My $245K was just to illustrate that people will be happy if you go up even a little bit. Depending on the comps, the lower offers suggested might be fine also.
Is there a listing agent associated with the property? You might be able to find a lot of information from her website. There should be a listing date. That may be more important than the vacancy date, since they might have held off as long as possible before vacating. The people who sold me our house put their house on the market and then started renovating it, which effectively took it off the market for a couple of months. By the time we looked at it it was stale, though they were still in it. That helped us get a very good price for it.
You might also check with neighbors about the circumstances. You can butter them up by saying how much you’d like to live in the area.
There is a house a few blocks from me that has been vacant for years - even before the crash. Rumor has it that there is some sort of estate fight. I don’t think it is being actively listed now. Anyone who wanted it and knew how long it has been vacant could probably get it for next to nothing.
I’ve got some lowballing experience. Some thoughts:
You have to remember throughout the process that you are lowballing. If you don’t get the place, you can’t get too upset about it because you were trying to get it on the cheap. If you feel that you may get upset if you don’t get the place then don’t lowball(ie, expand your price range and make a real offer or don’t make an offer).
I think it helps when every other part of the offer is absolutely perfect. So, no closing condition to sell your place, closing ASAP (or whenever the sellers want), etc.
If you end up agreeing on a price, don’t hold out much hope of any concessions after inspection.
Have fun! You are trying to steal a place, and it may work. This is one of the best aspects of the lowball to me. Why dick around with places that are in your actual price range–live a little and lowball a better place!
Realtor checking in here. If you aren’t working with a knowledgeable Realtor, find one. First & foremost. He/she should have a very good grasp of the market conditions and be able to advise you on value. Not knowing your market, I wouldn’t want to advise you on how to approach a negotiation. But some of the things I’d want to know:
How much inventory is on the market? How many months of inventory do you have based on sales activity for the past 3 months?
What are price trends looking like in your market?
How does the DOM (days on market) for this home compare to the rest of the market? In our market right now, 70 days is a long, long time to get something sold. Two years ago, our average was closer to 90 days.
What have comparable homes sold for in the past few months?
What level of foreclosure activity do you have in your area? How many default filings have there been in the past 6 months?
I could go on and on. I don’t know how many clients I’ve worked with that came in with a preconceived notion that every offer should be made x% below asking. Sometimes that’s appropriate, but it’s never that simple. For instance, if you take that approach in our current market, you could be writing offers until your fingers cramp up and not getting anything accepted. Your market may be different. Get yourself a good Realtor.
Oh, I will echo one piece of advice from above - be careful about giving up your contingencies. Especially your loan and inspection contingencies. Make sure those things are solid before you give them up.
A word of caution regarding Realtors if you are implementing a low-ball strategy. Successful low-balling may require walking away from several properties until you find a suitably motivated seller. You may be willing to invest the time required, because you will reap substantial financial benefits if you eventually find such a seller. The Realtor, on the other hand, actually suffers a loss if you find such a seller (i.e., they receive a lower commission and have expended more effort). Thus, you and the Realtor will be pulling in opposite directions, which is something to consider when evaluating their recommendations.
(Please note that I am not attempting to criticize Realtors as a profession. Rather, I am simply pointing out the economic realities of the transaction and how rational people will be motivated to act.)
This is very important to remember - you paying $20,000 more means a lot less to the commissions than it does to you. In my experience, you decide on your offering price and let your realtor know - it isn’t really their decision.
I’m a Realtor also and have never actually known one to try to convince a client to bid a certain way thinking only of their commission. Really, it’s more likely that both sides will do everything possible to get the buyer and seller to agree on something, anything, because that’s better than nothing. There’s way more effort expended if the deal fails and we have to go through this with a different house or different buyer. By the time I get a lowballing buyer to the point where he might actually buy a house it’s way past the point where I’m coming out ahead on him anyway. I just figure it balances out on the easier deals.
I’ve seen more cases where Realtors actually give up part of their commission to get a deal to go through.
Well, you might if you hadn’t had any interest in three months and desperately need to sell it to pay off another mortgage or credit card debt or something. Even just to avoid paying taxes on it. You’ll let the seller know that you cannot go higher, and you’ll avoid losing the buy entirely by making a ridiculous lowball offer.
You also tip yor hand, so the seller is on notice that you’ll probably be tailoring most of your coutneroffers in such a way to stay near the 250k point. In other words, the seller will know you’re not really making “concessions” as much as you are just altering the terms of your offer so that you stay within your affordability range.
I’ve bought and sold a few houses, and beleive me, you never want to give out more information than you have to. Most Realtors will wisely advise a seller not to consider what the buyer can afford.
Same here. We do occasionally have to give up a little commission to keep a deal together. We try not to do it a lot - we have bills to pay too, you know. But half a loaf is better than none, and it’s usually just better business than letting something die and having the parties walk away and find another agent.
As far as trying to get somebody to pay more for a property because the commission would be better - that just doesn’t happen in my experience. In fact, when we talk to each other about these kind of things, we’re more often bragging about the good deal we got for our clients than anything. If I can help a buyer client win a negotiation and get a house for well under what it might have sold for, I’m stoked. If I can protect my seller clients and get them top dollar, I’m stoked. I like money as much as the next guy, but there’s a lot more to our business than that.
Yes, also consider how much real effect a lower price actually has on a realtor’s commission. Often the selling realtor is not the listing realtor, in which case the commission gets split 4 ways…between the listing broker, listing realtor, selling broker, and selling realtor. So if the commission is 6% on a 250K house, the commission would be $15,000. Assuming (aaasuming, I don’t know what the actual splits would be) equal division, that means each party gets $3,750.
If the house sold for $20,000 less than that, the commission would be $13,200, with each party getting $3,300, or a huge $450 difference. IMHO, that isn’t enough difference to really matter; making the deal would be far more important than the diff in commissions to all parties.
It’s unethical because the friend/lower bidder has no intention of actually purchasing the house, and is only bidding to help the first bidder. Ethics aside, it’s fraud, it’s collusion, and it’s most likely illegal.
Just remind us again about exactly who, in post #12 of this thread said.
???
You can’t lie straight in the same thread.
Why the assumption that the bid is not genuine? The owner could accept it, maybe they don’t like my haircut. The auctioneer/agent’s terms and conditions has a clause (at least in this juristiction) allowing them to reject any bid not in the best interests of the seller.
And so, were the owner, agent, auctioneer to do the reverse, say indicate that there was interest, or higher offers that were highly conditional, add some dummy bids and/or buyers in the auction?
I would have thought that was standard operating procedures of exactly the same ethical and legal basis. Claveat emptor is a two edged sword, not indemnity.
My experience making a “lowball” offer was in the case of an overpriced (as far as we were concerned) home during a medium market. We made our bid, the seller did not make a meaningful counter-offer and we walked away from it. No big deal.
If there aren’t many other “options” for homebuyers in the area (a bit hard to imagine at the present time), then you probably aren’t in the best position to bargain.
I’ve found real estate agents to be a hindrance in making low-end offers. They want deals to go through so they can collect commissions and generally don’t want any part of waiting games or negotiating ploys. I wouldn’t buy the “you’ll insult them” warning. The seller doesn’t have to love you.
It really would help the OP to find out more about the seller’s situation if possible. From a negotiating standpoint the worst sellers might be the ones who are retiring and planning to move, but don’t have a fixed date to do so. They can hang on for a long time since there’s little incentive to move the place.
I’ll send your question marks right back at you. How do my two posts conflict?
Perhaps I’m assuming too much, but getting another person to bid lower on a house than you so your own bid looks good by comparison is the same as having a ringer at an auction, bidding an item higher. It’s essentially a real estate sock puppet.
My recommendation would be to convince the seller, as well as all other potential buyers, that the property is haunted. I myself once acquired an amusement park for a very reasonable sum in this manner.