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First off I notice that the current market has cooled significantly, interest rates are up almost a percentage point and inventory levels are much higher. So, given this, is it even unreasonable to offer 10% under asking considering the market in Orange County area has risen anywhere from 30-60% in the last 12 months?
Realtors are still scoffing at anything under list price (although they are now not asking for "above list") although the buyers are scant and few.
I wanted to offer 10% under but if they don't bite then I am glad to play the waiting game. I am firmly convinced that NO WAY prices have any further to go since:
- interest rates are not going down but perhaps will go up
- income is not going up
- investor interest has dropped to virtually zero since there is no ROI at these price levels anymore
- there is talk about FHA loan limits dropping which will affect higher price homes, this may have a rolldown effect on the price chain at the low end as well
- next Spring season may not pan out as Realtors are predicting (they predict 6% appreciation but I think they are DREAMING!), there is a budget mess in Feb which will be much more difficult to resolve than the shutdown fiasco that we had this month.
All I see is a speculative bubble that carried prices with crazy momentum in the last 12 months and now those forces are gone and there are significant headwinds for the market.
If you don't really want the place, go ahead and offer 10% off asking and play the waiting game, you might get rejected. If the place still doesn't sell you might get a call later asking you to resubmit the offer, but if you don't put in an offer , you won't get that call. It is typically the agent's job to help the set the list the house at a price which they thing will bring in offers. This is not always the case, some buyers have a price in their head and they will only sell if for that price. Those people aren't selling their homes at market price, they are just putting in on the market.
Your 10% off list means absolutely nothing if the house is 20% over market. If the last comp sold for $400k and the next list for $450k 10% off is still $405, this is reasonable, but if it list for $410k and you want to offer $369, it probably won't be accepted with a home just put on the market in souther california.
Many people do not understand the value of a good agent you might want to talk to a few to see what they bring to the table.
As far as your comment about ROI, there are investors using 16% 1st TD to acquire investment properties to flip, there are people buying places for all cash. There are foreign national that sold in their countries because they speculate a downturn in their own country, so they buy here because they saw the market already dropped and is now recovering.
I think FHA will have a limited impact of higher priced homes, many people in that market don't want to pay the high monthly MI anyways.
Do simple math, take a house paid in all cash, take the yearly rent subtract the taxes and other expenses, divide by the sale price and this is your ROI. I doubt you'll find a place where the rent equals the property taxes meaning a ROI of zero. You'll only see that on land for developing and serious luxury homes, both which I don't think you are in the market for.
With the affordable healthcare act, will people have more money to put in their pocket to buy a house , thus increasing price competition, Or does the higher cost it passes to employers cause layoffs thus reducing the number of buyers, who knows?
Whether or not an offer of 10% under asking price is reasonable depends largely on the specific property. There's a condo listed right down the street from me that is more than 10% overpriced, especially given current market conditions. It's highly unlikely they would accept a 10% under asking price offer, but it's not an unreasonable offer. Give that one another 30-60 days on the market and the sellers may be more reasonable. There are still a lot of buyers out there. Homes that are well priced and move-in ready will still get multiple offers.
Year over year home sales in OC were still up 9% in September. It's not uncommon for the real estate market to cool down this time of year. I believe we will keep seeing a flattening of prices throughout the rest of the year, leading into a more normal rate of appreciation going into the spring. Then again, who really knows. Just the other day, in the OC forum, I noticed someone with a very similar user name to yours predicting prices would never be lower than they are today.
The property in question has a list price of $450,000, the ZEstimate is $529,000 (which is probably worthless I know but i'm just putting it out there!). Days on market for the townhome is 5 so far so it's a new listing.
Comps:
4/08 for $499,000
6/20 for $490,000
so my offer of $399,000 is wishful thinking? It IS a unapproved short sale Ultimately I understand that I am competing with many people that will offer whatever amount they can get financed for even if that means bidding up to get the property. Demand and suppy I guess.
Yeah, I'd say that's wishful thinking. Even if the seller accepted it, it's highly likely the bank would not. They would look at the comps. Lately zestimates are usually, but not always, lower.
The property in question has a list price of $450,000, the ZEstimate is $529,000 (which is probably worthless I know but i'm just putting it out there!). Days on market for the townhome is 5 so far so it's a new listing.
Comps:
4/08 for $499,000
6/20 for $490,000
so my offer of $399,000 is wishful thinking? It IS a unapproved short sale Ultimately I understand that I am competing with many people that will offer whatever amount they can get financed for even if that means bidding up to get the property. Demand and suppy I guess.
Unless this is an area with very few sales , you are also competing with people who have much better information. If 400k is your limit comps won't matter because you have a set limit.
I think zillow is more for entertainment and advertising. Why aren't you using an agent for a short sale purchase ?
The property in question has a list price of $450,000, the ZEstimate is $529,000 (which is probably worthless I know but i'm just putting it out there!). Days on market for the townhome is 5 so far so it's a new listing.
Comps:
4/08 for $499,000
6/20 for $490,000
so my offer of $399,000 is wishful thinking? It IS a unapproved short sale Ultimately I understand that I am competing with many people that will offer whatever amount they can get financed for even if that means bidding up to get the property. Demand and suppy I guess.
Yeah that's gonna fly like a lead balloon. If I was selling I wouldn't even look at your offer. But then again I wouldn't overprice my house either
In So Cal someone that knows how to save $20,000 to $120,000 in cash and makes at least 65k to 150k per year and is tired of paying $1800-2000 in rent. It would be very hard to say what is typical, it depends on so many factors,property type, size, amenities, surrounding jobs market, location, location, and did I mention location.
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Ultimately I understand that I am competing with many people that will offer whatever amount they can get financed for even if that means bidding up to get the property. Demand and suppy I guess.
