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selling a house: offers & counteroffers

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As someone with very limited experience with RE (bought one house in my life); here's what I would do:

Draft an offer at $366,500, send it to whoever made the first offer on the house and have it expire in 24 hours. Have your agent tell their agent that if they do not accept the offer, you will send an identical offer to another party that has shown interest, who will also have 24 hours. Tell them that if neither party bites, you will be open to counter-offers as well.

Can someone with more experience in RE negotiations tell me if this is a good strategy?
 
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There's always an other offer. A house can be sitting for ten years, and the day you make an offer, the RE agent will tell you someone else did too.
 
I sold last fall. I had an offer after 10 days on the market.

My list price was $272,000 which was fully backed by an appraisal 6 months earlier and before I made a number of updates. I wanted out of the house, but wouldn't take anything under $260k and my realtor knew that.

The offer came in at $245,000.

I countered at $268,000.

They came up to $252,00.

I countered back to $265,000. With a reminder to my realtor that if you get me to $260,000 it's a done deal.

Twenty minutes later it came back at $260,000. Right at the magic number that I wouldn't go under. I'm sure there was some realtor to realtor capitulation going on there.

I think countering is pretty common and you can really judge how it's going to play out on the first counter. If the seller counters a couple thousand from their asking each offer they aren't gaming. If a buyer counters only a couple thousand on their first then they aren't either. But if one party is willing to give up several thousand at a time there's room to work.

It really just comes down to how bad you want/need out of a place and how bad the buyer wants/needs in yours. Neither party is openly going to disclose that. The counter offers will to some degree though.
 
JulesMaximus said:
It's not a game. It's reality.

My wife is a Realtor and has 4 properties in escrow right now with multiple offers on the ones she is representing the seller on.
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It doesn't matter if there are other actual offers, the seller ALWAYS tells prospective buyers there are other interests/offers. Your wife does it too. They all do.
 
iFX said:
It doesn't matter if there are other actual offers, the seller ALWAYS tells prospective buyers there are other interests/offers. Your wife does it too. They all do.
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The seller that I bought from didn't do that. I wouldn't care if he did. What am I supposed to do with that information? I don't know what he's willing to pay or if he'll buy or not. I would just keep negotiating the same as if there was no one else involved.
 
Blackjack200 said:
Never looked into a RE license, but I would bet money that they are bound by regulation and ethics to not lie during negotiations.
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Correct, and I just asked my wife the following question via e-mail just to prove the point:

Question: If you are representing a seller and get an offer on the house, do you tell the other agent that you have other offers even if you really don’t?

She answered back: No, that would be unethical. Not to say that some agents do end up doing this but I do not.

So, unless my wife is in the habit of lying to me, iFX, you are flat out wrong on this.
 
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Oh and to answer the direct question about multiple offers I'd simply counter to both the same way and not play games. Hopefully I can get an accepted offer from one that I'm satisfied with and then my realtor can go back to the other party and ask that they match + $1,000. Give them 24 hours to respond and if not, cary on with the first one.
 
I have done a lot of buying and selling of real estate and while I can't tell you how all realtors and buyers/sellers think, I'll tell you my approach.

When buying - before I make my first offer, I will decide what the maximum amount I am willing to pay is, then I will submit an offer I believe is designed to be slightly too low for them to accept. If they counter with a reasonable offer I will increase my offer significantly to show good faith and see if we can reach middle ground while never exceeding my maximum value. The presence of lack of competing offers makes no difference to my approach, except perhaps I will counter offer faster to make sure they get my offer before making a decision.

When selling - it is the exact reverse of the above, I decide my bottom line price before listing the property, and then negotiate with the buyers until we have come to an agreement. On occasion I have decided to not even counter an absurdly low offer, just to send a message that I am not interested in wasting my time. I have never disclosed details to potential buyers when I am receiving mutliple offers, but I would ensure that they know if I am dealing with more than one potential purchaser.
 
D1gger said:
When buying - before I make my first offer, I will decide what the maximum amount I am willing to pay is, then I will submit an offer I believe is designed to be slightly too low for them to accept.
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Any illusion of good faith negotiation is lost when you low-ball them with your first offer.
 
Mike Gayner said:
Any illusion of good faith negotiation is lost when you low-ball them with your first offer.
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He didn't say lowball. He said slightly too low to accept. There's a difference.

If a house is reasonably priced at say....$200,000 a seller should be fully prepared to sell it for $190,000. Most houses typically sell between 3-5% of asking assuming they are priced for the market.

If he goes in and offers $150,000 that's a lowball. If he offers $182,000 it's low, but still within negotiating reach. He's pretty certain they won't accept but it sets the bar for where to start negotiating.
 
If it's a house that you really want, give them your best offer and then tell them to take it or leave it. If there are other houses you like just as much, forget this one. Maybe those other sellers won't try to mess with you.
 
vi edit said:
He didn't say lowball. He said slightly too low to accept. There's a difference.

If a house is reasonably priced at say....$200,000 a seller should be fully prepared to sell it for $190,000. Most houses typically sell between 3-5% of asking assuming they are priced for the market.

If he goes in and offers $150,000 that's a lowball. If he offers $182,000 it's low, but still within negotiating reach. He's pretty certain they won't accept but it sets the bar for where to start negotiating.
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My wife has had to deal with buyers who aren't very realistic when they start out looking. It sometimes takes a couple declined offers to get them to realize that they need to make better (or more realistic) offers to begin with or they'll just keep losing out on houses they like and waste everyone's time.
 
JulesMaximus said:
My wife has had to deal with buyers who aren't very realistic when they start out looking. It sometimes takes a couple declined offers to get them to realize that they need to make better (or more realistic) offers to begin with or they'll just keep losing out on houses they like and waste everyone's time.
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I blame the realty shows on HGTV and the like. Well and the simple fact that a lot of people are simply greedy AND ignorant(what a great combo!).

But I digress...

You have these real estate shows that have a young couple looking for houses and one is priced at like $340,000. They hear from their buyers agent that the "owners are desperate to move!" so they offer like $290,000. And the sellers freaking take it. You have all these media outlets telling you "BUYERS MARKET...lowball lowball lowball!!!" and people assume that all situations are like that.
 
vi edit said:
I blame the realty shows on HGTV and the like. Well and the simple fact that a lot of people are simply greedy AND ignorant(what a great combo!).

But I digress...

You have these real estate shows that have a young couple looking for houses and one is priced at like $340,000. They hear from their buyers agent that the "owners are desperate to move!" so they offer like $290,000. And the sellers freaking take it. You have all these media outlets telling you "BUYERS MARKET...lowball lowball lowball!!!" and people assume that all situations are like that.
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Case in point- the importance of a good agent. Your agent should be telling you if an offer is unreasonable, and the buyers should be receptive to and trust the agents advice.

If the agent isn't offering you advice, or you don't trust your agents advice, get a new agent. If you ignore your agents advice (assuming you trust them, if not, refer back to point 1), well then you're an idiot.
 
I am in this exact situation right now. original was 209900 and my first offer was 195. I probably should have started at 190 or 192 or something.
 
drum said:
I am in this exact situation right now. original was 209900 and my first offer was 195. I probably should have started at 190 or 192 or something.
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Buyer or seller?

As someone who has bought and sold multiple homes...you have far more freedom as a buyer and wouldn't sweat it much. $5,000 difference in offer vs. accepted price is like $15 a month to you. For a seller that is still $5,000. By the time the realtors take their cut, city/county fees get lumped in, and you pay the taxes in the arrears you just lost tens of thousands of dollars. You want to keep every penny you can keep.

A thousand or two as a buyer is nothing. A thousand or two as a seller could be the difference between breaking even or owing money. Or owing even more money if you are in a really bad situation.
 
vi edit said:
Buyer or seller?

As someone who has bought and sold multiple homes...you have far more freedom as a buyer and wouldn't sweat it much. $5,000 difference in offer vs. accepted price is like $15 a month to you. For a seller that is still $5,000. By the time the realtors take their cut, city/county fees get lumped in, and you pay the taxes in the arrears you just lost tens of thousands of dollars. You want to keep every penny you can keep.

A thousand or two as a buyer is nothing. A thousand or two as a seller could be the difference between breaking even or owing money. Or owing even more money if you are in a really bad situation.
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buyer. I realize 199 and 202 doesn't make much real world difference but it would be nice for me to get my price. I'm very much new at this so I hope 195 was the place to start at least. They have come down twice as far as I have come up
 
rh71 said:
So what are your opinions on negotiations when buying a house? Say there's also a competing offer out there. Yet you're not being told what it is. Do you play the game? How many counter-offers are you willing to make? How low did you start? Say the asking price is 375k.. I'm the seller, you're the buyer.

I'm looking for mindsets / thought processes moreso than actual numbers.
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If I know there is someone else looking at the same property I simply walk away. Why on earth would I want to empower the seller? And if it isn't for real, then the seller is screwed. If it is for real, then they no longer have the advantage.
 
rh71 said:
^ well here's the details as we sit (again we're the sellers)... they lowballed us at $35k below on day 4 on the market. Another offer on the same day came at $30k below. We came back at $370k quickly to let them know we're willing to negotiate. Now they both went up a good amount. We know they both have been looking a while but made offers immediately on ours. We know there's the $8k tax credit out there for them. We know they both have 20% down already. With research, we know there are very few houses on the market HERE at this price in this condition (which makes knowing they've been looking for a while an advantage for us). We're about to counter again but not 5k more like the first time. I'd say we do have the upper hand here, wouldn't you agree?

As a buyer, are you set on a price or are you simply looking to make the best deal possible (knowing sellers aren't going any lower)?
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where on long island can you get a house for $370k?
hempstead? valley stream?
 
BlahBlahYouToo said:
where on long island can you get a house for $370k?
hempstead? valley stream?
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There's plenty of 300-400k starter homes now in this recession. Ours was up near 425 at one point before it... everything in Levittown & Hicksville have dropped to this range now, great for starting couples - we bought in '02 at 330k ourselves. It's all good though because our new home will also be at its lowest.
 
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General rule of thumb seems to be that first offer should be 10% below asking price to start the negotiation. I think most sellers expect this, so they end up asking for more than they actually want for the property, as they know they will get negotiated down. So yeah, it's all a big game from both sides.

I think for the most part, a buyer won't actually make an offer at all on the house unless the initial asking price is at least reasonably acceptable to them. So anything they can shave off the price is just a bonus for them. I think it's kind of rare that someone would say, "oh, look at that nice house for 375k. I like it, but I can only afford 350k". They wouldn't be looking at 375k houses in the first place if all they could afford was 350k. I'm sure there are some, but its a reasonable gamble that if push came to shove, they'd pony up your asking price if they really liked the house. And in the scheme of things 10k on a 350k house isn't going to make someone take a house they don't like, or not take a house they do. So basically, give in a bit and make them think they are getting a bit of a "deal", but don't think they are just gonna walk cause you didn't come down too far.
 
I am currently under contract, selling my house.

The buyers didn't seem to care what the purchase price was (offered very close to list price), but they wanted me to pay all closing costs.

Buyers usually don't care as much about purchase price as sellers, because a few thousand dollars over 30 years is nothing.

Cash at closing is much more immediate and important to most people.
 
rh71 said:
There's plenty of 300-400k starter homes now in this recession. Ours was up near 425 at one point before it... everything in Levittown & Hicksville have dropped to this range now, great for starting couples - we bought in '02 at 330k ourselves. It's all good though because our new home will also be at its lowest.
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hicksville, no wonder... that's practically suffolk. or is it?
i thought you were in nassau.

so where's the new home at?
 
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