Write an offer for over list price on a regular sale? Why? Why not?

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Real Estate Agent with Alain Pinel BRE 01367196
http://actvra.in/zwh

Write an offer for over list price on a regular sale? Why? Why not?

On Trulia, a buyer in San Ramon CA asked 

For a regular sale, my broker is asking me to make an offer 15K more than asking price. I feel this is the wrong way to negotiate. Am I wrong?

 


Several questions come to mind:Hot sale hot offer

  • What is the market like where the buyer is writing an offer? Is it a seller’s market?
  • Are properties selling quickly in competitive situations?
  • What are the comps?
  • How do the actual cash outlays and monthly PITI compare at certain sale price points? Here’s an example, assuming 4% interest rate, 10% down payment, 1% loan origination fee. Are the differences that significant that one would jeopardize getting the property by insisting on a lower offer than what the market would bear?

 

 

$350,000

$375,000

$400,000

Cash outlay for downpayment and closing costs


46,735


49,814


52,888

Monthly PITI (principal interest taxes and insurance)


2,109


2,260


2,411



 

  • Who will know better how to write an offer in this situation ---- an experienced broker, or a first time buyer?
  • Why hire a professional if you won’t listen to his/her advice?


Still want to write an offer for over list price on a regular sale? Why? Why not?

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Rainmaker
322,676
Sara Homan
Coldwell Banker Ellison Realty 352-209-4044 - Ocala, FL
Realtor, Homes, Farms & 55+

Hi Pacita,  In the worst part of our market I was beat out on a beautiful deal by a $50,000 over asking price offer.  My offer was $100 over asking price and was written only 4 days after the property was listed.  

If all roads lead to Rome, follow that road!

Apr 30, 2012 12:31 PM #1
Rainmaker
665,364
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Sara

It's hectic in my part of the state, too.

I had listed a short sale and held an open house shortly afterwards. By the end of the open house, I had 10 offers in hand. By the next day, 12. 3 were all cash, and all but 2 were for significantly over list price. Same thing is happening on another listing (regular sale). Multiple offer situation.....

Buyers must pay attention to what their agents are telling them about the local market.

Apr 30, 2012 12:36 PM #2
Rainer
277,387
Steven Cook
No Longer Processing Mortgages. - Tacoma, WA
- Pierce, King, Kitsap, Thurston, Mason Counties

Pacita -- that is the important point, the agent knows what is happening in the local market, and the client has hired them to assist, the client should listen carefully to what their agent tells them about the market.

Apr 30, 2012 01:55 PM #3
Rainmaker
665,364
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Steven

We as agents have to educate clients about our local conditions. Too often, we have clients who pick up information, see what they want to see, and then try to make the market fit THEM versus their adjusting to what the market is saying.

Apr 30, 2012 02:17 PM #4
Ambassador
959,384
John McCormack
Albuquerque Homes Realty * www.AlbuquerqueHomes.com - Albuquerque, NM
AlbuquerqueHomes.com, Albuquerque Homes Realty

Each market is different and yes a true professional Realtor® is needed to save the buyer cash!  Suggested :)

Apr 30, 2012 02:36 PM #5
Rainmaker
440,113
Jim Patton
Century 21 M&M - 209-633-2839 - Turlock, CA
Realtor - Stanislaus & Merced county Realtor.

Same thing over here in the Central Valley, Pacita.   If you have an agent working for you I think it might be a good idea to listen to him. 

Apr 30, 2012 05:49 PM #6
Rainmaker
252,426
John M. Scott
BRE # 01442690, Scott Keys Properties - San Francisco, CA
Broker / Owner San Francisco Bay Area

Pacita, offers were due on one of my listings today in SF. Some under, some at listing and some considerably over. It all depends on how much the heart wants it I guess!

Apr 30, 2012 06:26 PM #7
Rainmaker
665,364
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

John --- thanks. And as you say, we agents know our market...so it would be advisable for our clients to listen to us.

Jim --- that's what we try to tell them. Some will listen, while others...well, they miss out.

John --- as they say, go to where your heart is...

Apr 30, 2012 07:35 PM #8
Ambassador
1,893,184
Jeff Dowler CRS
Solutions Real Estate - Carlsbad, CA
Carlsbad CA Homes for Sale (760) 840-1360

Pacita

As you point out it depends on the market conditions, and who knows those best but a knowedgeable agent. Buyers also have to be comfortable with what they are offering, and be willing to lose out.

We, too, are seeing more multiple offer situations on non-REO and short sale homes, and the inventory ins some communities is continuing to shrink. It is far more competitive than it was just a few months ago.

Jeff

Apr 30, 2012 08:30 PM #9
Ambassador
1,399,659
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale - San Jose Probate Agent

Pacita,  In a hot hot hot market if a buyer wants to win the deal ... writing $15K over asking price is peanuts in the scheme of things. 

Apr 30, 2012 08:41 PM #10
Rainmaker
665,364
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Jeff --- From what we're reading, multiple offers at above list price is more the norm than the exception lately

Kathleen -- hot, hot, hot is right. That's why I thought it may help if the agent provided a comparison of actual cost and monthly PITI to illustrate that the differences may not be significant, and by vacillating one may lose more than just $15K

Apr 30, 2012 09:25 PM #11
Rainmaker
1,286,270
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

If you hope to get into escrow you almost have to write over asking now.  The market is so tight.

Apr 30, 2012 09:52 PM #12
Rainmaker
588,963
DeeDee Riley
Lyon Real Estate - El Dorado Hills CA - El Dorado Hills, CA
Realtor - El Dorado Hills & the Surrounding Areas

Pacita,

You are so right about this?  Another question I would have is how much do you like this house and want it.  Our statistics have been showing it is a seller's market here in El Dorado Hills for a few months now.  And multiple offers are backing those stats up as well!

Have a great week!

Apr 30, 2012 11:55 PM #13
Ambassador
1,177,985
Michelle Carr-Crowe-Selling Silicon Valley Homes in Top Schools San Jose, Cupertino, Saratoga, Palo Alto-Just Call 408-252-8900
Just Call (408) 252-8900! - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years

We just had to fight it out with 12 offers-and ours was 10%+ over asking in Silicon Valley, Calif.

May 07, 2012 11:15 PM #14
Rainmaker
665,364
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Gene --- I'm seeing this with my own listings and also on offers I write for buyers

DeeDee --- Scary for buyers who are now panicking at this turn of events

Michelle --- I wrote a cash offer on a short sale listed at $209K. They received 14 offers, and we were countered at $247K

May 08, 2012 08:29 AM #15
Rainmaker
1,492,697
Sally K. & David L. Hanson
Keller Williams 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Short Sale - CDPE, REDS

We had an explosion of activity and multiple offers on a property...now we are at the point where the buyer's lender is doing their appraisal....the offer was very significantly over asking....I can't wait to see what the appraiser says !

May 18, 2012 02:33 AM #16
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Rainmaker
665,364

Pacita Dimacali

Alameda/Contra Costa Counties CA
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