Post: #1

I understand that the "value"of a house is imprecise, within +/- 5% or so, and that it's normal for sellers to price a bit above value.

But some houses have an asking price 50% or more above value. Either the seller is crazy, or bought at the market peak (2006/2007) or has been flattered by an agent just out to get the listing.

Is it even worth bothering to make an offer in such a case? Or better to have "abundance mentality" and make offers only on a reasonably priced house?

If a house worth 200K is priced at 300K does one offer 200K as a best and final offer? I doubt that will work. Nor will offering 100K and waiting for the seller to meet me halfway at 200K.

My gut tells me not to bother.

Thoughts?

Post: #2

I negotiate high value items for a living.

Most things with an asking price 50% over market are "not really for sale."

It is worth bothering but do a "would you take" or other minimally effort offer to the seller or their broker. Offer 15% below market or whatever you feel would be a steal. Move away quickly if they do not show signs of meeting the market. Repeat every three months or so depending on how fast your market moves because there a possibility that "someone" will be there right place right time and get the asset at or below market.

Forget "mentalities" and get a shrewd businesslike and non emotional approach and stay with that.

Hope that helps.

Post: #3

Make the offer. If $200K really is a legitimate good offer for the property and the sellers are in some kind of fantasy world about the value of their house, then their real estate agent will tell them this is a good offer, and they should come down to earth and accept it. They may not be willing to sell for a realistic value, but why not try?

The only downside could be that you would be tying up some earnest money, or could be limiting yourself from going after another option depending on how long this offer takes to play out.

Post: #4

What I do is use the classic negotiating technique. Knock them down on the price (in person works best), then when they won't move any further, make it clear you are a serious buyer and have the funds ready to go. Then write down your best offer on a business card, hand it to them. Thank them for their time and leave.

Last time I did that within ten minutes I got a phone call accepting my best price!

Post: #5

Are the houses meant for investments?

Most sellers are emotionally attached to their houses. Many think they are worth far more because they added some special wallpapers or some other nonsense.

You won't be able to show them the truth. Only time will and if/when they get to the point where their reason for selling is more painful than the reducing the price of their house.

There are also times when these sellers overextend themselves on the loans. They may be trying to break even at that price. At this point there really is no way to negotiate a better price because their hands are tied.

If you are looking at investments, you have to go through a lot of marketing and talk to a lot of sellers to get to the good deals. If there is equity, in the property, you need to find out the motivations behind the sellers.

Unfortunately, this cannot be done through a agent. If these houses are sold through agents, the only thing you can do is shoot them offers. They can either be cash offers or, if the numbers work, a offer where the seller finances part of the purchase for a higher selling price. This is more of a shotgun approach. I tend to think this type of approach is better for properties that can built upon to increase value. Stuff like rehabs, acreage that can be split, houses that can be turned into multi-units, etc...

Post: #6

(09-28-2015 03:37 PM)worldwidetraveler Wrote:  Are the houses meant for investments?

Most sellers are emotionally attached to their houses. Many think they are worth far more because they added some special wallpapers or some other nonsense.

You won't be able to show them the truth. Only time will and if/when they get to the point where their reason for selling is more painful than the reducing the price of their house.

There are also times when these sellers overextend themselves on the loans. They may be trying to break even at that price. At this point there really is no way to negotiate a better price because their hands are tied.

If you are looking at investments, you have to go through a lot of marketing and talk to a lot of sellers to get to the good deals. If there is equity, in the property, you need to find out the motivations behind the sellers.

Unfortunately, this cannot be done through a agent. If these houses are sold through agents, the only thing you can do is shoot them offers. They can either be cash offers or, if the numbers work, a offer where the seller finances part of the purchase for a higher selling price. This is more of a shotgun approach. I tend to think this type of approach is better for properties that can built upon to increase value. Stuff like rehabs, acreage that can be split, houses that can be turned into multi-units, etc...

I agree with this when it comes to houses. I just bought a while ago and there were some homes that were just insanely priced because they people (read single women) who owned them "felt" that they were worth that much...and because they were emotionally invested couldn't be negotiated with.

There is a flipside to people that overvalue/emotionally price things if you are patient though. They run that high price and then when crisis hits they panic/give up and will sell it for anything just to get it off their plate because their emotional investment is shattered.

The home we bought came from such a "I'm done with this" woman. She was selling because she got married and was moving in with the guy. She wanted to sell before her wedding but the buyer bailed on the deal...so she was 'done with it' and just wanted to move on with her life....her realtor was also a horrible representative for her and was also 'ready to be done' with that sale.

So, they greased the skids to make the sale happen and this chick put close to $20k into the house of her own money between repairs, replacements, cash and closing costs that we asked for to make the deal happen.

Tl;DR - as advised above, give them a low offer and leave your contact info with them saying that you are open to discussion down the road and are not in a hurry. Cross your fingers that they get into a bind down the road and panic.

Post: #7

(09-28-2015 03:27 PM)Guitarman Wrote:  What I do is use the classic negotiating technique. Knock them down on the price (in person works best), then when they won't move any further, make it clear you are a serious buyer and have the funds ready to go. Then write down your best offer on a business card, hand it to them. Thank them for their time and leave.

Last time I did that within ten minutes I got a phone call accepting my best price!

I'll second this. The power of walking away leaves you in a much better negotiating position. As long as you never emotionally get involved in a sale, you know what your limits are, and employ the walkaway when needed, you'll come out on top.

Post: #8

how did it go?

Post: #9

(09-30-2015 11:08 AM)John Michael Kane Wrote:  

(09-28-2015 03:27 PM)Guitarman Wrote:  What I do is use the classic negotiating technique. Knock them down on the price (in person works best), then when they won't move any further, make it clear you are a serious buyer and have the funds ready to go. Then write down your best offer on a business card, hand it to them. Thank them for their time and leave.

Last time I did that within ten minutes I got a phone call accepting my best price!

I'll second this. The power of walking away leaves you in a much better negotiating position. As long as you never emotionally get involved in a sale, you know what your limits are, and employ the walkaway when needed, you'll come out on top.

For houses as for women mate.

Post: #10

(09-28-2015 02:41 PM)mammal Wrote:  I understand that the "value"of a house is imprecise, within +/- 5% or so, and that it's normal for sellers to price a bit above value.

But some houses have an asking price 50% or more above value. Either the seller is crazy, or bought at the market peak (2006/2007) or has been flattered by an agent just out to get the listing.

Thoughts?

Depends on what you're basing your valuations on. The seller could have done renovations and improvements to justify the price. The market could be experiencing upward price pressure because of a lack of inventory and high demand.

Often a city's assessment is lower than actual market value, especially if improvements have been made.

A truly overpriced property can be an excellent buying opportunity. It will take time and patience that many buyers don't have. I've seen a very nice $310,000 property sell for $248,000 because they overpriced it. By the time the sellers we're ready to let go of their demands many of the original potential buyers had already moved on to other properties and they desperately needed to sell because they already bought another home.

That's when you come in and swoop.

Post: #11

(12-25-2015 09:20 PM)Onto Wrote:  

(09-28-2015 02:41 PM)mammal Wrote:  I understand that the "value"of a house is imprecise, within +/- 5% or so, and that it's normal for sellers to price a bit above value.

But some houses have an asking price 50% or more above value. Either the seller is crazy, or bought at the market peak (2006/2007) or has been flattered by an agent just out to get the listing.

Thoughts?

Depends on what you're basing your valuations on. The seller could have done renovations and improvements to justify the price. The market could be experiencing upward price pressure because of a lack of inventory and high demand.

Often a city's assessment is lower than actual market value, especially if improvements have been made.

A truly overpriced property can be an excellent buying opportunity. It will take time and patience that many buyers don't have. I've seen a very nice $310,000 property sell for $248,000 because they overpriced it. By the time the sellers we're ready to let go of their demands many of the original potential buyers had already moved on to other properties and they desperately needed to sell because they already bought another home.

That's when you come in and swoop.

Well said. If it were easy to get great deals everyone would. The excellent post by worldwidetrav earlier in this thread is pointing out this is a consumer dominated market.

Post: #12

There are plenty of deluded people out there who have property for sale at over market values, they probably hope for fools to pay over the odds and aren't really interested in selling at a fair price. Its not until people get desperate that they start to accept lower offers on their over priced property, best to make an offer and if its not to your liking move on, there are plenty of houses available but you need to be flexible if you want to get the most value for your money.

Post: #13

There's kind of a break pedal in the system, in that you can't get a mortgage if the property doesn't appraise for the sale price. Appraisements aren't perfect, but mortgages do get denied for overpriced properties.

Post: #14

My Mother owned a successful real estate company for some time. She told me, "The best time to sell is when you don't have to".

I imagine the same would apply to buying.

Post: #15

The thing is that you have to get your player game on, and see how the seller is dealing. You have to understand what the situation actually is and how in need the seller is. When prices are so high is usually because the seller is not in need of the cash or is just basing their valuation on a projected increment of the property price. This can be due to fue buildings or commerce center close by.

At the end, you dont loose anything if you make an offer, so my best bet would be to make a good one regardless on whether the price is nuts or not.

The price is just a matter of perspective

Post: #16

Guitarman said it best. Give your price and leave. Nothing beats it. It's like showing on a date with a girl, giving her your number and saying "look, My worth is higher than yours. Now you have this one chance to call me and I'll get back to you. Otherwise, I'm leaving for good.".

Besides many people list their properties for "fun". Don't waste your time with these guys.

Post: #17

(12-26-2015 04:57 PM)thisisright Wrote:  Guitarman said it best. Give your price and leave. Nothing beats it. It's like showing on a date with a girl, giving her your number and saying "look, My worth is higher than yours. Now you have this one chance to call me and I'll get back to you. Otherwise, I'm leaving for good.".

Besides many people list their properties for "fun". Don't waste your time with these guys.

Lol it's not really like that. It's a game but there's other variables first off if you're a cash buyer- fast closer and have a good agent people tend to take you seriously.

If you're a appraised needing finance guy you need to jump through hoops to get a loan these days.

To answer the original question just make an offer then they counter or get insulted. Many times things are high because of existing loans etc.

I'm actually trying to buy a second home now so I'll be hitting them with all I've got I'll keep you informed.

Post: #18

Oh yeah and if the listing agent is female look at the tax rolls and find the owner before you deal. Talk to them yourself.

Post: #19

(12-26-2015 05:27 PM)el mechanico Wrote:  Oh yeah and if the listing agent is female...

Post: #20

update?

Post: #21

Put a firm offer in for 10% less than market value and give it a 5 day expiry