woods.
Placing multiple offers can be tricky business; hopefully your Agent is experienced in this area. Ernest money doesn't have to be any particular percentage; however; a strong amount lets the seller know that you're serious or extremely interested.

Personally, I think $500 ernest money should acceptable to submit with your offer/offers. Keep in mind that you could end up in a binding contract for more than one house if multiple offers are accepted before you withdraw.

All the Best!

Adell
  • July 19 2009
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Profile picture for 2005jjt
I wouldn't worry about multi offers. We have been looking at bank foreclosures. The banks will drag there feet so just make sure that the contract has a contingent on short acceptance time frame. This will cause them to move faster or reject faster. You still have time to withdraw your offer until they sign the deal. It can get tricky. The best thing to do is make the one offer that you really want to go through look the best. 1% earnest money, AS IS and waive inspection, Short closing time frame. This will make the deal get a quick green light. Just do your home work on the properties and know your lender....Good luck
  • July 19 2009
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