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Realtor questions and bidding strategy

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Anonymous
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Realtor questions and bidding strategy

So, it was a struggle, but my scores are finally above 700, I have a nice downpayment, the market is good, and I'm ready to buy my 1st home.  I've done a bit of exterior walks, and I'm down to 3-4 houses.  A few questions, mostly about finding an agent:

 

When I go to the bank to get pre-approved, I imagine they'll try and hook me up with a realtor they have under contract.  Will I get some sort of discount on the loan/closing if I use their person?

 

Of my 4 houses, the one I like the most is listed by "remax Elite", and I have the agent's name.  Would she be able to get a better deal for me as the buyer, assuming she won't have to split the commission?

 

I have a fear of underbidding on my top choice as it really is the one I want.  The list is $239K, it's fresh to the market.  That's $96 a square foot, which is about average for what I've seen-- maybe a little on the low side.  $240K is about the top of my range, however.

Do I bid:

229 (92/square),

227(exactly 5% off),

222(89/square lowball).

 

I don't bargain in real life.  Actually, I really hate shopping.  So I don't know how to do this.

Let's say I'd be happy at a final cost of $235K.

Where do I start?

 

I understand I won't receive legal advice, but I figure most of you have done this before and can share your experience.  Thanks.

Message 1 of 10
9 REPLIES 9
fishbjc
Senior Contributor

Re: Realtor questions and bidding strategy

Here's the way we did it.   

 

Is the house empty?  If so, the owner may be making two mortgage payments, so they may be willing to do whatever necessary to sell that house.

 

If the above falls to your favor, I'd offer them approximately $222 & expect them to counter.  Speak to the sellers agent, if you buy using her, the agency may be able to cut a little bit off the back end to benefit both of you.

Message 2 of 10
cobaltnv
Established Contributor

Re: Realtor questions and bidding strategy

 I doubt the bank will try to set up up with an agent. Most people when they get to the pre-approval stage already have an agent. I would find one on your own. I used a buyers agent when I bought my home. In general the commission will be the same wether you have an agent or not (the sellers agent will just get to keep the whole commission). I would also advise against using the agent who is selling the home. THat agent is obligated to the sellers interests not yours.

Do yourself a favor and get an agent. They agent will be able to show you more houses than you can see on your own (and you will get to go inside :-).  

Good luck.

Cheers 

TU 810: EQ 813: EX 814 (9/16/09--Loan officer pull)

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Message 3 of 10
WannaHouse
Valued Contributor

Re: Realtor questions and bidding strategy

I would offer 227K and let them counter offer.

 

Everything I have learned on here says do NOT use the agent that is selling the house! Talk to family and friends and get a recommendation from them.

 

Hope that helps you a little bit  Smiley Happy

 

Good luck!!


Kathy


We are finally homeowners!!

Closed May 5th-30 yr fixed at 5.25%.

Message 4 of 10
Fixitnow
New Member

Re: Realtor questions and bidding strategy

FATDUMBHAPPY,

 

Go find youself a reputable realtor in your area.  You need someone working for you, not the seller so you can get the best deal. 

 

Prior to making an offer have your realter pull the comparable sales in your area.  This will tell you what other homes of similar size and year have been selling for.  This will help you from overbidding.

 

Find out what your seller's situation is.  As stated earlier maybe they have taken another job and can't afford to make two house payments.  I would have no problem offereing at least 15% less than what they are asking.  Look at the sorry shape the market it is right now.  It's not your problem if the seller bought to high.

 

Also, your realtor may tell you to bid fairly - they get a percentage.  This higher the home sale the more they make.  Keep that it mind.  Go to a mortgage calculator and find out how much $10,000 can cost you over the life of the loan.

Message 5 of 10
Anonymous
Not applicable

Re: Realtor questions and bidding strategy

Thanks for the advice.  I didn't receice emails stating this thread was updated, and I contacted the seller's agent.

 

Situation is:

House on market 190 days.  Original list 289 (I verified).  Then 269, recently dropped to 239.  (not sure what happened between 39 and 69.)  I was in the house today and it's clearly the best home in my price range.  $45k in upgrades.  They had it built in 2001 for $181k.  (so that's 226 if you ignore inflation.)

 

Homeowners apparently are retiring type and are having a house built in an exclusive area, and are selling this one.

 

My original plan was to view a bunch of homes, and start pre-approval process the next day.  Realtor seems to think pre-qualified (which is quicker) caries some weight as well.  It will be 6 days before I have time to visit the lenders. 

 

If I was already qualified or approved, I would have made an offer today.  Don't want to lose this one, and I imagine I will.  Maybe that's just the way it's meant to be.  All my CDs are maturing this month, and it's kinda strange watching my checkbook balance as it climbs above my standard $400.

Message 6 of 10
Anonymous
Not applicable

Re: Realtor questions and bidding strategy


@Anonymous wrote:

Thanks for the advice.  I didn't receice emails stating this thread was updated, and I contacted the seller's agent.

 

Situation is:

House on market 190 days.  Original list 289 (I verified).  Then 269, recently dropped to 239.  (not sure what happened between 39 and 69.)  I was in the house today and it's clearly the best home in my price range.  $45k in upgrades.  They had it built in 2001 for $181k.  (so that's 226 if you ignore inflation.)

 

Just FYI, our first offer was 20% below list. They countered and we offered 10% below list, PLUS seller paid closing costs (4%). They finally accepted.

 

190 days is an awful long time to be on the market (even in this economy) and the price going down so exhoirbantly, I'd say means that one of two things will occur: Either they'll accept an offer 10% below list, or they've gone down as far as they can.

 

If they have a selling/listing agent, the agent will advise them to be VERY reasonable. As the longer this home stays on the market, the less likely it will be that they'll see ANY good offers at all.

 

(Please bear in mind that's the advice our Buyer's Agent told US)

 

Homeowners apparently are retiring type and are having a house built in an exclusive area, and are selling this one.

 

My original plan was to view a bunch of homes, and start pre-approval process the next day.  Realtor seems to think pre-qualified (which is quicker) caries some weight as well.  It will be 6 days before I have time to visit the lenders. 

 

It does. A LOT. For the seller to take your offer seriously, they're going to want to see a pre-app letter -- at the very least, a pre-qual letter. Ours did. BIG time. 

 

We were pre-approved for $250K (what we asked for -- we qualified for $325K, but didn't need that temptation since we're kinda addicted to eating) and we had a dickens of a time providing the pre-apped letter since it said how much we qualified for. Since we were only offering $226K, we didn't want them to see how high we COULD go. So make sure that your pre-qual/pre-app letter's amount closely matches your offer amount.

 

If I was already qualified or approved, I would have made an offer today.  Don't want to lose this one, and I imagine I will. 

 

Get thee a Buyer's Agent (who will be paid their commission, most times, by the seller -- you CAN negotiate that) -- that's the only way you can REALLY know what kind of a shot you have and if there are any offers already on the table.

 

Maybe that's just the way it's meant to be.  All my CDs are maturing this month, and it's kinda strange watching my checkbook balance as it climbs above my standard $400.



Just remember that in most parts of the country, you'll need to plunk down at least $1K in "Earnest Money" -- it just "proves" to the seller how committed you are to buying the home. Have that, a pre-QUAL letter and solid offer and there's NO reason why you can't get this house!! Smiley Happy

 

Best, best of luck!! Hope to see your post stating that you made an offer and it was accepted here SOON!! Smiley Happy

Message 7 of 10
Anonymous
Not applicable

Re: Realtor questions and bidding strategy

Honestly, I'm normally a "DIY" kinda gal, but we'd have been completely LOST without our Buyer's Agent. He made the whole process SO smooth!!

He made sure the home warranty was transferrable, that we could transfer (at a discount) the existing termite bond, got our utilities transferred over, arranged for garbage services, etc. That man did everything but move us!! Smiley Happy

But really, BA's usually have contacts that can make the whole process just ... flow. And save you oodles of money!!

Really!!! Smiley Happy
Message 8 of 10
Anonymous
Not applicable

Re: Realtor questions and bidding strategy

Wonderin--

 

Thanks for the pointers and the breath of fresh air.  As I mentioned, the other homes I am looking at are a very distant second.  Getting into this one would be great.  I'll get the ball rolling on Monday by visiting some money people.  I think I will qualify for much more than asking, and tamping that down a bit is a very good idea.

 

After sleeping, I realized I can wait for something I really like to come along (If I miss this one.)  My lease just went to month-to-month, so I won't be homeless.  Also, the longer I wait, the more I can put into savings.

 

On this one, the price/square foot is $96.  Some others I'm looking at are 109-118.  Honestly, I could pay asking (but who wants to?)  If I throw out some lowball, and they simply reject without a counter, I'm still in the game, right?  I could submit a second bid closer to asking, or even bid the asking price? 

Message 9 of 10
Anonymous
Not applicable

Re: Realtor questions and bidding strategy

After 5 hrs with the realtor, I was pooped!

 

On the house where she represented both sides, I mentioned I'd pay 220K and not entertain a counter-offer.  She said turning-in that offer would be fine, but didn't think it would fly as she knew their mortgage situation.  And since she'd be the broker for both parties, there really wasn't much she was allowed to do.  I'm fine with that.  I guess I changed my mind about the purchase price once things became "real".

 

On some other houses, where she did not represent the seller, we talked openly about what a bid might be.  This put me at ease.  Her finance guy also had some encouraging news for me.  I'll post details once the ball gets rolling.

Message 10 of 10
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