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Making offer on house just listed - need advice (1 Viewer)

gbill2004

Footballguy
A home just went on the market today that we really like here in Winnipeg. It is for sale by owner - no agent. We plan on making an offer. We are not working with an agent and don't plan to for various reasons. House is listed at $430, and is assessed by the city at $390. Based on comparables I've seen, the house is worth around $410. Basement is finished except no bathroom (plumbing is roughed in though), where most homes do...so that's another $5-10k, which could turn off some buyers. No fireplace either which most homes have. Those aren't deal-breakers for us, but they do deduct from what the house is worth. We want the house but don't want to over pay. There is an open house this Sunday.

What should our strategy be in making an offer? Make the offer before or after the open house? If before, the sellers are unlikely to accept less than listing price since its only been on the market 2 days. I don't have an agent so the sellers won't need to pay the 2 percent commission, which is about $10k. Or do I make the offer after the open house when it's more likely I may be able to get the home at a price we are more comfortable with?

The home is near a train track, so that will likely turn off some potential buyers (this is a different home than the one I previously asked about on these forums). And right now we are in a buyers market.

Should I make the offer a day before the open house? Or wait until after the open house? Downside is if we wait until after the open house we may have more competition, but more likely to get the house at a lower price.

I'm perfectly comfortable paying what the house is worth...not looking for any type of unreasonable discount. But we do want the house.

Thoughts?

 
Why do you think making an offer the day before the open house will make any difference?
My thinking is that the seller might be unwilling to sell for lower than asking price before they have an open house.  Or is my logic wrong on this? 

 
My thinking is that the seller might be unwilling to sell for lower than asking price before they have an open house.  Or is my logic wrong on this? 
Well, that is my point - there is no advantage to you making an offer that close to an open house - unless you really want the house, and are willing to over-pay for it.

 
Well, that is my point - there is no advantage to you making an offer that close to an open house - unless you really want the house, and are willing to over-pay for it.
Yes I know that...I said that in my initial post.  You must not have read it. 

 
Why do you think making an offer the day before the open house will make any difference?
It does if you make an offer at asking price and it gets accepted prior to the open house.  Sometimes you can avoid a bidding war that way.  However, don't expect a owner to accept your offer if it's below asking.

 
It does if you make an offer at asking price and it gets accepted prior to the open house.  Sometimes you can avoid a bidding war that way.  However, don't expect a owner to accept your offer if it's below asking.
True, except I'm not working with an agent, so that essentially saves them around $10k by not having to pay the 2% commission to a buyers agent.  So if I offered $420 that's the same as $430 to a buyer with an agent. 

 
True, except I'm not working with an agent, so that essentially saves them around $10k by not having to pay the 2% commission to a buyers agent.  So if I offered $420 that's the same as $430 to a buyer with an agent. 
$420 seems reasonable.

 
No real advice here except 

- Real estate is incredibly local and most posters here are from the US

- You seem to love this house even though you've never seen it. That makes me think you'll end up overpaying. 

- Get a good home inspection 

 
No real advice here except 

- Real estate is incredibly local and most posters here are from the US

- You seem to love this house even though you've never seen it. That makes me think you'll end up overpaying. 

- Get a good home inspection 
I didn't state this in my initial post but we did view the house yesterday. 

 
Chances are that it won't matter if you make an offer today or tomorrow. They will wait until seeing all the offers from the weekend.  Then they will probably contact those with the higher offers for one last chance to make their best offer and then take the highest.

 
Chances are that it won't matter if you make an offer today or tomorrow. They will wait until seeing all the offers from the weekend.  Then they will probably contact those with the higher offers for one last chance to make their best offer and then take the highest.
This is very much a buyers market in our area. Highly likely they get no offers after the open house. Houses in this area are on the market for several weeks/months. 

 
If you saw the house and really like it---make a reasonable offer that is not insulting and see how they react.  If it truly is a buyers market there--and the house does have a few cons (railroad track proximity, no bathroom in the basement, no fireplace, an assessment by the city at $390k)--I see no harm in going in below asking price.  I would personally go in at $400 or $405k--which would net them the same money as a $410-415k offer from somebody that has an agent. One of three things will happen--they either accept, they say "no thank you", or they say "no thank you, and counter offer".    As a previous poster said--make sure you get an expansive inspection.  

 
This is very much a buyers market in our area. Highly likely they get no offers after the open house. Houses in this area are on the market for several weeks/months. 
Why?  There's a home shortage in the US.  Are you Canadians having a problem making bacon?

 
Why?  There's a home shortage in the US.  Are you Canadians having a problem making bacon?
Not sure. It differs here depending on the province. It's very much a buyers market here. Some areas it's balanced, but in our higher price range there's typically less potential buyers. 

 
Don't let the love of a particular house make you significantly overpay and be in a hurry.  There are other houses everywhere.  Find a house you like and/or love and priced affordably.

That being said, $430 is a hella deal.  I would suggest buying a dozen of them and renting them out.

 
If you are not happy paying that price and do not plan to pay it, you need to wait.  Their expectations may be too high. But then again, even in a buyers market the good houses sell.  If you are convinced the house is a bit overpriced, maybe talk to the sellers and tell them you would like to have an Independant appraisal done.   It may just be the sellers are a bit upside down with what they owe and need that amount.   

 
Any offer should be pending inspection.  Never know what will be found!

Not to mention... no bathroom in the basement?!  Odd.  I would find that to be a pain in the ### having to trek my ### upstairs everytime to take a piss.

 
Oh, and let me add... the "appraisal" is what the city says...?  Around where I am, city and county appraisals aren't always that accurate.  Perhaps consider an appraisal via a lender (if you're using one), and make it pending the appraisal, too?

 
I really don't think you are that far apart especially once you consider not using a realtor.  For the price difference you are talking about, it is not worth the risk.  Come in with an offer now of $410 explaining to them you are not using a realtor which saves 3 percent and see what they say.   They may come down to about $420-$425k.  At which point you should probably accept.  Or just offer a price of $420 firm to start with.  That is about what you are going to pay.  Just get it done.  If you let the house go you will never hear the end of it and will overpay on the next one that pops up.  And of course have inspection and loan approval clauses.  

 
I'm not sure if it works the same way in Canada but if the seller signed a contract with the seller agent to list the house at 4% it doesn't automatically mean if you don't have a buyers agent that contract goes to 2%.

It means the sellers agent gets the entire 4% and to get that 4% lowered that is something the agent and seller will have to discuss.

Maybe different in Canada?

I probably wouldn't make the offer before but instead right after.

If you do it before the agent may basically go around saying to everyone showing any interest that there is an offer already at XX giving people a baseline where they would need to be.

 
I'm not sure if it works the same way in Canada but if the seller signed a contract with the seller agent to list the house at 4% it doesn't automatically mean if you don't have a buyers agent that contract goes to 2%.

It means the sellers agent gets the entire 4% and to get that 4% lowered that is something the agent and seller will have to discuss.

Maybe different in Canada?

I probably wouldn't make the offer before but instead right after.

If you do it before the agent may basically go around saying to everyone showing any interest that there is an offer already at XX giving people a baseline where they would need to be.
The seller doesn't have an agent, and neither do I.  But typically of a buyers agent brings the seller a buyer, they seller gives the agent a 2% commission.  That's typically how it works here.

And you are absolutely correct on the sellers possibly using us as leverage.  What if we had a expiry on our offer where it expires before the open house?  Would that alleviate that concern? 

 
Always buy with your head, not your heart.

Assessed values are subjective.  They basically are there to get the tax collector the amount of money he wants from the property.  The higher the mill rate, the lower the possible assessed value, and so on...

Don't know what interest rates are like in Canada, in the US, an additional $10k at around 4% is about $50/mo.  $10k is A LOT to a seller, would $50/mo really be that big of a strain for you?

If I wanted the place, I would subtract the commission and add a couple thousand, that way the seller would, ultimately, be getting more than they were asking.

If I wanted to get a deal, I would take the chance your "buyers market" could lend to a delay in reasonable offers, wait a period of time, then, make my offer significantly below asking price.

With any offer, you can use your inspection to attempt to renegotiate your purchase price.  Those guys will undoubtedly find something you could use to try to get a discount and sellers are more likely to agree to them because the psychology of deal, probably, changed the moment they accepted your offer.

Good luck

 
Oh, and let me add... the "appraisal" is what the city says...?  Around where I am, city and county appraisals aren't always that accurate.  Perhaps consider an appraisal via a lender (if you're using one), and make it pending the appraisal, too?
My experience is that Cities and Counties do not make appraisals, they make assessments.  The assessment is used for taxing purposes.  The assessed value (a) times the mil level (b)equals the tax (c).  The county gets its tax dollars by manipulating either of the factors (a) or (b).  In most areas folks can challenge their assessed value but there is no challenge to the mil levy.  The folks who challenge do this by seeking an appraisal, but an appraisal is not (a) it is (ai).  Now it is in the counties bet interest  to not lose a battle on assessed value so they tend to assess around 10% lower than appraisal since that is the only corresponding metric, though an imperfect one, and in the comparison the county is not overpricing the home. The assessment stands.  

How matters work north of the border I am not certain, but finance seems to transcend borders.

 
Not sure. It differs here depending on the province. It's very much a buyers market here. Some areas it's balanced, but in our higher price range there's typically less potential buyers. 
What specific criteria are using to claim it's a buyers market?

I've put 30 buyers into homes this year.

 
If you want to low ball, sit on it for a couple weeks before making your offer. An offer right after listing isn't going to get the people to move much. With winter coming quick, houses don't move and people will get desperate come Nov/Dec if they really want out.

And it certainly is buyers market. We just sold/bought (first night in the new house last night!) outside of Winnipeg. Got lots of info from our agent about what places were going for. Pretty much everything was 5-15% below listing price. We sold for 5% below listing and bought for 9% below.

ETA: and absolutely have a 24 hour expiry on your offer.

 
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Why?  There's a home shortage in the US.  Are you Canadians having a problem making bacon?
The low-end market has been priced out damn near everywhere. A single person making $50-70k cannot buy a home in any decently sized city unless you want to live in a terrible area.

 
"A good agent". ?
:bye:

It does matter. And yes, there are a lot of bad ones. The inspection process without an agent is a recipe for a  :tfp:

So many areas here where buyer needs solid advice and a FSBO seller can get into a lot of legal trouble.

 

 
:bye:

It does matter. And yes, there are a lot of bad ones. The inspection process without an agent is a recipe for a  :tfp:

So many areas here where buyer needs solid advice and a FSBO seller can get into a lot of legal trouble.

 
It is a potential trainwreck with or without an agent.  Having a party in-between may help to negotiate things, but just following the process and documenting findings and what you expect to have fixed prior to closing or compensation at closing is sufficient between reasonable parties. 

 
It is a potential trainwreck with or without an agent.  Having a party in-between may help to negotiate things, but just following the process and documenting findings and what you expect to have fixed prior to closing or compensation at closing is sufficient between reasonable parties. 
LOL at a reasonable FSBO seller.  They don't exist 95% of the time.    

 
What's going to make you more upset? 

Seeing the house sell without getting your offer in

or

Overpaying for the house?

If the money isn't going to destroy your finances and the 1st would bother you more, then put an aggressive offer on the house while still being smart and see what happens.  If the 2nd is the answer, then you're better off waiting and then offer a low but acceptable offer and go from there.  There are no guarantees in these kinds of deals so you need to figure out what you're most comfortable with and act accordingly.  As others said, don't get too emotionally tied to any house as there are ALWAYS other options.  That said, if you really like and really want the house, as long as you aren't flushing money away, then make a good offer (without waiting) and go for it.

 
It is about the same odds at finding a good realtor.  :shrug:  
I don't understand this.  It's not that difficult to knock on the door of neighbors who are selling their home and ask them the opinion of their realtor.  You can also go to open houses and meet the realtors themselves.

 
LOL at a reasonable FSBO seller.  They don't exist 95% of the time.    
Agree.  Owners have an emotional attachment to their homes that a realtor does not.  When a realtor gets an offer it's just a number and negotiating starting point, but to an owner selling his own home it can be a slap in the face.  Owners also don't know their market like a professional does.

 
ou mentioned no fireplace, not basement restroom, and railroad tracks. While these things do not matter to you they do matter to most buyers.  The sellers may be lucky that they found a match in you.  They are not likely to find a lot of matches unless the house is very unpriced.  Perhaps you should let them see how difficult it is to find a buyer willing to overlook, or to not be influenced by those matters.

 
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It is about the same odds at finding a good realtor.  :shrug:  
I know we go back and forth on this LOL.  You must have not had a lot of good agents and/or very poor training that goes hand and hand with each other.  I get amazing training.  We have around 525 agents.  I'd say 200-225 are very, very good and provide tremendous value to their clients.

I just got back from a Buyers Consultation.  I won't show a home unless they are pre approved for loan and meet with me first. I just saved this guy a ton of hassle by eliminating a lot of properties he'd never be approved for.  Also got him to my #2 lender that deals with issues better and one came up for him. All up front instead of scrambling with issues right before a closing from the underwriter.

The best way to find a good agent is to call a RE office, ask for their broker, tell them what you are looking to accomplish and have them recommend 2-3 agents that are proven to get results for your needs and know your area. Then interview them and choose one. You'll never get a crappy one by doing this.

 
I don't understand this.  It's not that difficult to knock on the door of neighbors who are selling their home and ask them the opinion of their realtor.  You can also go to open houses and meet the realtors themselves.
The issue is the cost.  Bringing in a realtor at this point for what will be generously about 10 hours of work for a $10k cost is silly. 

 

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