Negotiations, round 2
June 17, 2010 3:54 PM Subscribe
A week later and we are in the midst of negotiations. Tell me what you think my counter offer on this house should be.
Seller's asking price: 270,000
House: 37 years old, 20 year old roof, original kitchen. It has been on the market for 91 days and we are the only offer. The seller inherited it from a dead parent and has never resided in the house. After some googling, it would appear that she is decently well off (I don't want to say what her profession is on here, but she has multiple offices and I'm sure she makes 6 figures).
What we want the house for: ideally around or just under 250,000. We can also close on July 22nd. We put in 2500 earnest money.
So far we put in an offer on the house asking for 235 plus seller pays 5k in closing. They countered with 261, and seller pays zero closing costs. We countered with 247,500 and seller pays 2500 closing.
My parents already lambasted me for making my second offer too high, so please don't. It's already done. I think it was a good offer because it shows that we are serious about purchasing the house but just need her to come down more.
Today she countered with 258 plus she pays 2500 in closing costs.
What should our next offer be?
Seller's asking price: 270,000
House: 37 years old, 20 year old roof, original kitchen. It has been on the market for 91 days and we are the only offer. The seller inherited it from a dead parent and has never resided in the house. After some googling, it would appear that she is decently well off (I don't want to say what her profession is on here, but she has multiple offices and I'm sure she makes 6 figures).
What we want the house for: ideally around or just under 250,000. We can also close on July 22nd. We put in 2500 earnest money.
So far we put in an offer on the house asking for 235 plus seller pays 5k in closing. They countered with 261, and seller pays zero closing costs. We countered with 247,500 and seller pays 2500 closing.
My parents already lambasted me for making my second offer too high, so please don't. It's already done. I think it was a good offer because it shows that we are serious about purchasing the house but just need her to come down more.
Today she countered with 258 plus she pays 2500 in closing costs.
What should our next offer be?
She's only come down $12K so far, which is 4% of the asking price - peanuts in this market. Unless this is absolutely positively the house of your dreams and nothing else will ever compare, I'd stand firm on $247,500 and be prepared to walk away if she doesn't accept it.
posted by googly at 4:10 PM on June 17, 2010
posted by googly at 4:10 PM on June 17, 2010
The house has been on the market for three months and there haven't been any other offers. It probably isn't worth $250K (9% less than the asking price). Stand firm with your current offer. If you are absolutely convinced that this house is worth $250K and you can't find anything else comparable, then offer $250K. Keep your focus on the value of the house, not the negotiations.
posted by ssg at 4:17 PM on June 17, 2010 [2 favorites]
posted by ssg at 4:17 PM on June 17, 2010 [2 favorites]
walk away.
20 year old roof? original kitchen? Sounds like things you would need to invest in at least $15k. I don't know the Chapel Hill housing market (if that is where you are looking), but it seems like too much much, especially since house sales have significantly decreased since the tax credit expired.
It's OK to be picky.
posted by wocka wocka wocka at 4:20 PM on June 17, 2010 [1 favorite]
20 year old roof? original kitchen? Sounds like things you would need to invest in at least $15k. I don't know the Chapel Hill housing market (if that is where you are looking), but it seems like too much much, especially since house sales have significantly decreased since the tax credit expired.
It's OK to be picky.
posted by wocka wocka wocka at 4:20 PM on June 17, 2010 [1 favorite]
Response by poster: Just to add to this: the roof will cost about 4K to repair. The kitchen, yeah, 7K to get it up to standards to resell such an old house.
Chapel Hill market isn't hit as hard as other markets, but it's certainly not doing great.
This is hard for me because my realtor really is swaying me and I want to start ignoring his influence. He thinks we won't get it for a penny under 255.
When you compare the house with comps over the past year a fair price would seem to be 250-255. However, the comp prices over the past year were most certainly influenced by the 8K tax credit.
posted by corn_bread at 4:22 PM on June 17, 2010
Chapel Hill market isn't hit as hard as other markets, but it's certainly not doing great.
This is hard for me because my realtor really is swaying me and I want to start ignoring his influence. He thinks we won't get it for a penny under 255.
When you compare the house with comps over the past year a fair price would seem to be 250-255. However, the comp prices over the past year were most certainly influenced by the 8K tax credit.
posted by corn_bread at 4:22 PM on June 17, 2010
Wow, they're kind of playing hardball with you. Is your agent giving you suggestions? I think the seller thinks you are a novice at negotiations, so is giving you a tough time.
That first $261 counter was not an honest cut in the price. They were just feeling you out. The next $3,000-less counter with closing costs? I'm not sure that was even a real counter-offer.
I might just tell them at this point that you really can't go any higher. See what their response is, and don't budge until they can come back with something like $253 with closing; at that point, you can probably get them to $250 with closing.
I know you probably love this house right now, but if you realistically wanted to keep it at $250K, you don't have much wiggle-room, and you have to be able to walk away.
As it stands now, their end-price is likely above $250, and your offers appear to have been telegraphing willingness to pay above $250.
posted by jabberjaw at 4:23 PM on June 17, 2010
That first $261 counter was not an honest cut in the price. They were just feeling you out. The next $3,000-less counter with closing costs? I'm not sure that was even a real counter-offer.
I might just tell them at this point that you really can't go any higher. See what their response is, and don't budge until they can come back with something like $253 with closing; at that point, you can probably get them to $250 with closing.
I know you probably love this house right now, but if you realistically wanted to keep it at $250K, you don't have much wiggle-room, and you have to be able to walk away.
As it stands now, their end-price is likely above $250, and your offers appear to have been telegraphing willingness to pay above $250.
posted by jabberjaw at 4:23 PM on June 17, 2010
Your last offer is no longer in play since you've received a counter. If you think it was too high, you are actually free to present an even lower offer, although it really isn't usually done. I would clearly communicate to agent that your last offer was your best and highest, that you are giving the seller 24 or 48 hours to reconsider that offer, and then walk if she doesn't take it. You are in the driver's seat here, just be patient and confident.
posted by raisingsand at 4:29 PM on June 17, 2010 [5 favorites]
posted by raisingsand at 4:29 PM on June 17, 2010 [5 favorites]
The sellers status as inheritor, making 6 figures, never lived there, etc. probably works against you. It means the seller can afford to wait and is not desperate. Right now you are $10,500 apart. As a positive, they have moved in your direction, from the asking price, $12K plus $2.5K closing costs. You have moved up more than that, from your original offer. Make it clear you've reached your limit, give a final offer and walk away if it's not accepted.
posted by beagle at 5:22 PM on June 17, 2010 [1 favorite]
posted by beagle at 5:22 PM on June 17, 2010 [1 favorite]
You seem to be caught up in the art of negotiation. What you should be looking at are the following: First, how badly do you want this house? Are you negotiating because you can't allow yourself to "lose" the negotiation, or do you really want this house? If you are ambivalent about the house, just walk away. If you really want the house, then Second, how much are you actually willing to pay to get it? Are you ready to pay $255 for it? ...$250? You need to decide. Third, offer that amount with the terms you are willing to accept. Include the words "Last and Final Offer." You have already stretched this negotiation out too far. One of you (you or the seller) is not serious. She may just be playing you along in the hopes of getting a competing offer. You may be more interested in "the deal" than the house. Be prepared to walk away and never look back. This is the true test of a negotiation.
posted by Old Geezer at 5:38 PM on June 17, 2010 [3 favorites]
posted by Old Geezer at 5:38 PM on June 17, 2010 [3 favorites]
I don't really see the logic behind offering lower. If I were a seller and a buyer reduced their offer after I'd already rejected it then I'd be plenty pissed.
Personally, I'd inform the seller that they have a perfectly good offer from me and, out of the kindness of my heart, I'm making it again. Then be prepared to walk. Your realtor should be capable of selling the heck out of your offer - that's what you pay him for.
It's perfectly reasonable for the agent to say "I don't think that they'll take less than X". That does not mean that you have to offer more than X. First, he can be wrong (amazing, I know). Second, what you are willing to pay is what you are willing to pay. If you are stupid and unrealistic then you'll find out. Better that than paying more than you are comfortable with.
posted by It's Never Lurgi at 5:39 PM on June 17, 2010
Personally, I'd inform the seller that they have a perfectly good offer from me and, out of the kindness of my heart, I'm making it again. Then be prepared to walk. Your realtor should be capable of selling the heck out of your offer - that's what you pay him for.
It's perfectly reasonable for the agent to say "I don't think that they'll take less than X". That does not mean that you have to offer more than X. First, he can be wrong (amazing, I know). Second, what you are willing to pay is what you are willing to pay. If you are stupid and unrealistic then you'll find out. Better that than paying more than you are comfortable with.
posted by It's Never Lurgi at 5:39 PM on June 17, 2010
Yeah, your realtor seems weak.
When you compare the house with comps over the past year a fair price would seem to be 250-255. However, the comp prices over the past year were most certainly influenced by the 8K tax credit.
Make sure you're comparing houses that were on the market as long as this one has. And needed updating. You may have done so already, but just in case . . .
I vote for you to stay firm with your offer.
posted by Dee Xtrovert at 5:46 PM on June 17, 2010
When you compare the house with comps over the past year a fair price would seem to be 250-255. However, the comp prices over the past year were most certainly influenced by the 8K tax credit.
Make sure you're comparing houses that were on the market as long as this one has. And needed updating. You may have done so already, but just in case . . .
I vote for you to stay firm with your offer.
posted by Dee Xtrovert at 5:46 PM on June 17, 2010
I'd offer $250,000 and the seller pays $2500 closing costs. The seller is probably sick of this and wants it done with. Also keep in mind that you may do a bit more negotiating after the inspection if there are repairs necessary.
posted by selfmedicating at 5:47 PM on June 17, 2010
posted by selfmedicating at 5:47 PM on June 17, 2010
Stoneweaver has the right tack in this situation:
1. Stand firm on your current offer. If it is rejected again, walk away for now.
2. Wait 6 weeks.
3. Make an offer for $225k with all closing costs paid by them.
4. Do not accept any offer over $240k, with at least half the closing costs covered.
Negotiating for a house is a bit different than haggling over a car, or at a flea market or something. Unlike these examples, a house can appreciate in value (although there is no guarantee, of course). You must have a top price set, and you must try to get the property for as little as you can. This is likely somewhere you will live for a VERY LONG time. Don't let your love for the house cloud your judgment. Be ruthless!
This seller may not have much incentive to sell because they have a good income, but it's got no "sentimental value" for them and it IS a drain on their finances.
If this falls through, never fear. You WILL find the perfect house for you, at the perfect price. It just takes time.
posted by wwartorff at 5:59 PM on June 17, 2010
1. Stand firm on your current offer. If it is rejected again, walk away for now.
2. Wait 6 weeks.
3. Make an offer for $225k with all closing costs paid by them.
4. Do not accept any offer over $240k, with at least half the closing costs covered.
Negotiating for a house is a bit different than haggling over a car, or at a flea market or something. Unlike these examples, a house can appreciate in value (although there is no guarantee, of course). You must have a top price set, and you must try to get the property for as little as you can. This is likely somewhere you will live for a VERY LONG time. Don't let your love for the house cloud your judgment. Be ruthless!
This seller may not have much incentive to sell because they have a good income, but it's got no "sentimental value" for them and it IS a drain on their finances.
If this falls through, never fear. You WILL find the perfect house for you, at the perfect price. It just takes time.
posted by wwartorff at 5:59 PM on June 17, 2010
Today she countered with 258 plus she pays 2500 in closing costs.
That leaves you to offer 250,00 plus 2,500 in closing costs.
If you really, really want this house you can move from there to 255,00 plus 2,500 but before you bid anything, make sure you know where your final offer line is and don't go over it. It isn't the last house in town.
posted by DarlingBri at 6:02 PM on June 17, 2010
That leaves you to offer 250,00 plus 2,500 in closing costs.
If you really, really want this house you can move from there to 255,00 plus 2,500 but before you bid anything, make sure you know where your final offer line is and don't go over it. It isn't the last house in town.
posted by DarlingBri at 6:02 PM on June 17, 2010
FYI, $7k doesn't buy much kitchen these days. I hope you didn't get that figure from your Realtor; he/she is a very biased source for such information, with little reason to have your interests at heart. If you make an offer on the assumption that it will cost $7k to fix, and then contractors start giving you estimates of $20K+ (much more likely), you'll be in a pickle.
I would take a breather, step back from this house and look at the wider market. You need to have your other options in mind so that you can select among them. If you're thinking that there's only this one house then you'll pay anything to get it, even more than it's worth to anyone else or more than you can afford. Remind yourself that there are houses for sale all over the friggin' place.
posted by jon1270 at 7:29 PM on June 17, 2010
I would take a breather, step back from this house and look at the wider market. You need to have your other options in mind so that you can select among them. If you're thinking that there's only this one house then you'll pay anything to get it, even more than it's worth to anyone else or more than you can afford. Remind yourself that there are houses for sale all over the friggin' place.
posted by jon1270 at 7:29 PM on June 17, 2010
What OldGeezer said.
How much do you want the house? What's it worth to you?
Otherwise, walk away. Let it sit for a few weeks, let her stew.
posted by wilful at 7:57 PM on June 17, 2010
How much do you want the house? What's it worth to you?
Otherwise, walk away. Let it sit for a few weeks, let her stew.
posted by wilful at 7:57 PM on June 17, 2010
Just out of curiosity, are you working with an exclusive buyer's agent, or is this the realtor representing the property? Because s/he is acting as though s/he's the latter.
A new kitchen will absolutely cost more than $7K. For comparative purposes, I live in an area where goods/services are relatively cheap, and it cost about $4-5K just to update the kitchen without replacing the cabinets. Actually ripping out & replacing cabinets will easily add another $5K, if not more. Budget at least $10K for the kitchen. Similarly, the roof? For safety's sake, double your estimate (depending on what the roofer finds, they may need to do a complete tear-off--I wound up having to replace a couple of beams).
I agree with the others that you should stop and walk, especially given that there are potentially expensive repairs to be made on top of the purchase price.
posted by thomas j wise at 8:07 PM on June 17, 2010
A new kitchen will absolutely cost more than $7K. For comparative purposes, I live in an area where goods/services are relatively cheap, and it cost about $4-5K just to update the kitchen without replacing the cabinets. Actually ripping out & replacing cabinets will easily add another $5K, if not more. Budget at least $10K for the kitchen. Similarly, the roof? For safety's sake, double your estimate (depending on what the roofer finds, they may need to do a complete tear-off--I wound up having to replace a couple of beams).
I agree with the others that you should stop and walk, especially given that there are potentially expensive repairs to be made on top of the purchase price.
posted by thomas j wise at 8:07 PM on June 17, 2010
I like your instincts.
Were it me, my next offer would be reiteration: 247,500 and seller pays 2500 closing.
Also remind your broker who he's working for. Because he's forgotten, as is common. (Or he's remembered that he's just working for a fee.)
posted by RJ Reynolds at 8:20 PM on June 17, 2010
Were it me, my next offer would be reiteration: 247,500 and seller pays 2500 closing.
Also remind your broker who he's working for. Because he's forgotten, as is common. (Or he's remembered that he's just working for a fee.)
posted by RJ Reynolds at 8:20 PM on June 17, 2010
Is this house in the Chapel Hill/Carrboro school district? If so, stop thinking about national trends, which aren't really in play. And a few years ago, at the height of the market, 90 days was pretty average in Chapel Hill and Carrboro for a house to sell. Other buyers are people moving in from New Jersey and California who think anything under $400,000 is a screaming deal.
You are too caught up in thinking there is a 'right' price and you have to find it. Also, the $8000 credit, the seller's finances--this is irrelevant, because, as someone said earlier, the seller can hang onto it forever without needing to sell.
The NY Times just had an article about how buyers are starting to think they can demand anything and the sellers will jump. Maybe you'll find it helpful.
posted by bluedaisy at 8:38 PM on June 17, 2010 [1 favorite]
You are too caught up in thinking there is a 'right' price and you have to find it. Also, the $8000 credit, the seller's finances--this is irrelevant, because, as someone said earlier, the seller can hang onto it forever without needing to sell.
The NY Times just had an article about how buyers are starting to think they can demand anything and the sellers will jump. Maybe you'll find it helpful.
posted by bluedaisy at 8:38 PM on June 17, 2010 [1 favorite]
Also, do you trust your realtor or not? Sure, if the house sells for more, he gets a bigger commission--but he doesn't get anything if you don't buy. So don't assume he isn't giving you good advice.
If you really want this house, accept the last counter. Any time you make another offer, she could easily say no.
posted by bluedaisy at 8:52 PM on June 17, 2010
If you really want this house, accept the last counter. Any time you make another offer, she could easily say no.
posted by bluedaisy at 8:52 PM on June 17, 2010
Fire your agent and find someone that does a better job representing your interests. You haven't given any indication why you absolutely MUST have this house. And even if you did really want it, your Realtor should be encouraging you to not get too attached to any one home until you have closed on it :-) Otherwise you're not negotiating from a strong position.
posted by Happydaz at 9:28 PM on June 17, 2010
posted by Happydaz at 9:28 PM on June 17, 2010
20 year old roof? Some roofs only last 20 years (my parents' original roof lasted 23 years). It would be prudent to up that figure.
Updates the kitchen include applances $3k+, countops $1k+, and cabinets $3k+. This is bare minimum quality. You may want better And there is the floor, paint, etc. And don't think of changing the layout on a $7k budget. Modern app liances are larger than 37 years ago- my brother's new fridge is very awkward in his 70s kitchen.
posted by Monday at 11:04 PM on June 17, 2010
Updates the kitchen include applances $3k+, countops $1k+, and cabinets $3k+. This is bare minimum quality. You may want better And there is the floor, paint, etc. And don't think of changing the layout on a $7k budget. Modern app liances are larger than 37 years ago- my brother's new fridge is very awkward in his 70s kitchen.
posted by Monday at 11:04 PM on June 17, 2010
Response by poster: BlueDaisy: I do respect your response. As someone from NJ I agree that anything under 400k is a screaming deal; however, that is only if that under 400k property is move-in ready. 258 for a 37-year old fixer upper is not a screaming deal and I'm not sure how many people would view it as such.
posted by corn_bread at 6:24 AM on June 18, 2010
posted by corn_bread at 6:24 AM on June 18, 2010
Corn_bread, sorry, I didn't mean to suggest the house was a screaming deal--just that some folks' responses don't reflect the understanding that Chapel Hill (like a lot of popular college towns with strong public school systems) is a different market.
I would just hate, myself, to be in a situation where I lost a house that I really wanted over a few thousand dollars. But if there are other houses in the sea (so to speak), then bargain hard. Good luck.
posted by bluedaisy at 10:39 AM on June 18, 2010
I would just hate, myself, to be in a situation where I lost a house that I really wanted over a few thousand dollars. But if there are other houses in the sea (so to speak), then bargain hard. Good luck.
posted by bluedaisy at 10:39 AM on June 18, 2010
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No other offers? In this slump? Maybe because they priced it too high. Don't play bidding war unless you happen to be in the middle of a desert with no other houses. Patience. Walk away if you have to.
posted by history is a weapon at 4:04 PM on June 17, 2010