How does one negotiate a selling price of a house?

amother

Sun, Jan 02 2011, 4:13 am

We saw our dream house in our dream community for sale. It is a bit pricey as well as in need of a bit of work (that we would have to put in before we would even be able to move in to such a house).
So, I was wondering, the sellers are obviously asking a specific price. I do know though that this house has been on the market for well over a year already and I do not think that the will get their asking price.
How do we go about negotiating the price? Do we just come out and tell them that we know they are selling for such and such but we are prepared to give them such and such? Is that all?
(anonymous because I dont want people to know that we may be moving and also because I am embarrassed to not really know this

)

amother

Sun, Jan 02 2011, 5:28 am

Pizza wrote:

people usually ask 5 - 7% more than they truly expect to get
you can offer 10% less than the asking price, then negotiatiote
if the house has been on the market for over a year AT THE SAME PRICE there is more leeway
odds are that the current asking price is significantly lower than it was last year
good luck!@

OP here. OK now for another embarrassing question. How do I figure out percentages? Meaning if I want to find out what 7% would be of lets say 300K how would I do that? (gosh, im so embarrassed that I have no idea. its been a LONG time since I have been in school and had to do maths.)

3mitzvos

Sun, Jan 02 2011, 6:50 am

amother wrote:

Pizza wrote:

.07 x 300,000 = $21,000

5% = .05
10% = .1
Just multiply by 300,000 to get the answer. Hope this helps!

amother

Sun, Jan 02 2011, 6:52 am

3mitzvos wrote:

amother wrote:

Pizza wrote:

.07 x 300,000 = $21,000

5% = .05
10% = .1
Just multiply by 300,000 to get the answer. Hope this helps!

thanks. (Im the OP)

Tova

Sun, Jan 02 2011, 8:37 am

The offer is in the form of a written contract. You write a contract (can get one online, or better yet, through a Realtor) and input the amount you are want to pay.

Let's say you offer $260,000 on a $300,000 list price but compromise and settle for $280,000. You either cross off the amount on the original contract and BOTH seller and buyer initial the change (that's what we did) or write up a new contract.

Good luck - as a buyer in this market, and with a home that's been on the market for over a year (in real estate terms they talk in terms of DAYS on the market) you are in a GREAT bargaining position.

amother

Sun, Jan 02 2011, 8:39 am

Tova wrote:

I hope you are correct. It is in our dream location, so we have to see. We are hoping and davening Smile

Chana Miriam S

Sun, Jan 02 2011, 9:14 am

considering how little you know about real estate, I think you need not to do this without a realtor AND a real estate lawyer. the realtor will help you with negotiations and the lawyer with technicalities. do not proceed without.

also, do not assume that just because the house has been on the market for a year you will get a deal and they are desperate. if they were they would have sold long before now. maybe you will get a deal, but do not assume it.

Tova

Sun, Jan 02 2011, 9:21 am

I don't think that a house on the market for over a year means that the sellers are desperate, but I do think (know) that the longer a house sits on the market, the greater your bargaining power. There are real estate laymen's terms for a house that gets "old" or "stale" after being on the market for too long to the point that Realtors often advise clients in that situation to take the house off the market for a month and re-list (often they make a small improvement or something so they can re-list with that information).

I do think chanamiriam is right, though, about getting in touch with a professional.

amother

Sun, Jan 02 2011, 1:35 pm

We recently bought a condo that had been on the market for close to a year. In our case, the seller WAS desperate (which we figured out based on friendly conversation, as well as his approach) and we put in an offer that probably seemed ridiculously low- but not low enough that he dismissed us completely! He counter-offered, we counter-offered, and he accepted our final offer, which was still quite low.

You have to know what you're doing if you want to be a hard bargainer. It might be worth bringing along a talented friend to do the dirty work for you.

amother

Sun, Jan 02 2011, 1:49 pm

chocolate moose wrote:

Professionals, such a brokers and such, know how to work it. Yes, you pay them too, but it could be worth it!

Yes, but only if you do your research and find one who will meet your needs. The broker who was assigned to the condo we bought was quite aidel and would not have fought for us. He thought our initial offer was a joke, and almost didn't want to put it in. He also was prepared to give in every time the seller had a demand. I wish he wasn't involved at all- he just made the whole thing unnecessarily stressful.

amother

Sun, Jan 02 2011, 2:26 pm

Just went through this from the buyer's perspective:

We recently sold our house for 17% below our original asking price, and 12% below our reduced price (we lowered the price once) and we went to contract only three months after putting the house on the market. There were a number of factors in our decision-
1) We bought before the market burst, so we still made a decent profit
2) We were moving and while we could have reasonable ate the costs of the house for around ten months after we moved there was no guarantee that we would have gotten a better price. And we lived in an area with extremely high property taxes, so we felt that was throwing away money.
3) There were similar houses for sale in my immediate area, which had sat for longer and had a much higher asking price. They all had different situations, but we didn't want their story to be our story.

Our buyers went through a broker and the offers and counter offers were run through her. We hesitated slightly before accepting the final offer because:

1) We had received a higher offer right before, but the buyers pulled out right before the contract was signed, so there was a slight nagging feeling of maybe we could do better
2) We had seen our neighborhood go through the bubble, and we know what our neighbors paid for their homes (after we did) and knew that had we sold two years ago we would have made at least 30% more. But such is life; we weren't ready to sell then.

I think our changing of the price after one month indicated to buyers that we were serious about selling, and therefore we were willing to entertain various offers. I think the fact that we were moving out of the area as a young family (rather than as retirees) also showed that we weren't in a position to sit on the house. Ultimately you need to be able to take the temperature of the buyers and then make an offer that is low enough that you will be able to negotiate a good price for you but high enough that you won't insult them.