Offer 25K below the listing price?

Question

Hi,

I'm interested in a listing in Lynnwood -- the house has been on the market for 50 days and thru two inspection failures (went pending inspections & then reslisted shortly after that each  time).  It's originally listed for 500K and then lowered it down to 475K.  I'm thinking of making an offer at 450K but not sure if that would work or if I would offend the listing agent :). Does anybody have any experience with this or if you have any advice on how I should go about it.

BTW, the house definitely needs some work but in a good location.

Any advice would be greatly appreciated!

Thanks!

-Bryan

Owen Dashner · Answer

@Bryan Doan, what's your plan with the property if you bought it?  Flip? Keep?  If your plan involves buying and selling it, make your offer based off of the ARV minus your costs and desired profit.  That's it. They could be way overpriced at $475K - who cares what they are asking for it.  Make your offer based on what the numbers and comps tell you, NOT THE LIST PRICE!

Michael Haas · Answer

My worst REI buy was 5% below list, and my best was 25% above list. List price is a made up number, and list price is not the same as market value.

Offer what you think its worth or what makes price makes the numbers work for your deal.

Fern Bacungan · Answer

Great points, everyone, especially about making deals happen and justifying your price.

If it helps, below is an offer that I made and the seller accepted it today with no issues.

It's a house in Tacoma, Wash. They accepted $190k for a house worth $280k and $15k of fixup. They were motivated to sell so that helps also.

Here's our offer and financial analysis behind our number.We intend to fix, update and renovate the property for resale.

Max Buy Price

$                       189,400.00

Comparable Homes Sold in the area

$280,000

Less:

Realtor commission upon resale

6.0%

$                         16,800.00

Carrying Costs during fix up and up to 2 months time to sell

2.0%

$                            5,600.00

Market risk - potential for lower prices due to COVID19

9.0%

$                         25,200.00

Return on Investment of capital (10%)

10.0%

$                         28,000.00

Rehab Costs

$                         15,000.00

$                         90,600.00

Russell Brazil · Answer

Id be offering somewhere in the $400k range to see what they countered back at.

I just put a property under contract thats most recently list price was $775k, and offered $650k and got it under contract at the offer price after a little back and forth.

Dave Skow · Answer

Bryan - if on market for closer to  2 months - that wouldn't be  considered a offensive  offer

Shawn Ackerman · Answer

@Bryan Doan What is more offensive? pissing off a listing agent or you overpaying for the property?

Robert Freeborn · Answer

@Bryan Doan

As I tell my clients all the time, ignore the list price.  Crunch your numbers and make the offer that your numbers say you need to.  Dont lowball just to lowball, but have a reason.

As long as my clients do that, I’ll make whatever offer they determine the numbers say.

If you really want to offer on it, shoot me a message and I’d be happy to work with you.

Michael King · Answer

My home was listed at $475K for about 2 years before I bought it for $325K.

Matthew Paul · Answer

First it doesnt matter what it was originally listed for . It didnt sell so it was too high . Now its $475K and it hasnt sold . Now who cares if you insult the listing agent or seller , Its business if they are insulted they will live . Me I would offer $400K contingent . And if they accept , to feel good you could throw me $5 grand

Andrew Syrios · Answer

You are only offering 5% below asking. They shouldn't be offended by that. (And you will likely offend some sellers, you shouldn't try to do it, but don't fear it either.) You might not get it, but with such an offer, the worst they could do is say no.

Offer 25K below the listing price?

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