# sending offers for a house



## davext (Apr 11, 2010)

Hi, 

I'm new to buying a house. I have my own affordability and value in mind and I was wondering how low is too low of an offer. I found a house that is a good location but doesn't look like it'd show very well on mls, for $500,000 approximately. Would it be wrong to offer say, $420,000? Obviously I'm hoping that since the owner is trying to sell in the winter, they might be very motivated to sell.

Thanks


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## jamesbe (May 8, 2010)

Feb-March as historically actually the best time to sell a home. People are shopping for the spring.

But you can offer whatever you want to offer, they can counter offer or accept or deny you.

You have nothing to lose but a few hours of your time really.

That does sound low though, unless the home is overpriced based on other listings and homes that sold in the area. You never know, they could be feeling the market (and won't take it) or they could be desparate and will. 

Chances are if it is a new listing they wouldn't, I don't know many people that would take $80k less a few weeks after they list.


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## Four Pillars (Apr 5, 2009)

davext said:


> Hi,
> 
> I'm new to buying a house. I have my own affordability and value in mind and I was wondering how low is too low of an offer. I found a house that is a good location but doesn't look like it'd show very well on mls, for $500,000 approximately. Would it be wrong to offer say, $420,000? Obviously I'm hoping that since the owner is trying to sell in the winter, they might be very motivated to sell.
> 
> Thanks


There is no "minimum" bid, although if you have a real estate agent, they might not waste their time if the bid is too low.

Like James said - figure out what the market value of the house is and go from there. You can always just talk to the agent and/or house owners and just ask them verbally. If they slam the door in your face, you know it's probably not worth putting the lowball bid in.

Not sure why you think the house won't show well on MLS? Every house shows well on MLS.


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## jamesbe (May 8, 2010)

Unless it is one of those million dollar Vancouver crack houses haha


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## NotMe (Jan 10, 2011)

There is no minimum but owners may get offended/irritated if it's too low and not want to deal with you. If you offer too low, you might get a signback for the asking price again (ie F U from the sellers). If however you offer low but not too low, you might be able to work the offer. Yes, that's emotion and there shouldn't be emotions in real estate but there are, especially if the person has emotional attachments to the home they're selling and want to ensure it's in good hands. I'd be interested in seeing what the comparables are - ie if they're asking $500,000 and houses of that condition/in that area typically sell for $525,000 in 30 days, offering $420 for a house you really want is not a good idea. If you don't really care if you get the house or not, go on ahead.


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## kubatron (Jan 17, 2011)

the question is is $420K a price you're willing to pay, a price of previously sold homes, or just you're trying to lowball and potentially insult the other side? If no other homes have sold for close to that, what makes your offer best? 

I would partner with an agent to discuss this, or give it your best shot and most likely it will go nowwhere. I'm not into the agent thing 100% but in this case, for a home that hasn't sold perhaps you should - maybe even the listing agent?


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## marina628 (Dec 14, 2010)

Generally I think all sellers allow for a 5-10% negotiation room when listing their house,beyond that I think you will insult them and maybe they will sign back full price.


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## HaroldCrump (Jun 10, 2009)

davext, your location says Toronto.
If that's accurate, I doubt someone listing a house in Toronto for $500,000 will accept $420,000.
Unless there is something seriously wrong with the house, or you know something that other buyers/agent don't know about the property.
If the house is being listed through a known RE agency, the selling agent has probably already done his/her due diligence on the asking price.

In other words, don't waste your time with stink bids.

If your affordability is max of $420,000 look upto $430,000 or maybe $440,00 and try to negotiate from there.
It is unlikely anyone would shave off > $20,000 from a reasonable asking price in this market unless there are hidden issues with the property.


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## Dana (Nov 17, 2009)

You need a list of recently sold comps in the area to determine if the price the vendor is asking is accurate. From there consider why it might be worth more or less than the comps. 

If after your due diligence, you think the house is worth $420k, then you take it from there. 

When you say that it might not show well on MLS, does that mean it is not yet listed? If the vendors haven't listed it yet then maybe you have some wiggle room because they might like to save the real estate commission. 

Also, except for one purchase, all of our houses have been bought/sold in the Winter (usually January). That tends to be when the market heats up after the holiday lull. Lots of people want to move in the spring/summer - especially families who have school to consider.


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## marina628 (Dec 14, 2010)

I have sold every one of my homes in Late January-late February with May/June Closings.This is a very active time of year for real estate.


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## kubatron (Jan 17, 2011)

That is interesting because typically the best time to sell is after February due to weather, and best time to move is August due to schooling. Jan/feb is hard time to sell because it's a hard time to list a home, snowstorm may ruin the open houses + you can't do the required work outside whatever is needed.

I'm considering listing our house but won't set it under to get a bidding war - in fact I'm going to do the opposite, ask a ridiculous price and hope for a buyer who is done with bidding wars. If I don't get my bottom line then I won't sell, and continue to live here since I don't have to move - but may want to for other circumstances. I am finding it hard to get people to come and "fix" what's needed outdoors, though, with the snow!


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## marina628 (Dec 14, 2010)

My second last house we listed Jan 22 and sold Feb 1 , the last house we listed March 15th and didn't sell until May 1.We never keep a house over 10 years so had no work to do.People stay inside and look at mls listings on computer in winterAs for open houses ,we never did any.Every other house we listed we priced it right allowed $10,000 room to negotiate and sold very fast.Seller need to be realistic with their prices ,we always price our homes to sell quick .Ask Agents how many times they sell with a open house and they will tell you probably less than 1%.
Our agent also takes great photos and has color handouts done for people to take with them.You know how it is ,you see 20 houses on a Saturday ,by time you get home you are confused.Definitely use brochures they can take home with them.We sold two homes in 2009 and bought three new ones in 2009/2010.We actually moved our best tenants from our old 10 year old house into a new home last year .
We have homes in Brampton , Oshawa and Courtice ,not bidding war markets although in 2001 we lost a house twice in a bidding war in Courtice lol.


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## jamesbe (May 8, 2010)

Yep, we are seeing huge action on our place which has been for sale for awhile. THis is the time to be listed. We have even missed some ofthe window, the first 2 weeks of feb I saw five houses sell, we dropped our price this past week maybe too late.

Feb-mar are typically great selling times.

Price it too high and it will sit for a long time, the. When you drop people ignore it unfortunately.


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## marina628 (Dec 14, 2010)

James 
Make sure your agent puts it in mls as a new listing when you reduce.Reason is agents get sent a list of NEW listings every day!A price adjustment will not go on that list.


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## moneymusing (Apr 3, 2009)

We're closing on a house in March of this year and if you're looking at it from a % perspective we offered 8% less (expecting to accept 5%) than asking. They actually came back at 6% discount, so we were happy to accept that.

I never understood the concept of being insulted by an offer. It's just a ploy real estate agents use to pump up the offer. That being said though, houses listed with MLS will almost always sell for near market value (not list price) so putting in junk offers aren't really worthwhile. An offer just below market is a good place to be.


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## sprocket1200 (Aug 21, 2009)

crazy, when we bought we got over 10% off, and my buddy just had his offer accepted for $500 on a list price of $580.

adjust your expectations people...


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## moneymusing (Apr 3, 2009)

That's great sprocket1200! 

Another factor we need to consider is your location. Some property markets are "hotter" than others and command different discounts


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## jamesbe (May 8, 2010)

Agents like to advertise that they sold their houses at the list price so they typically do not over price on MLS but there are always exceptions.

Like the home on my street that is 100k over priced for over a year. Our current purchase was listed at 530, we offered 480 and settled at 500.

We were listed at 493 but were overpriced we would have taken 450 but we had lots of time. Now that we are more serious about selling we listed at 450 which we realistically believe is very close to the value on the current market.


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## sprocket1200 (Aug 21, 2009)

moneymusing, ever heard of a place called Victoria bc??

smoking hot, but i REFUSE to pay....

oh, and just so u don't think it is a dump, 3,000 sq ft, built in 1999, with wide open ocean view. my buddy's deal was for 5 acres with house...


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## davext (Apr 11, 2010)

Thanks for all the tips. I'm not using an agent yet, I was hoping maybe I could save money on one. There aren't really any houses that are still listed in the same area that would be a good comparable. I'm going to go check out the house on the outside first today and see.

The reason why I thought the house would not be attractive or not show well is because the appliances were not upgraded so the kitchen looked very boring, and all the rooms were painted different pastel colours. Nothing stood out to me.


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## NotMe (Jan 10, 2011)

Davext - as a reminder it's the seller that pays the real estate agent, not the buyer. You probably already knew that but wanted to clarify for the newbies (now, you do 'pay' the real estate agent by buying the house, but in the end you set the price, not the realtor). unless you hire a buyer agent, but that's a set fee anyway.


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## Dana (Nov 17, 2009)

davext said:


> There aren't really any houses that are still listed in the same area that would be a good comparable.


Houses that are currently listed aren't your best comparables. You need a list of _recently sold comparables_. The value of a house is what the market is willing to pay for it, not necessarily what someone is asking for it. 

There is a house across the street from me that has a floorplan identical to mine and similar sized lot. It has been listed for over a year. It is $100k over market. It is not a good comparable for the value of my home. 

Unfortunately, you will need an agent (someone with MLS access) to get a list of recently sold comps. This will be free for you. If you decide to use an agent to put an offer on the property, the sellers will pay your agent's commission.


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## davext (Apr 11, 2010)

Yes it's the seller that pays the commission but do you think it's possible for the seller's agent to reduce their commission if they are both acting as the seller agent and the buyer agent? 

I saw some seller agents take a cut on commission on one of those reality tv shows once.


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## jamesbe (May 8, 2010)

Yes, but typically not likely unless they really want to make the deal. Depends on the agent and most importantly their broker.


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## LondonHomes (Dec 29, 2010)

davext said:


> Yes it's the seller that pays the commission but do you think it's possible for the seller's agent to reduce their commission if they are both acting as the seller agent and the buyer agent?
> 
> I saw some seller agents take a cut on commission on one of those reality tv shows once.


Often the agent will cut the rate they are charging the seller if they are working with the buyer as well. However as the buyer that will not save you $0.01. As a buyer is always in your best interest to get independent advice by using your own agent and it doesn't cost you anything.


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## davext (Apr 11, 2010)

LondonHomes said:


> Often the agent will cut the rate they are charging the seller if they are working with the buyer as well. However as the buyer that will not save you $0.01. As a buyer is always in your best interest to get independent advice by using your own agent and it doesn't cost you anything.


If the seller can save money, I hope they are willing to sell for a lower price.


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## MikeT (Feb 16, 2010)

It really is the selling side that controlls commissions. I hate the fact that commissions are ridiculous too, but as the buyer, you don't have alot of say. You could specifically look for homes for sale 'by owner' or one of those low commission places, but your selection will be limited.

One realtor at an open house asked me if I had listed my place yet, then said "I can sell it for way more than anyone else." I asked if she was stupid. She didn't understand what I meant.


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## jamesbe (May 8, 2010)

Because my agent is family I am lucky in that if a buyer comes to me with no agent, I will basically discount the price the 2.5% a huge savings to the buyer. Of course I don't outright tell the buyers but I tell them there is a lot more wiggle room.

IE: I'll take a lower price with no buying agent for obvious reasons. About 10-12 thousand reasons haha


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## davext (Apr 11, 2010)

I looked at the house today. The house is small, it lacks enough windows. Everything looked cheap. Even the material the doors were made of for bedrooms/closets was really cheap. A crappy out in a nice location. 

The house was originally listed at $500K, and then reduced to $475K. The real estate agent hinted that I could probably have it for $450K

It's an 11 year old house, probably purchased for about $250K. 

I don't think I'll be sending any lowball offers for this one.


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## Plugging Along (Jan 3, 2011)

davext said:


> I looked at the house today. The house is small, it lacks enough windows. Everything looked cheap. Even the material the doors were made of for bedrooms/closets was really cheap. A crappy out in a nice location.
> 
> The house was originally listed at $500K, and then reduced to $475K. The real estate agent hinted that I could probably have it for $450K
> 
> ...


It really doesn't matter what it was originally purchased for, that shouldn't add into the argument, it's what it can sell for now.

If you think it's overpriced then I would probably move on, or at least wait a while longer until the person drops their price again. If they do.

We were looking for larger house during the boom, and saw one listed at $660 (about 100K more than it should have been), then it went back on the market 3 more times, until the price was down to $540 (more than 18 months later). We were about to make an offer, and someone just came in. Maybe this will happen here.


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## Addy (Mar 12, 2010)

Plugging Along said:


> It really doesn't matter what it was originally purchased for, that shouldn't add into the argument, it's what it can sell for now.


I don't totally agree when I hear this arguement. The going rate is certainly a huge factor, but if the owners really want to sell and they paid $200K for a house that is now "worth" $350K.... they may be willing to take less than the neighbour who paid $325 for a similiar house also "worth" $350K. It depends on how quickly the market is moving of course, but I would hesitate to say the original purchase price is not relevant in any way shape or form.


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## NotMe (Jan 10, 2011)

My parent's house in Markham was bought in 1970 for $33,000. I think it's fair to say that has no bearing on what they sell it for today. Just as if I was buying a house, and the owner's paid $500,000 last year and they're currently going for $300,000, it's irrelevant to me that they paid $500,000.


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## kcowan (Jul 1, 2010)

NotMe said:


> ...Just as if I was buying a house, and the owner's paid $500,000 last year and they're currently going for $300,000, it's irrelevant to me that they paid $500,000.


I would say that you will have more luck with a lowball offer if they paid significantly less than your offer. It is just human nature!


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## marina628 (Dec 14, 2010)

It also depends did seller already buy another house ,that will motivate people to bargain.

You can have identical homes costing $xxx,xxx more than the other depending on the quality of upgrades in the home.My old neighbor put $100,000 into her basement when she finished hers.My husband did ours for $40,000 including all furnishings and I think ours was done to a higher standard than hers. She had to pay $40,000+ in labor costs ,we paid a few massage appointments for my husband's sore muscles , $600 to a plaster friend and some plumbing /electrical from friends.When she sold her house she got $12,000 more than we did although she had it listed $47,000 more.


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