I need some house-buying tips about a specific situation.

April 23, 2019 1:13 PM

There's a house for sale in our little town in Sweden. It's been on the market since January, and we know (through friends of friends) that the owners are keen to sell and move. We made a bid quite a bit under their asking price, expecting them to come down a little and then meet them half way, but they haven't. This question is partly strategy (should we wait? Bid higher immediately? etc.) and partly psychological (does it matter if we pay 'too much' if we like the place? etc.)

This is the first time we're buying a house. We've been idly looking for a year or two now, and our little town has previously been very much a sellers' market (way more buyers than sellers, and house prices regularly going 20-30% over starting price). This seems to have changed in the last 3-6 months - there are now a handful of houses for sale, nothing is selling quickly, and a big apartment building is going to be completed soon (so we're expecting more houses for sale then).

The place we're interested in has been very cheaply and (imo) badly renovated - cheap plastic fake wood doors, cheap rattly kitchen cabinets, horrendous wallpaper, etc. I'm pretty sure this is a big reason it hasn't attracted much interest. We didn't even consider it when it first came out, but came around because if we can get it cheaply, it will be nice once a whole lot of work has been put into it.

The owners tried to sell it last year for 1.3M SEK (~$130k US), then took it off the market after a few months. It was listed again in January for 980,000 SEK ($98k US). Houses nearby have been sold for around that much, but they were in much better condition. After looking at it a few weeks ago, we bid 700,000 SEK ($70k US), figuring they must be desperate and if we get it for that then it will be worth putting in all the work it needs. Or if they counteroffer and we end up somewhere in the middle then it'll still be fine. They said no to our offer, and when the agent asked if they'd like to counteroffer they replied 'Not really. Our absolute lowest to go any further is 950,000 SEK ($95k US). So no need to reply.'

So: if we like the place (or it's potential, really), is there any strategy we should be thinking of here? Or should we just give our maximum bid (maybe 850,000? Still under their minimum) and then move on?

Also: we could afford to pay their asking price. But it is definitely overpriced compared to what other houses in the area have sold for, so I'm worried we'd always feel like we got a bad deal. After buying a place, did the feeling of 'great deal!' or 'too expensive!' affect how felt about living there for you?

posted by twirlypen to Home & Garden (13 answers total)

give our maximum bid (maybe 850,000? Still under their minimum) and then move on?

That’s what I would do if I really did like the place, it’s potential, the location, sellers market, etc. If they still give a hard no, so be it. Then I’d consider offering 800,000 if you haven’t bought by the end of summer and if it’s still available.

(I am in USA, in a market that is more expensive but still considered cheap in our terms, so not sure how relevant my recent experience is. But generally I think if you can afford it and really like it, and plan to live there many years, it shouldn’t matter much if the deal was considered good or bad by others, they won’t live there and won’t have your exact values and preferences)
posted by SaltySalticid at 1:21 PM on April 23, 2019 [1 favorite]

House transactions are very emotional (I'm going through two right now!). There's always the possibility they were insulted by the low offer. In the US this all goes through realtors usually; not sure if that's true in Sweden, but that helps will cues and communication about what an acceptable offer might be. There also all kinds of ways to sweeten an offer besides money - flexibility in a closing date, waiving the home inspection, having a loan commitment, etc.

I never felt I over or underpaid for a home - I always felt like the home went for what the market wanted it to be.
posted by stupidsexyFlanders at 1:24 PM on April 23, 2019

I think of this problem in the following way: if I pay X for this house, and things change, will I be able to sell it and not lose a bunch of money? A few months isn't ages on the market, but you essentially also know no one has bid 950,000 or it would've sold. They aren't desperate, because they have a firm floor on the offers they will accept, possibly because they paid for the bad renovations and have that much into the home. People get really emotional about homes. You did underbid by a lot (almost 30%), which might've make them think it wasn't a serious offer. It's been a good market and hasn't been too long. They believe it will still sell.

I would try another bid at less of a discount, but that you are comfortable with (850,000 in your example). There are other homes that will be available and you aren't in love with this one; there will be renovations to redo and if you pay full price, I think you'd be unhappy long term feeling like you paid twice for some things, or I would be (if I paid full price and had to get new cabinets, wallpaper, etc. on top, meaning I had paid 20-30% above asking in effect). I'd probably total up what I anticipated the re-renovations would cost, deduct that from their asking price, and write a letter explaining the thinking behind the offer. Then perhaps they will see the fairness in it to both sides (this worked well for me when I bought the house I live in now. It had been on the market for quite a while and they were firm about their price, but took some concessions when th reasoning was explained).

I do not think they are highly motivated to sell, and this may not work right now. You can wait, but the risk is someone else will buy it in the meantime. People are weird. Some people will leave a house listed for over a year before they reduce the price, even though it clearly isn't selling.
posted by OneSmartMonkey at 1:31 PM on April 23, 2019

If they took it off the market for a few months, then I'm not at all certain that they must be desperate. That it hasn't been a sellers' market for 3-6 months may not be long enough for that change to register with all sellers.

Personally, if I really needed *this* house, I would up my offer (by a healthy amount, but not to my maximum bid), and see what they say.

If more houses will be coming on the market soon, then it's to your advantage to wait anyway.
posted by Capt. Renault at 2:05 PM on April 23, 2019 [3 favorites]

This seems to be a bluff: "Our absolute lowest to go any further is 950,000 SEK ($95k US). So no need to reply.'"

One of the most basic things about real estate negotiation is a buyer avoids disclosing their ceiling and a seller avoids disclosing their floor. Maybe they said this because they are feeling a little insulted by being lowballed, which happens.

You could try sending a letter saying something along the lines of: "We really love your house and the area, and are hoping to make it our home! However, we spoke with contractors and anticipate spending $X on [Scope of Work] to bring it up to date to fit our our needs. We came to this conclusion by considering the cost of hiring tradespeople and materials, and by looking at some nearby properties such as: (give an example or two here - your realtor should be able to find some).

We are working with a fixed budget, so accordingly we can only spend $YFinalOffer on the purchase."

And then detach from the outcome, there are always more houses!
posted by zdravo at 2:06 PM on April 23, 2019

I don’t think they’re bluffing at all. The fact that they took it off the market and also didn’t bother to counteroffer and actually told you they wouldn’t accept less than $xxx...while not accepting less than $xxx, well, these people seem to be standing behind what they’re saying.

If someone came in at 30% less than I was asking, I probably wouldn’t bother to entertain it either just because you’re never going to get them to their not nearly as low bottom price. There are people out there who test the market like this and are prepared to sell but only at a certain price and are quite happy to keep it if they don’t get what they’re asking. You seem to have found one of these.

I don’t doubt that this house isn’t worth what they want. I also can’t see them giving it to you for what YOU want, they’re prepared to hang onto it rather than let it go for substantially less.
posted by Jubey at 2:33 PM on April 23, 2019 [18 favorites]

If your mutual friends are providing info about the sellers' willingness to sell, could you ask them for more info? Like, how serious are they about that minimum? Is there something you could do to get them to come down more? Seems like a resource you could utilize.
posted by kevinbelt at 4:18 PM on April 23, 2019

Not in Sweden, but we just sold a house. We got an offer on our house that was was $30,000 under asking price. We initially told the other party we weren’t interested, no counter. We felt they were too far off from our minimum that it wasn’t worth our time making a counter, so I can definitely see the sellers point.

We eventually sold our house to the people for asking price. But totally different cor instances. We live in a hot market. Our house was in good condition etc.
posted by MadMadam at 5:52 PM on April 23, 2019

Just months ago they thought their house was worth 1.3M SEK. They don't seem to be particularly realistic about their house and the current condition. They likely were quite insulted by your offer (which isn't unreasonable given the work you'll have to do and the current market.) But, your offer was near half of what they originally thought the house was worth. That's a bitter pill to swallow and it's likely pretty emotional for them. You could offer 800-850 in a couple of months if it hasn't moved, but they might not be as desperate or rushed as you think they are. Good luck!
posted by quince at 8:53 PM on April 23, 2019 [1 favorite]

I've only bought one house, but we had great luck with responding to a counter with "Okay, I'll pay that if you do <itemized list of repairs/improvements that would cost the difference between our bid and their ask>". Our realtor didn't think we'd have any luck with this approach, but they met us right in the middle for a good price we were shooting for.
posted by so fucking future at 10:23 PM on April 23, 2019

The house is only a bargain if and only if you factor in ALL of the remodeling and repair that potentially needs to be done. In Sweden does the homeowner provide a house inspection report for potential buyers to review or is that something entirely on you, the potential buyer? Whenever I look at a house, I am calculating for all the expenses entailed in making the house "mine" in addition to repairs. Not to mention the inconvenience of living in a place during repair/renovation. These thoughts usually head off any flight of fancy bargain or compromise feelings.

If the seller's market is in the process of turning into a buyer's market why not wait? You mention that there will be even more housing stocking available pretty soon, so there is no pressure on you to purchase based on shortage of stock.

In a turning market, it takes time for sellers to come to terms about the change of circumstance and leverage. It also takes time for them to come to terms that they may need to either to do work on their home or compromise on the price to move it. I would suggest letting it lay for a few months to see if the owners become more amenable to future offers. This time also gives you a chance to see what else comes on the market.

I have not done property in Sweden just the US and exploration of the Australian market.
posted by jadepearl at 10:59 PM on April 23, 2019

I suspect that if they don’t get a bid at over 950 they’ll take it off the market again in the hopes that prices go up. I think the right strategy is to wait it out and see if they become more realistic about what it’s worth. That can take some sellers a long time. I agree with quince above that the sticking point psychologically is that they originally though it was worth 1.3m. That anchor point is going to weigh really strongly in their minds. In the meantime, keep looking at other houses.
posted by plonkee at 11:32 PM on April 23, 2019

The hard floor may be a very real - it could be they need to make that much from the sale of the house. Either to pay off debts or they need at least that much for the new home they want. The cheap remodel might have been an attempt to increase the value like they show on all those TV shows and they might be sore that they're now being offered less than what they could have got before the remodel if it was a seller's market back then. If you really want this house you may have to wait until they're desperate enough to give it to you for half of what they originally wanted for it.
If its worth 850k to you, you've nothing to lose by offering that much but at this point they will probably turn you down. I would move on and find something else. If you don't find something better than keep waiting for them to drop the price but they might decide to keep it as a rental property rather than sell it for so little.

When we were house-hunting, one of the houses we looked at was partially remodelled but the owner had to move to London so it was unfinished, the asking price was way too high but she needed to sell it for that much to afford somewhere in London. We didn't make an offer on that one haha.
The first one we made an offer on, we offered under what we wanted to pay, expecting them to counter offer. They didn't. The house stayed on the market for another 6 months and sold for a little under what we would have paid for it
posted by missmagenta at 5:27 AM on April 24, 2019