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We are looking at homes and are ready to make an offer when the right place comes along. We are pre-qualified, have 20% down - basically we are ready to go and just waiting for the right place.
We are first-time buyers, so this is new to us.
My question is regarding making offers and what is reasonable. Obviously, we are looking to spend the least amount possible. For example, if a home is listed at $395K and we can afford to spend $380K but would feel more comfortable spending closer to $360K, are the sellers going to entertain an offer of $360K and possibly counter so that we can negotiate, or are they just going to ignore an offer tht is $35K less than asking. Would we be better off to put the most we can afford as our initial offer? I'm sure it is different for all sellers and their individual situations, but I am looking for a general guideline.
since individuals mostly buy and sell property, it's going to be determined by the individual.
there is no such thing as a rule of thumb.
make an offer of what a reasonable buyer would be willing to pay a reasonable seller, given that the buyer knows what other willing buyers paid other willing sellers.
Essentially, we cannot afford the asking price and want to start with a low offer, but not so low that the seller won't even counter. Basically, we want to offer the lowest amount that we can offer and still expect the seller to see us as serious buyers and negotiate with us.
If you like the house and think it is right for you, offer what you can, as we learned the hard way, someone else will come in an outbid you as they are bidding on the "low end" of thier price range.
It happened to us a few times during our 5 month home buying process (waiting on the short sale we purchased the whole time).
Your best bet is to work with your Realtor on this. Have them run the comps to come up with a price that you can justify. Also, how flexible the sellers are going to be is dependent upon their personal situation. Do they have to sell soon because of a relocation? How much equity do they have in the house? How long has the house been on the market? Have there been previous price drops while on the market. Has it been listed and withdrawn multiple times? What is the inventory in the area like?
All of these things play a role in making an offer. The more information you have the better offer you can make and justify.
I've had the same question in the past. Our realtor said that we could offer however much we wanted but to make sure it was in line with what other comparable houses nearby had sold for. You want to start low to leave room for negotiation but be sure that your price is still within reason. "Within reason" can be based on a variety of things such as: how long the house has been on the market, whether or not the current price already reflects some obvious drawbacks (lower price due to being on a very busy street, close to train tracks, poor condition, etc.), or anything else that prices it lower/higher than comparable properties.
If the seller's asking price is in line with what nearby homes have sold for (not necessarily what current homes for sale are) then I wouldn't go too low since it's reasonable for the sellers to expect a similar price for a similar property. Your real estate agent should advise you as to what is appropriate in your market.
It's also a question of you finding a price you feel comfortable with as your maximum and at what point you'll walk away.
As my realtor would tell me, "All they can say is NO" and "I'm used to hearing NO all the time, doesn't bother me!" and "Any offer is better than no offer".
Get a good realtor that knows the area and they should help you with a good offer. But if you really want the house but it's a little out of you reach, I say go for it! Who cares if they get their "feelings hurt" or you "offend them." You are a very well qualified buyer and an offer is just a start to negotiating.
Hurry up though, you don't have much time if you want in on the $8,000 tax rebate. You'll probably need to become under contract before November 1 if you want to close before December 1. Should still be plenty of time to find the house if you are looking now and have the finances ready. Good luck!
I think your realtor would have better information. From a personal point of view, I do think I would just not respond if the offer was too low. I wouldn't even reject it, I would just let it expire. The reason is there are bottom feeders out there offering well below market value just to see who nibbles. They will get some hits and that is what they are looking for. But it just simply would not be worth my time if I felt the offer was so low it couldn't be negotiated to an acceptable level.
Using your figures, with an asking price of $395, I would probably be expecting $385 or higher. If an offer came in at $360, I would ignore it. If it came at $380, I would counter.
[Edited]
I think a major factor is how desperate a seller is
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