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I've had lots of clients and customers over the years want to feel out verbal offers. Logical of course, but not always practical or realistic. Plus I always say real estate purchases are always more than the NUMBER. The typical contract here in Texas is at least 9 pages...and sometimes with several other pages. I often see these days timing can be more important than price. How many times has a seller said no no no to a verbal offer....I won't take less than X....and when they have a written contract with all the details filled in....and presented to them in person....with a "just sign here" and it is over....and they do it at a price much lower than asking.....I also see prices change over time. Often a seller thinks their property is worth more than listing price on day 1....after 15-30-60-90 days...what they will take often changes....sometimes significantly.
House is now on the market 76 days. I know there were only 2 showings in this price range in a month and one of them was me.
No, we haven't. I have read and been told that an overpriced home that sits for a long time often sells for less than it's worth because the initial price puts people off even looking. So I am going to lay low for a while and see what happens. It is critical in this environment (probable incoming governor who wants to raise income and property taxes a lot) to not overpay.
This price is not dropping 25%. It is overpriced to begin with by 25%. In my area (in this price range which is higher), prices dropped about 30% in 2007, then recovered about 20 percent and dropped about 10 percent since then. They are up from the recession, but down in the last year or so. It is because you can no longer deduct property taxes above $10k and mortgage interest above $750k mortgage. This house is priced at PRE-recession level peak.
I know properties below a million are going fast because of pent up demand by millennial who are finally pulling the trigger. But on the high end in THIS blue state, things are very different. This is Illinois.
I'm sorry that things are so bad in IL that the tax deductions have had an effect on the market. Wow, 10%??
I mean, it was $1MM, yes? So at the 35% rate, you're paying about $10K more in federal taxes for a $1MM+ home.
Well, it's over 85 days now on the market and no price adjustments. So, the way I figure it, my two choices are:
A)Make a low offer at what I think is fair market value...I could either make it lower than I think and negotiate or higher (meaning my top price) and say no negotiations on price but maybe on terms.
B) Wait it out until they start dropping. This is riskier in that I may not get it but could result in getting the house for an even lower price. I have heard that way overpriced houses actually often sell for less than market.
My husband and I were once looking at a home in a vacation resort. It was significantly over our budget but the realtor took us there and said it had been on the market for a long time and it was a divorce sale. It was priced at $1.35m and sold for $999. I never thought it would sell for such a low % so I don't want to miss a good opportunity here. We ultimately wouldn't have bought that other house because it's a hard place for us to get to from where we live. But knowing that kind of thing happens is giving me hope.
What you are trying to do is get a verbal agreement to take your offer, without actually making an offer. That is a big no-no if you want to buy a property at a lower than asking price.
Trying to feel out the sellers as you are attempting to do before you even make an offer, does not work. Either party can change their mind before the actual written offer is presented. Never make a verbal offer.
Put your money where your mouth is, is an old business saying. The only way it should be handled is:
1: Write an offer at the price and terms you will pay, along with a loan commitment from your lender. In other words, make a firm offer. Only a firm offer, will mean anything.
2: If they counter back with an offer that is not acceptable to you, counter back that you will keep the first offer open for 3 days. This is a way to say MY OFFER IS FIRM, AND I WILL NOT NEGOTIATE TO A HIGHER PRICE. You are saying, I will pay so much, and that is not negotiable.
It is playing hard ball, and I have had it work many times. Going on and on, with the seller and you making offers back and forth or as many calling it Negotiating, is not the way to handle it in your situation. You do not have to buy a home and move, and have no true motivation to do so, and want to buy a property far below what the seller says they will accept, rarely will work when you are so far apart.
I spent from 1972 until I finally retired as an investment real estate broker, handling clients more like a stock broker does. I would buy, sell, and exchange property for the same investors time after time. We had to buy property at a price that would make financial sense as income property. We never overpaid over what made sense. I bought, sold, and exchanged not over 10 year old single family homes hundreds and hundreds of times to investors. My record was selling 14 homes in an afternoon on the telephone. Thirteen were in a to be built 13 units subdivision, plus one home that had to be sold that day to avoid repossession. One investor took 5 and none took less than 2.
The other Realtors in town, knew I was hard nosed on the prices my investors would pay. We would pay a fair price, but not one penny more. When I gave them an offer on a property, they knew I was not going to negotiate. They relayed that to their sellers, and we bought a lot of property. They knew when we sold, we were selling at a fair market price, and would not negotiate. I was listing agent on a lot of sold property, including single family homes, apartment houses, commercial property, farms and ranches, development land and rural land, mobile home parks, etc. In all the years I was in the business, I never had even one of my listings that did not sell within a 90 day listing period, and most sold within 2 weeks.
I took appraisal classes at a major university before I went into the business, and understood how to evaluate the value of all types of property. I would not list overpriced property, and would not list under priced property. I listed at a true value looking at it as an appraiser would. I sold at a true market value.
I would buy, at a price that would allow an investor to have a good Total Return On Invested Dollars (according to Wall Street Journal the only way to judge the value of Income Property in a front page article).
Total Return on Invested Dollars is the sum of 4 measures. They are the Cash Flow Return, the Tax Benefit Return, the Amortization Return, and a fair projected Appreciation Return.
When you are trying to get a verbal commitment to accept your price, there is no wonder you are not getting the attention of the agents involved. It is absolutely the wrong approach when buying income property. Make a FIRM OFFER on the property with all terms and conditions along with your price. Give them 48 hours to accept or reject the offer. If their counter back is not acceptable, simply counter back that you will keep the original offer open for 2 or 3 days. People would be surprised, to see how often that works. Once you start negotiating, you lose control of the purchase and the seller knows you are open to buy at a price other than your offer. Such tactics too often end up with no sale being made.
Wonderful advice! The property has been on the market long enough for the seller to know that it will not sell in the current market at the listed price. You're really overthinking this whole thing; put pen to paper and submit the offer as suggested above. What have you got to lose?
Wonderful advice! The property has been on the market long enough for the seller to know that it will not sell in the current market at the listed price. You're really overthinking this whole thing; put pen to paper and submit the offer as suggested above. What have you got to lose?
So you are saying go with the one time offer and tell them it's non negotiable?
Wonderful advice! The property has been on the market long enough for the seller to know that it will not sell in the current market at the listed price. You're really overthinking this whole thing; put pen to paper and submit the offer as suggested above. What have you got to lose?
I am worried about overpaying. I feel like I am in a declining market and this could be made worse by what happens in the November election. They want to raise state income taxes a lot and also property taxes on top of already huge increases. THAT's why I am worried about overpaying.
Well, you can't overpay if you don't have an accepted offer. I've no intention of offending, but it seems that you're not quite ready to commit. If you want the house go forward with your offer. A large concern in any real estate transaction is motivation: it appears in this situation that the seller has very little, and you are questioning yours... not an auspicious start for any contract.
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