When is an offer an insult?

fret_wimp2

I'm looking at buying a house in the next year or so and want to start getting my feet damp in the bargaining process.

Let's say there's a house for 300k. Obviously I want to pay as little as possible, without having my offer rejected outright.Im that case, would an initial offer of 250k be too low, or could I push it further?

Tigger

never

get two hats; a normal you hat and a hardass business you hat

make all decisions/offers that will affect your entire remaining life wearing the second hat

(hats can be imaginary)

just to clarify i buy and sell for a living and thats the sum of what i learned in 20 years

whippet

before you even consider making an offer make sure you know what you reckon the house is worth. Asking prices mean nothing, they just look better than POA on a listing.

Offer well below what you are willing / capable of paying as you will never buy at your initial offer (unless you offer the asking price of course!!)

In this day and age, starting off negotiations at about 50% of the asking is reasonable enough, you'll probably be told to jack it, but that is where the fun starts

Noxin

Tigger wrote: »

(hats can be imaginary)

Should keep them real and change them at the right time. People will know you mean business when you put on the hardass business hat in front of them.

Marcusm

I would not worry that a 16% reduction would be regarded as an insult. If they have priced it very keenly, they might be justifiably peeved otherwise they need to grow a harder skin as any upset is related to unrealistic attitudes. There is little finance available to buyers such that prices even below the long term economic value (a NAMA term) are normal. There are few buyers with finance and many sellers who need ot get out. 40% under asking is an aggressive position but many sellers will have to get used to receiving such offers from buyers with cash. (IN this context, I am thinking about "asking" prices 40% or more below peak.)

MaceFace

Viewed a house last night and the latest offer is 25% below asking and the owner is considering. The first offer was 35% below asking and was dismissed straight away.

Snakeblood

MaceFace wrote: »

Viewed a house last night and the latest offer is 25% below asking and the owner is considering. The first offer was 35% below asking and was dismissed straight away.

Did you make the offers or did they tell you that they dismissed the 35% offer out of hand?

zulfikarMD

MaceFace wrote: »

Viewed a house last night and the latest offer is 25% below asking and the owner is considering. The first offer was 35% below asking and was dismissed straight away.

I viewed a house last month and offered 27-28% less then a asking price and EA told me "it is rediculous to put such offer and i wont go even to the seller with this". After couple days (recently) revised my offer to about 19% less then asking price and i was told by EA that "I already have offer of X amount" which is about 10% less then Asking price.

Duckjob

Depends on the asking price in the first place.

If you buy into the concept that an offer can be insulting, by the same rationale you could say that there's some seriously insulting asking prices out there.

cgarrad

Get someone to offer 25% lower and then pull out, you come in at 33% lower and save the day....

Capitalism at its finest

MaceFace

Snakeblood wrote: »

Did you make the offers or did they tell you that they dismissed the 35% offer out of hand?

I did not make the offer. I was told this from an EA.
The only thing I can confidently take give from the story is that the owner will listen to offers 25% below asking.

The rule of thumb I am using is this:
Look at the asking price now. Multiply that by 2.5. If that is about the price it would have gone for in the peak, then that may be a somewhat realistic price (in todays market - assuming a 60% fall).
Example: I looked at a house recently that was asking 350k. That would give a height of the market valuation of €875k. I believe that at the peak that would have only gone for 650k which should mean today it would be go for about 260k.
So, I would offer 230k and go to 260k. More if I really wanted the house.
The response to your initial offer should tell you where the price will end up.

Snakeblood

MaceFace wrote: »

I did not make the offer. I was told this from an EA.
The only thing I can confidently take give from the story is that the owner will listen to offers 25% below asking.

The rule of thumb I am using is this:
Look at the asking price now. Multiply that by 2.5. If that is about the price it would have gone for in the peak, then that may be a somewhat realistic price (in todays market - assuming a 60% fall).
Example: I looked at a house recently that was asking 350k. That would give a height of the market valuation of €875k. I believe that at the peak that would have only gone for 650k which should mean today it would be go for about 260k.
So, I would offer 230k and go to 260k. More if I really wanted the house.
The response to your initial offer should tell you where the price will end up.

I suppose for me, the only thing I'd take is that the EA wants you to think he wants offers 25% below or higher. EAs are professional liars.

Sala

A house I was interested in currently has an offer of 22% below asking being considered.

MaceFace

Snakeblood wrote: »

I suppose for me, the only thing I'd take is that the EA wants you to think he wants offers 25% below or higher. EAs are professional liars.

Absolutely, but what was encouraging is that the EA mentioned 25% rather than 15% or 10%.

Also, is this still the general experience (EA's trying to get as much out of the buyer as possible)?
Am I right that most no longer work off percentages?
Sherry Fitz recently mentioned a flat fee (that was very negotiable) and one of the reasons of their reducing their costs was that I want to price very aggressively.

the_syco

MaceFace wrote: »

Also, is this still the general experience (EA's trying to get as much out of the buyer as possible)?

That's their job. You're having an elephant if you think otherwise.

MaceFace

the_syco wrote: »

That's their job. You're having an elephant if you think otherwise.

Maybe it is their job to sell a property for the highest price they can attain, but that does not mean they will do it.

Think about it - you pay them a flat fee (as I believe most operate off flat fees vs percentage of sale). Say that is 2k. So, they get 2k whether they sell your house for 200k or 300k. Why would they care if it sold for 200k or 300k?
Sure, they may get a good reference in that you will tell people how good they were, but chances of a referral may be slim (not that many houses are being sold these days).
On the other hand, holding out for 300k when there is a 200k deal on the table will involve them putting in more work and potentially another 6 months or year of showing people around the house and dealing with the seller. Again, what is in it for them?

So, while you may think they are only interested in carrying out your wishes, I think many/most are only interested in surviving and that means selling your house and earning the commission.

My recent experience with an estate agent while selling my house was that they agreed to lower their fee if I lowered my asking price.

zac8

MaceFace wrote: »

I believe most operate off flat fees vs percentage of sale.

I don't think this is true, unless you're talking about properties with very low valuations.

Monty Burnz

MaceFace wrote: »

Viewed a house last night and the latest offer is 25% below asking and the owner is considering. The first offer was 35% below asking and was dismissed straight away.

Bear in mind the estate agent or the seller can tell you any story they want about 'offers' that may or may not exist. 'Phantom bidders' are one of the oldest tricks in the book.

Villa05

fret_wimp2 wrote: »

I'm looking at buying a house in the next year or so and want to start getting my feet damp in the bargaining process.

Let's say there's a house for 300k. Obviously I want to pay as little as possible, without having my offer rejected outright.Im that case, would an initial offer of 250k be too low, or could I push it further?

I find asking prices insulting, therefore, if your offer does not insult, you offered too much

Ritchi

Someone said to me, that if you're not embarrassed by your offer, then you've offered too much.

Monty Burnz

Ritchi wrote: »

Someone said to me, that if you're not embarrassed by your offer, then you've offered too much.

I hope he felt embarrassed, offering you so little advice.

Ritchi

Monty Burnz wrote: »

I hope he felt embarrassed, offering you so little advice.

Ha

Monty Burnz

Ritchi wrote: »

Ha

Actually it was much funnier in my head than when I wrote it down.

jmayo

whippet wrote: »

before you even consider making an offer make sure you know what you reckon the house is worth. Asking prices mean nothing, they just look better than POA on a listing.

Exactly.
First off I would say you need look at what is average for that type of house, that condition in that area. e.g 3 bedroom from 1990s in Naas.
Then look at what is average in other similar nearby towns/areas and ask yourself are there any reasons houses in the area you are looking at may be higher asking prices.

Then if the house you are looking at for some reason has asking price 10% above the norm then you need to start thinking of asking price -10% before you then factor in any offer x % percent below that.

If you go in low what is the worse that happens ?
They tell you shag off and just maybe there is a slim chance someone else may have higher offer x in.
This last scenario would usually mean that they ask you to up the offer to x.

If you go in high what is the worse that happens ?
Well it could mean you pay more for the house than it is currently worth and you are left with paying more money over than you should.

zulfikarMD wrote: »

I viewed a house last month and offered 27-28% less then a asking price and EA told me "it is rediculous to put such offer and i wont go even to the seller with this". After couple days (recently) revised my offer to about 19% less then asking price and i was told by EA that "I already have offer of X amount" which is about 10% less then Asking price.

And you said fine, I am out ???

FGR

EAs are seasoned veterans when it comes to lying about phantom bids/offers and it gives them an opportunity to detect whether or not you really want a property - even to the extent that they may play the waiting game.

I fell prey to it a few years back. Thankfully I had some sense knocked into me shortly before the boom went bust.

spider77

I am new to this process also and I put in my first offer recently. I offered about 30% below asking price and was told the offer was ridiculous and the EA would not to go the seller with the offer. He gave me time to rethink my offer and said he would call back. Do you go a little higher in this case or stick to your guns and let him go to seller with the original offer and let them decline it? Prices are still dropping so buyers need to be cautious too and not pay over the odds. I do think this house will make about 20K more than I offered but wanted to start a little lower and go up if needs be!!

P. Breathnach

Like any other occupational group, EAs are a mixed lot: some are very reasonable to deal with, and others not.

If you are trying to buy a property, you should remember that the EA is on the vendor's team. It's his or her job to get as high a price as can be achieved. It should be taken as a given that this is a high-stakes game where certain types of bluff are accepted as being part of the game strategy (the phantom bidder is one of those strategies, as is saying that the EA will not even communicate an offer to the vendor).

A well-organised vendor and EA should have three figures in mind: asking price; a realistic estimate of an achievable selling price; a baseline price below which the vendor will definitely refuse to consider offers.

With market conditions as they have been, it is very difficult for the seller and EA to strike the right figures, so they should be open to adjusting their expectations.

Not all vendors and EAs are in cloud-cuckoo land. This week I signed a contract to sell a property at just shy of 90% of asking price, and bang on what the EA had suggested was the achievable price. I recognise that this is relatively unusual.

But some vendors are having difficulty judging where the market is. In my non-expert opinion, quite a lot of properties carry asking prices that are about 50% higher than what is reasonably achievable. I really think that buyers should pay little attention to the asking price on a particular property. They should judge what a property is worth to them, and bid accordingly.