How to counter-offer an offer on a house?

Discussion in 'Homesteading Questions' started by countrygrrrl, Oct 20, 2004.

  1. countrygrrrl

    countrygrrrl PITA

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    *jumping up and down* *jumping up and down*

    We put a house on the market less than two weeks ago, and have had lots of interest and several verbal offers. I mean, it IS a really wonderful house, but is quite dated and needs lots of work.

    We just received a serious offer, in the form of a contract. The offer, as is predictable, is somewhat lowball --- although this lowball offer specifies we, the sellers, make NO repairs.

    *jumping up and down*

    We have really excellent realtors helping us, but still need to consider on our own how to counter the lowball offer (with the expectation the potential buyer will counter again with a more acceptable offer).

    How do we do it? I have tonight to think this over, then we are meeting tomorrow evening to put together our counter-offer.

    But where do we start and how do we figure our way through this?

    *jumping up and down*
     
  2. Jena

    Jena Well-Known Member

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    Your realtor should advise you and they should fill out and deliver a counter offer for you.

    All you have to do is decide what is acceptable. I would not counter for more than you really want in the hopes that they come up on theirs. Just counter with what it will take for them to buy the house. There can be a mix of money and repairs done, or allowances for certain items.

    I made an offer on a house with a bad roof (not this one, though it does have a bad roof). My offer considered the fact that the roof would have to be replaced. They came back asking for a higher sales price, but would give me an allowance to fix the roof. Worked for me.

    Jena
     

  3. Cyngbaeld

    Cyngbaeld In Remembrance Supporter

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    Depends on how low the low ball figure is from what you were asking, but. I would expect that I would prob get half way between what I was asking and what the first offer was. So, I would counter back with a price that was half way between that figure and the asking price. Confused? OK here are some bogus figures since I have no idea what you are asking and won't ask.


    asking price 60,000
    low ball offer 40,000
    half way 50,000
    your counter offer 55,000
    their counter, counter 50,000 accepted by both (hopefully).

    If you were willing to do some repairs you can subtract that amt from what you asked and come up with another figure.


    Kim (jumping up and down with you)
     
  4. countrygrrrl

    countrygrrrl PITA

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    Okay.

    *jumping up and down with Kim, jumping up and down with Kim*

    Sounds good and sounds sensible. That gives me a place to start (as soon as I calm down :D ). The repairs are primarily cosmetic, although it does need one pier. But the original sales price included our deduction for the cost of that pier.

    However, other than that pier, it is very structurally sound, including a fabulous 30 year guarantee laminate one-layer roof put on just this last year, new furnace and a mess of other stuff.

    I can't believe we may have actually sold it this quick. Okay, yes, I can. It's a wonderful little house for the right person!

    *jumping up and down with Kim, jumping up and down with Kim*
     
  5. jillianjiggs

    jillianjiggs Well-Known Member

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    Legally, it's a written offer. Once you counter offer, the original offer is cancelled. If they counter your offer, your offer is then cancelled...until you both decide on a fair price.

    If you're dealing with an agent, let them do all the work. :) It's what they're paid to do. They have generic forms that they fill out with your info and counter, and they'll deliver the counter offer for you.
     
  6. Tango

    Tango Well-Known Member

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    Only if it is workable do you want to counter. If it is too low, reject it. Keep in mind, you can only engage in one contract at a time- if you are working with a realtor. If it is too low and another offer comes in that is more to your liking, you are stuck with the one you are working on at the time until you get to reject it. "Time is of essence." Also, if you counter, give a time limit for a counter back; put it in the contract. Your agent should know this but newer ones sometimes don't, or they forget. Don't get caught in a waiting loop. You go cg :yeeha:
     
  7. countrygrrrl

    countrygrrrl PITA

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    Tango, the offer is lower than we want but I kind of understand their reasoning. It's a wonderful house ... for someone with deep pockets. :D The verbal offers have come from young married couples who WANT the house but are wondering if we're willing to go really, really low. IOW, I'm not sure they have the money to do the upgrading it will need.

    This offer, however, is from a real estate investor --- exactly the kind of person who needs to buy the place --- that or a multi-millionaire. :D I'm talking DEEP pockets --- its saving graces are structural solidity and wonderful floorplan (including interior flagstone walls).

    Jillian, thanks --- the agents are old pros and very savvy --- their sense is we don't want to lose these buyers, they're the ones. That's my sense, too. They've given us a suggested counter-offer which I sense is a bit too high. But I need to go through and mull it over, while ticking off in my mind all the repairs and upgrades needed.

    That said, it's good to know the agents are the ones who actually have to do the work. :haha:
     
  8. clovis

    clovis Well-Known Member

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    Great advice already given, except for this thought:

    After letting your agent do the work for you, hold fast to your guns. every thousand dollars represents equity to you.
    Most folks give low ball offers. You would be surprised how many people take the first offer, loosing thousands of dollars.
    A good friend of mine low balled a lake house once, and won HUGE. He was willing to pay $65,000 of the $77,000 asking price. He offered $28,000, and the sellers accepted. With cosmetic work, the place would now sell for $100,000, and more if he subdivided the extra land into lots. I believe that there are laws now limiting how low you can offer, but I am not sure.
    Think of the thousands of dollars in terms of weeks you would have to work to earn that money.
     
  9. Mike in Ohio

    Mike in Ohio Well-Known Member

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    If you have had that much interest after only 2 weeks then I wouldn't be in any hurry to drop the price significantly. Right now the wind is blowing with you. Interest rates are still pretty low and the economy (short term) doesn't look too bad.

    I think the biggest risk you face by toughing it out is an unforseen shock to the economy that would tank the housing market (use your imagination). When you counter you might ask the realtor to pass the (potential) buyer a message..... are they willing to risk losing the house over a few thousand dollars.

    As usual, just my 2 cents.

    Mike
     
  10. pcwerk

    pcwerk Well-Known Member Supporter

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    Hello,
    If you just put the place up for sale a few weeks ago, I wouldn't be in
    such a hurry to accept a lowball figure. You could be losing thousands.
    I would wait and put it up for sale in the spring, if you can wait that
    long. Good luck!
    James in Houston
     
  11. Kenneth in NC

    Kenneth in NC Well-Known Member

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    Is the low ball really to low or is it a might low.

    My granddad always had a formula he used "Hassel Quotient VS Profitability" I can't remember him ever sweating a deal. If the hassel is worth it in profit Counter if not consider taking it with a provisio. Maybe some consession you want they can live with.

    As a potential buyer looking at houses I know I only make 2 offers. Then no matter how good a place I walk away. Like most I lowball it just to test the waters then I give what it's worth to me offer. My wife has gotten really po'd at me when we were looking for a truck because I used this technique on that decision as well. Many car salesman were left with that "what happened" look on their face after all it was just a $1000 more and surely I would go that. Nope. Offer, Counter, Done.

    Good luck and let us know how you make out.

    Kenneth in NC
     
  12. countrygrrrl

    countrygrrrl PITA

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    The lowball is a true lowball. But the potential buyers are real estate investors, and it's a buyer's market and not-great economy here.

    In addition, although the place is structurally sound and has a wonderful layout, it does need some work.

    Kenneth, the hassle factor is a big one for me. I just plain don't feel like putting one more dime or bit of effort into the place. The house is a pain and a big worry for me. However, the lowball is too much of a lowball --- and the counter-offer suggested by the realtors is very close to our asking price.

    In any case, thanks, you all. We'll see what happens --- I do think the amount of interest this quickly is a good sign --- but I've also been told the best house sales happen in the first thirty days --- and there are at least four other houses in that neighborhood for sale, all of which have been on the market well over a year without hardly a nibble.

    My gut tells me counter-offer and go with it. But we'll see.
     
  13. Kenneth in NC

    Kenneth in NC Well-Known Member

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    countrygrrrl I just reread the post and noticed the "potential buyers are real estate investors" part. I've had to deal with that type before. They want everything for about 60% or less of value. I guess they do have to put out effort and cash to fix a place up but they (all I've met so far) just feel slimy. Counter Offer but make it as close as you can to what your ready to Close it for. These RE investors are real jerks most time and have many, many properties to choose from. Cash is king.

    I hope you get what you want out of the place.

    Kenneth in NC
     
  14. ChuckinVA

    ChuckinVA Well-Known Member

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    If your agents are as experienced as you say, you should listen to their advice. They should know what the current market is and the value of your house. Are the other 4 properties that have been sitting some for a year just like your house ? Perhaps your house has unique features that the others don't. Keep in mind that investors have the money to invest or not. They may have offered a low offer only to see if they could get you to react to it. If the home is worth what you are asking for it, someone will buy it. Maybe not these investors. Best of luck to you. Don't let your anxiousnes cost you $. * jumping up and down*
     
  15. countrygrrrl

    countrygrrrl PITA

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    Yes. The realtors think we can pull it off. And the counter offer is only $2K under our asking price. I'm willing to drop it another $4 - maybe 5K, but not more.

    The problem we have is that it would take thousands to update it --- the place has all original appliances (almost 40 years old), counters, etc, that have lived through 4 kids, countless grandkids, etc (it was my parents' house), things like that.

    Ideally, it would go to a young married couple --- but unless they have deep, deep pockets or are construction people who know how to do the work to code themselves, we're talking thousands and thousands and thousands of dollars. Which is why it makes sense to me that real estate investors would want it, simply because they have the money to do it. Most people in that city just don't, at least not now.

    I would be more wary if I didn't already know how lame the real estate market is where it's being sold. But I certainly do understand your caution and appreciate it. Once my excitement wears down, I may very well say to the offer, eh ... no deal. :D
     
  16. countrygrrrl

    countrygrrrl PITA

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    Yes. They actually brought us the listing of what properties are actually selling right now --- it's pretty grim. Not a lot moving.

    No, our house is much cooler. :D It's very unassuming on the outside and totally cool inside --- entire walls out of flagstone, nice fireplaces and very nice *flow* to it. You would never guess at the inside by the outside. The other houses are what I call chicky-chick houses --- very girly and doodad-y. Ours, though, is very plain but cool --- rustic, lots of light, not a lot of doodads --- nice, open spaces. People really love it. It's a cool place.

    My thoughts exactly.

    Thanks! :)
     
  17. Dreams30

    Dreams30 Lady Rider

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    RRRRRRRRRR

    does this mean that you will start over repainting somewhere? :eek:
     
  18. countrygrrrl

    countrygrrrl PITA

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    :haha:

    No, this is another house in a nearby city.

    They'd have to drag me kicking and screaming out of this place. Esp. after all that painting. :D
     
  19. desdawg

    desdawg Well-Known Member

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    Investors typically like to use as little cash as possible and to get terms. Maybe you could get closer to your asking price if you were willing to carry a note? Just a thought.
     
  20. amelia

    amelia Well-Known Member

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    The best way to ascertain your potential buyer's "top dollar" figure is to find out what their agenda for the property is. Real estate investors are easy, as buyers go, because they are not being guided by emotion or dealing out of exigency, but rather are thinking in terms of hard, cold profit. If you know what they want to do with the property, you can do the math the same way they've done it and thus figure out what their bottom line should be.

    Both buyers and sellers are often reluctant to ask what the other's game plan is. But questions such as this are fair, and can be posed by your agent to the buyer's agent, or by you to the potential buyers directly. Is this seller looking to rent the property "as is"? Fix it up and rent it? Tear it down and build something else? Flip it immediately? Depending on the answer, the economics of the situation (and hence the buyer's "bottom line") will be very different.

    Investors base their decisions on a surprisingly different set of variables than homeowner-buyers do. Depending on the anticipated use, they will look at a weighted combination of three factors: (1) the value of comparables in the area, (2) income stream, and (3) cost to rebuild. The "income stream" method of valuation is probably the most significant factor to investors in residential real estate. Significantly, it is the one that sellers, such as you, are probably giving little or no thought to. The "income stream" method of valuation is based on a black-and-white formula that considers what investors are currently demanding in terms of return for the particular type of investment ("cap rate") and the anticipated net operating income (gross rental receipt minus anticipated expenses, including an adjustment for deferred maintenance). If your own real estate agent is not well versed in the area of real estate investment, surely he or she has a colleague in the same office who is. That person could take a quick look at your property and probably give you a real good idea what the value to an investor would be.

    Hope that helps!