How much should we give when countering our counter offer?
My future wife and I put a offer on a home last week at 131,000, with an asking price of 139,900. We were counter offered by the owners at 135,900, but they accepted our other terms (i.e. leave the deep freezer, pay for a home warranty.) The home has been on the market for over 6 months. It is the nicest home that we have seen so far, and it is in a good neighborhood. Still, over 200 homes are for sale in this area at the current time, as reflected in the asking price (it went on the market over 164,000 during the summer). We are going to counter offer the counter offer, but we are having a hard time coming to a decision. Any help?
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Counter back with $133,500, with all previous terms met, and ask for a carpet allowance (so you can replace the carpet). That’s meeting them half way and it is a buyer’s market so they’d be nuts not to take it.
You are $4900 apart. Focus on that number. The whole number $135,900 is hard to imagine.
How long will you have to look to find another house that is better for the price? Are you paying rent, or packing away a down payment? If you are in strong savings point and not in a rush, you can be more aggressive. If you are throwing money away in rent you should try to make the deal work.
Do they have any urgency to sell? Prime real estate sales season starts next week and people will start looking in January. (aka competition)
I would offer 134,900.
It is very easy to get roped into the psychology of negotiating when buying a home. First, you should make sure you have a really good idea of the value of the house to begin with. Asking prices can be completely erroneous. Most people do not realize that in many cases, very little thought or research is used when the initial asking price is determined for a house that is placed on the market. There is not an exact value, like with a stock, but you should be able to get a good number within +/- 3% by researching sales of other similar homes within that neighborhood. This is typically public information, or you can have a Realtor or appraiser help you to obtain these sales figures.
Once you have a base price of true market value, I would offer anywhere from 5 to 10% below this. Of course, this is all premised upon having a solid starting value to base your 5 to 10% discount on (and this is the most important part of the equation). You can usually expect the seller to counter your offer and try to meet you in the middle. If you start by offering 10% below the asking price, you may end up with a final discount of 5%, etc… Depending on your market conditions, any discount to value of 5% or more would be a successful negotation. Of course, every negotiation is unique and can be affected by a stubborn or unrealistic seller, or on the other hand a very motivated seller.
The reason you have to be very careful in determing the value is that many people will simply ask 5 to10% more than market value and then concede the markup to the buyer, leaving them with the perception that they got a bargain, when they actually overpaid for the home. Also, be sure to protect yourself by adding a clause in your contract giving you the right to cancel if your appraisal does not come in at or above the sales price.
James L. Paris
What is the value of the property? How much is it worth to YOU? If you had found it and made your offer just after Thanksgiving, it might have been accepted. Now, the seller knows that more buyers are just around the corner (next couple of weeks).
How much does your Realtor say it’s worth?