Lowball Offer on House

[squiffy]

A good agent should be able to provide you with some hard STATISTICS about selling and asking prices.

But as you mention, you have to be very careful about an agent's OPINION. Most agents have a simple economic incentive. They want to spend as little time working for you as possible and make as much money as possible.

If they are representing the seller, their incentive is to get him to lower his price a bit to make a deal, and if they are representing the buyer, their incentive is to get him to raise his offer a bit to make a deal. The agents don't make money unless there is a sale. So ironically, there are stats and studies showing that people that use agents generally sell for a lower price or make a higher offer, than they normally would have, without an agent.

It makes sense. The agent wants his 3% commission as soon as possible. And a change of 5K to 20K in price to make a deal happen, doesn't really affect his commission all that much.

It's unfortunate. But it's hard to find an agent who is not only knowledgeable, but truly has your best interests at heart. In theory they should. But in reality, they are selfish players, like everyone else on the market

An agent can be helpful in many respects. But you should definitely stick to your guns on pricing decisions.

If you want to make a lowball offer and are willing to wait, then do it and heck with the agent.

Though keep in mind that a lowball offer might alienate some sellers and might cost you some deals.

You have to be very careful not to let the agent call the pricing shots. Listen to their advice, but try to get them to provide some hard data to back up their OPINION, and then make your own decision about what price to offer and whether to stand firm.

If you can afford to be patient, be patient. Agents are in a rush to get the deal done at your expense. They need to eat and they need their commission. If the sell doesn't go through they don't eat. So they are happy to have you spend an extra 10K or 20K more, so the deal gets done sooner.

[AMerv]

Dont know if you thought of this but.... Get rid of your agent and his percent goes to the sellers agent who then uses it to pay closing cost so the seller can drop his price by about $7500.

[w_gibbs]

[ QUOTE ]
Dont know if you thought of this but.... Get rid of your agent and his percent goes to the sellers agent who then uses it to pay closing cost so the seller can drop his price by about $7500.

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I thought about going that route from the beginning. I have a friend that does home closings and he suggested I contact the selling agent directly and offer him 4.5% commission (compared to the 3% if I used a buying agent). Unfortunately, I am in another state and doing the deal via fax/email/phone. Your statement brings up an important question I have been meaning to ask though. Assuming I decided to make a future offer on my own, I would at least need an attorney to draw up the contract, correct? I spoke to an attorney and they said it would cost somewhere in the $500 range. That would be a cost that I would have to cover, correct? So to make that a winning proposition, I would have to be sure I got at least a $500 savings compared to my results with an agent?

Also, what are the ethical issues if I later dumped my agent, contacted the selling agent directly and tried to negotiate a deal on the house I have been discussing? I don't recall reading anything in the sales agreement I signed about being obligated to make any further offers on this particular home through the buyer's agent I am working with. And I did not sign any kind of contract other than the sales agreement which obligated me to work with this buyer's agent on future purchases.

[raptor517]

it seems as though the longer the house is on the market, the less apt they are to accept lowball offers. how much does the room cost to fix? accept his offer of 265 or w/e assuming he throws in the entire price of getting a new roof. easy game. when we got our house, we got them to give us an extra 15k to fix pool/ac stuff/some some small foundation issues.

[AMerv]

You could use an attorney. You could also google real estate contracts and find what you need. Legally, it you dont need an attorney. Just two people with a written and signed agreement will hold up in court. As far as saving $500, you already did if you dump your agent. Fax/e-mail/phone is just how its done. Why drive as far as across town if you don't have to.

If you have a problem with the ethics behind not using the agent you have tell them your not pleased with their effort. This way your giving them the option to shoot the ball, pass, or sit on the bench. Just be aware that any agent will want to get the deal done fast, easy, etc. They don't see you as a future asset as they would if you were a real estate investor.

I forgot about the roof issue. A definite must in your price negotiations.

[w_gibbs]

Update:

My agent called me a few minutes ago and asked if we had decided anything. I explained that the roof is point of contention (perhaps for buyer and seller). I said counter at $250,000 plus roof of my choosing up to $10,000. He said okay. He calls me back 5 minutes later with an insta-counter.

Seller: $259,500, no roof

I feel like I am getting outplayed after the flop. My original upper ceiling was $250,000 without roof. Now I am at that number. It seems weird to counter at a number lower than my previous offer (e.g. $245,000 without roof). Not sure what my play is here. I really would like to get the roof put on as part of the deal. But all along I was willing to stretch my upper ceiling without a roof to $255,000.

[scott1]

You seem set on this particular house. If that's the case, your lowball bid didn't work. Just make your best offer and say it's firm.

If you aren't set on this house, move on. If he's motivated, he'll come back to you.

[raptor517]

id say offer 259 with roof, and if he says no make sure he knows he can go [censored] himself. this guy seems very unwilling to deal though, and that makes it tough. he seems to not really care if he gets the house sold, so you prob dont have a whole lot of leverage here.

[squiffy]

A lot of sellers want to sell as is. Few sellers want to take the time and effort to fix up their place.

It's especially risky for a seller to spend 10K on a new roof that you may or may not like or that you may or may not approve.

I really side with the seller on this one. Unless I were really desperate, if I were a seller, the last thing I would want to do is have a sale contingent on your liking the quality or price of the new roof.

If you want a new roof, you should put it on yourself. If you think the home is only worth x with an old roof. Just offer x, what you think it's worth with the old roof.

This isn't some fancy Texas hold em hand in the final round of the World Championships. You don't get style points for degree of difficulty. Bet for value.

I cannot imagine why you would want to make a new roof part of the negotiations. It's only going to complicate things.

Offer him what you think the home is worth, then walk away. If you get it. Then spend the 10K to put your own roof on.
I really disagree with how you are looking at this, particularly at the issue of the roof.

When negotiating for a huge purchase like this, you need to keep things simple.

A lot can go wrong if he hires a roofer and the roofer does a lousy job. All the risk is on him. Plus he cannot predict if you will be reasonable and approve the roof, or be unreasonable and reject it based on some idiotic objection.

[raptor517]

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It's especially risky for a seller to spend 10K on a new roof that you may or may not like or that you may or may not approve.

I really side with the seller on this one. Unless I were really desperate, if I were a seller, the last thing I would want to do is have a sale contingent on your liking the quality or price of the new roof.

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the SELLER isnt getting the roof fixed. he is basically knocking off 10k of the price so that YOU can fix the roof to your liking, and if u dont like it, thats your problem as you already closed on the house. this is a completely standard thing that happens in a TON of real estate transactions. i wouldnt make a deal without something like this.