"How much lower do you think they'll go?"

"How much lower do you think they'll go?"

This morning I woke to an email from a buyer who asked,

"Do you think that this house will go for the price they are asking? (the lot is large, but the house is really small) I know that they are listing it at 1M, but I was wondering if a much lower offer could stand a chance?"

This is a question I hear from many buyers, at different stages of the buying process. While there is no easy answer, no set answer, here are some of the steps needed to make an informed, educated decision:

  1. houses from which to chooseYour Realtor® needs to prepare a thorough market analysis to learn what sales prices have been recently for similar properties in that particular neighborhood. Square footage of the house and numbers of rooms is a starting point; also the condition of the house, the layout, the privacy factor, and other intangibles.
  2. A study of competing properties currently on the market is needed. If there are a many similar homes from which a buyer can choose, more flexibility in an offer price might be possible.
  3. CalTrain line, San Carlos, CAAn investigation as to the condition of the property is essential, as are neighborhood issues. Is high-speed rail expansion slated for nearby? Are school closings or openings imminent? What about shopping centers, half-way houses, other proposed changes?
  4. How long has the property been on the market? In many areas here sellers become nervous after about a month, and might be more receptive to considering a lower offer than they would have been during the first couple of weeks.
  5. charming San Carlos houseWhy does this particular house appeal to you? Are you looking for a "deal" or does this house have what it takes to make a great home for you?
  6. How would you feel if you lost out on this house? If the answer is "terrible" we need to figure out the value based on the above steps, and offer a fair price.
I guess the quick answer to the question, "How much lower do you think they'll go?" is "I have no idea. If it's a house that you are truly interested in, let's get to work and study it."

Of course, if someone else falls in love with it, all bets are off and reasonableness can fly right out the window.


 

 

--- Come for a visit; Stay for a lifetime!

Lottie Kendall, Realtor®

Today | Sotheby's International Realty

San Carlos, California, 94070

CA BRE#01215160; 650-465-4547

Lottie@LottieKendall.com;

www.LottieKendall.com

www.SFCondosForMe.com

 

 

Comment balloon 41 commentsLottie Kendall • January 24 2011 10:41AM

Comments

Good morning, Lottie....that's a question that is asked by most buyers....a buyers agent needs to quickly do a market analysis for the buyer and submit an offer to start the negotiating....sooner rather than later.

Posted by Barbara Todaro, "Franklin MA Homes" (RE/MAX Executive Realty ) almost 7 years ago

Right, Barbara. Too often I think buyers feel we can simply toss out a number -- doesn't work that way. Here we usually have a complete disclosure packet available to read through in addition to our other analysis. When buyers are looking for a "deal" it rarely will happen the way they hope.

Posted by Lottie Kendall, Serving San Mateo County and San Francisco (Today | Sotheby's International Realty) almost 7 years ago

Very good post!    I always tell them after they have the pricing facts....offer the most you are willing to pay...and walk away if it doesn't work....but don't cheap yourself out and kick yourself later! 

Posted by Deborah Byron Leffler BzyBee Real Estate Lady! (Keller Williams Realty Boise) almost 7 years ago

Thanks for a nice review of the things that have to be considered when an Agent is doing Due Diligence to support an offer.  My experience is that when a client asks that question, that may be one of the moment where they are teachable.  Making an offer is a process.  We have to decide what we think the property is worth generally, then we have to decide how much it is worth to the client (those numbers are not always the same, as you pointed out).  We have to decide what our absolute Top Dollar is going to be (I hate it when Auction Fever kicks in).

My fast answer to the original question?  "The only way to find out is to make a written offer....."

Posted by Judith Abbott (Coldwell Banker Residential) almost 7 years ago

Thanks for a nice review of the things that have to be considered when an Agent is doing Due Diligence to support an offer.  My experience is that when a client asks that question, that may be one of the moment where they are teachable.  Making an offer is a process.  We have to decide what we think the property is worth generally, then we have to decide how much it is worth to the client (those numbers are not always the same, as you pointed out).  We have to decide what our absolute Top Dollar is going to be (I hate it when Auction Fever kicks in).

My fast answer to the original question?  "The only way to find out is to make a written offer....."

Posted by Judith Abbott (Coldwell Banker Residential) almost 7 years ago

Thanks for a nice review of the things that have to be considered when an Agent is doing Due Diligence to support an offer.  My experience is that when a client asks that question, that may be one of the moment where they are teachable.  Making an offer is a process.  We have to decide what we think the property is worth generally, then we have to decide how much it is worth to the client (those numbers are not always the same, as you pointed out).  We have to decide what our absolute Top Dollar is going to be (I hate it when Auction Fever kicks in).

My fast answer to the original question?  "The only way to find out is to make a written offer....."

Posted by Judith Abbott (Coldwell Banker Residential) almost 7 years ago

Lottie ~  You certainly make some very valid points.  Working as a Buyer's Agent allows one to begin the education process from the moment we sit across the table for the first time.  Nice post -- leaning . . .

Posted by Tish Lloyd, Broker - Wilmington NC and Surrounding Beaches (BlueCoast Realty Corporation) almost 7 years ago

Deborah - I agree, totally.

Posted by Lottie Kendall, Serving San Mateo County and San Francisco (Today | Sotheby's International Realty) almost 7 years ago

Hello Judith - thanks for stoppin by. I'm with you, Auction Mentality has to be guarded against, and your 'fast answer' is a good one.

Posted by Lottie Kendall, Serving San Mateo County and San Francisco (Today | Sotheby's International Realty) almost 7 years ago

Tish, educating buyers certainly is a process, one they need to be ready to hear.

Posted by Lottie Kendall, Serving San Mateo County and San Francisco (Today | Sotheby's International Realty) almost 7 years ago

I got stuck at $1,000,000!  lol

Cindy in Indy

Posted by Cindy Marchant, "Cindy in Indy" , Realtor, Fishers Real Estate (Keller Williams Indy NE 317-290-7775 www.marchantteam.com) almost 7 years ago

I know, it seems goofy, doesn't it? The house in question has 1 confirmed offer for tomorrow; 11 disclosure packages out, so its likely another 2-4 offers will come in. Palo Alto, a nice community with good schools and Stanford University next door, commands high prices.

Posted by Lottie Kendall, Serving San Mateo County and San Francisco (Today | Sotheby's International Realty) almost 7 years ago

Don't you love that question.  How about making a first reasonable offer and going through the negotiations.  That is the only way you are ever going to find out.  We certainly can't ask them.

Posted by Jane Peters, Connecting you to the L.A. real estate market (Home Jane Realty) almost 7 years ago

Good post. I like the way you put it in question and answer form!

Posted by Dawn Crawley, Find Pinehurst Homes (Dawn Crawley Realty) almost 7 years ago

Lottie - Right you are.  Perfect explanation for an all-too-common question. 

Posted by Jason Crouch, Broker - Austin Texas Real Estate (512-796-7653) (Austin Texas Homes, LLC) almost 7 years ago

Although the question is over-worked to us, each buyer thinks they invented it. You asked great questions to qualify them, Lottie. And then you get to decide to work with them or not.

Posted by Glenn Roberts (Retired) almost 7 years ago

Excellent points and a great way to break it down to your buyer's.  I'm with you, I think that sometimes they do think a number is just thrown out there. 

Posted by Tracy McPeek almost 7 years ago

Lottie - You are right on point with the approach to the offer.  Imagine... making the decision based on facts & research instead of ESP.  Sheesh!  ...and no, we don't know how much less the seller will take.  The other one I like is multiple offers.  Those clever buyers want to know how much the other offers are.  I ask them if they've ever played poker. 

Posted by Allen Robison almost 7 years ago

Lottie, I really liked your clear explanations of each step of the process.  It is a commonly asked question, probably one I would have asked prior to being in real estate.  Thanks

 

Posted by Mary Stewart, Wilsonville and Surrounding Portland Metro Areas (HomeTrust Real Estate, LLC, Homes for Everyone) almost 7 years ago

Very good explanation, and I guess parts of it should be touched upon even before any houses are shown, not to mention offers are in the making. (Like are you looking for a deal vs a house you will love to bits)

On a side note: as buyers agent, you can get facts and say for how much similar property could be expected to sell, and what would be a reasonable start of negotiations but how low will THEY go - only THEY know. They might not want to lower the price at all!

Posted by Anna Tolstoy (Coldwell Banker Residential Brokerage) almost 7 years ago

I love to answer that 1st with "Do you want to buy the home or just make an offer?" Generally, a client askes this question after seeing at least a couple homes and is generally wondering if this house they like could be purchased for the money of some they didn't like...  If a home is significantly overpriced and you know the area, you will / should be able to advise them in advance that the home is price out of line with the current market.  Send your buyers!  I love them!!...  :-)

Posted by Ken Patterson, Roseville Real Estate, TOP Rocklin Realtor (TPR Properties) almost 7 years ago

Last week I was called a communist and a poor agent because I would break my promise of confidentiality and tell the buyer what the seller was prepared to do. I told him that I also could not tell the seller that the buyer had just sold his RV for twice the price he had thought it was worth. Here being a transaction broker, working with both parties, means I must not disclose negotiating facts that could prejudice one party or the other. He said that was like in Russia where you could not say what you thought. Good grief!  That has nothing to do with it. He had some other nutty ideas and needless to say, I was glad when he did not call me again after we had met. I predict a very poor buying experience for him and any agent that gets involved with him.

I do not mind being asked that question. Lots of buyers do it out of habit. But I do expect the buyers to understand the simple common sense explanation about why I have to be fair. My sellers understand it and buyers can to, if they WANT to.

Posted by John Elwell (CENTURY 21 Bill Nye Realty, Inc.) almost 7 years ago

Lottie,

Great analytical approach mixed with an emotional approach. Your step #6 about trying to anticipate feelings of future regret is the hardest for most buyers.

Posted by Dave Halpern, Louisville Short Sale Expert (Keller Williams Realty Louisville East (502) 664-7827) almost 7 years ago

There is nothing like putting pen to paper to find out what a seller will do.

Posted by Michael Simcock, Elk Grove, CA Realtor 916 425-1084 (Coldwell Banker (Elk Grove, CA)) almost 7 years ago

Yes, people often ask this question.  I tell them to make an realistic offer and we'll find out how much lowere they'll go!"

Patricia/Seacoast NH & ME

Posted by Patricia Aulson, Realtor - Portsmouth NH Homes-Hampton NH Homes (BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate ) almost 7 years ago

Yes, people often ask this question.  I tell them to make an realistic offer and we'll find out how much lowere they'll go!"

Patricia/Seacoast NH & ME

Posted by Patricia Aulson, Realtor - Portsmouth NH Homes-Hampton NH Homes (BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate ) almost 7 years ago

I like your quick answer!  I also appreciate all the input from the people commenting above.  Thanks for touching on a question I get asked all the time.

Posted by Brenda Whitman, Live in Laramie Real Estate, Broker/Co-Owner, Laramie, Wyoming (Live in Laramie Real Estate, Laramie, Wyoming) almost 7 years ago

Lottie--Great post.  Sorry I missed it yesterday.  Your responses back to the buyers are right on.  I confirm each one, especially #5, 6 and the finale "If this is the house for you, let's work on making it happen.'

I like your style of writing, Lottie.  (Prices are so much higher than my area)

Posted by Mary Yonkers, Erie/PA Real Estate Instructor (Alan Kells School of Real Estate/Howard Hanna Real Estate) almost 7 years ago

I get this question a whole lot, too, and like how you responded. It's a reblog in Southern Maryland for me!

Posted by Cheryl Ritchie, Southern Maryland 301-980-7566 (RE/MAX Leading Edge www.GoldenResults.com) almost 7 years ago

Lottie - This is very well explained.  I think many buyers just don't understand how many factors go into this answer.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) almost 7 years ago

The only way to find out is make the offer, great to be able to educate them as you mention so the offer may be a reasonable one.

Posted by Michael Eisenberg, Bellingham Real Estate Guy (eXp Realty) almost 7 years ago

I always tell the buyer "If you see the published sale price after closing, and think "I would have paid that", then NOW is the time to put that number on the paper!  don't kick yourself later!

Posted by Pat Tasker, Your Milwaukee Metro Area Agent (WI) (Shorewest Realtors) almost 7 years ago

JUST WRITE THE OFFER, and then you will see how the seller responds! :)

Posted by Ryan Case, 877-828-0710 (SCA Real Estate) almost 7 years ago

I hear that questions all the time, too.  You have succinctly answered the question.  The buyer needs to decide, after viewing the comps, if they can make a reasonable offer and then just do it.

Evelyn Kennedy

Posted by Evelyn Kennedy, Alameda, Real Estate, Alameda, CA (Alain Pinel Realtors) almost 7 years ago

People need to make reasonable offers based on what the home is worth. Buyers looking to steal a home are very irritating and most lose deals because the sellers become fed up with them.  I have a buyer like that now on one of my listings. His agent went into long-winded detail about why it was only worth "X" when it every comp out there clearly showed she was off by about $30k. Then she said "He's waiting till spring." Then he came back in and upped the ante $5k.  They just keep inching it up  hoping to be able to steal a house. It's ridiculous.

Posted by Ruthmarie Hicks (Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605) almost 7 years ago

I like your post - "all things are negotiable"

Posted by Kimberly Brandon, Broker/Owner (Smart Moves Real Estate) almost 7 years ago

Lottie -- ALL excellent points you have made.  Do the analysis, submit a reasonable offer and then they'll get their question answered. 

Posted by Barbara Altieri, REALTOR-Fairfield County CT Homes/Condos For Sale (RealtyQuest, Fairfield and New Haven County CT Real Estate) almost 7 years ago

You are awfully nice.  I tell them that I am fairly certain the seller will take a cash offer for list price.  Other than that, I don't know. 

Posted by Jeanne Gregory, Re/MAX Southwest, Sugar Land TX almost 7 years ago

Lottie,

   Great Points! We are professionals and the market analysis is part of the job. I always say, 'Well lets go take a look at it. I'll submit any offer that you want to present'. Educating the buyer on the area and market is usually next.

Jason King

www.JKingProperties.com

Posted by Jason E. King (J. King Real Estate, Inc.) almost 7 years ago

Well said.  Very common question and exactly how I would respond.

Posted by Nick Dailey, RE/MAX: Northern Kentucky Real Estate - NKY MLS - Short Sale (RE/MAX Affiliates) almost 7 years ago

Thanks for all the comments, everyone, and for adding to the conversation. We do hear this a lot, don't we? All part of the education process.

Posted by Lottie Kendall, Serving San Mateo County and San Francisco (Today | Sotheby's International Realty) almost 7 years ago

Participate