Realtor says my offer would be an insult

[Anonymous]

Not sure if this is the appropriate place to post this but I'll go ahead and post it anyways.

My family found two houses in a new community. One was built last year and the other was built this year and both on the market for $320k and 342k respectively.


We found the one for 320k before we knew about the other one so our sights were set on the cheaper one. Btw, we have a maximum budget of $306k. Even before we told our realtor what our budget was, she told us that any offer less than $300k would be an insult!!!

I have never bought a house before but excuse me? An offer of say 295k would be an insult? Considering the seller may be desperate to sell? I thought that was a wrong thing to say to your customers but she some how managed to convince us to put in an offer of our maximum budget($306k). It was turned down, they want $317k for the house.

Now to the second one that is listed for $340k. My realtor insists this offer of $306k would be an insult, again excuse me? From my understand, this is a business transaction and not a time to be all emotional. Why would an offer be an insult? They either accept or decline right?

Does anyone have any suggestion what I should do? Can I just call the number on the sign in front of the house and make an offer anonymously?

Btw, the government really needs to simplify the house buying process!!! I read somewhere realtors make as much as 6% of the sales price! I think that is just ridiculous!

[Anonymous]

I don't know where you live, but the housing market is pretty tight in a lot of places.  Making a low-ball offer would be kind of an insult.  Not that anyone would take it personally, but they would just write you off as not a serious buyer and not even come back with a counter.  You would be seen as just wasting their time.  As for a realtor's commission, that is their job.  They don't just post a pretty picture and watch the cash roll in.  A good realtor is worth every penny.  If you are buying it doesn't come out of your pocket, and if you are selling a realtor will generally get you the best possible price for your home.  In addition, a realtor handles all the dirty details of negotiation and paperwork and gets you to the finish line.  In a rural area, a realtor my only sell one or two houses a month.  On top of all that, the commission isn't pure profit.  They have the expenses of marketing the home, the time they spend, and any fees due to the broker they work for, or if they are the broker, then the additional cost of running their own business--paying employees, renting an office, paying taxes.  I don't know what your occupation is, but do you think you are overpaid? There is probably someone out there who thinks what you make is ridiculous.    Do you think you are underpaid?  You can always go out and get your real estate licence and rake it in like the realtors... smh 

Anyway, good luck in your search for a home. If your budget is $306,000 then looking at homes in the $340,000 range is just going to make you frustrated.  Where I live, homes are generally going for more than the asking price, not less.  A realtor knows your market and can steer you to homes that WILL accept your offer.

[pipeguy]

Having bought and sold more than a few properties I can tell you that if I get low balled on an offer, especially an insulting offer I'll just say NO and write that buyer off as a PITA even if they up their offer. Last property I sold a year ago went for $795,100 (in less than 6 weeks, asking price reduced from $840 to $800 after 4 weeks) and I had low ball offers in the $585k to $640k area which I told my realter to trash and disregard any future calls. I also talked to my realter, who was the listing and selling agent, he took 4.5% because he got both sides. Note the second highest offer was $770k which came in just before the one I accepted. 

Realtor commissions break down as 50% seller and 50% lister, that typically is split 50% agent and 50% broker so in fact a non-broker agent could only get 25% of the commission. It's to your advantage to find a good agent that is both the broker and listing agent (not uncommon in high population areas in my experience) where you'll have your greatest advantage of discounting the commission. Keep in mind that you as the buyer won't pay the commission directly, but the seller has to fork out the 6% which would be over $20k on a $340k home. Do the basic math - NOT counting all the other seller closing costs and a $340k house "discounted" to $300k, is going to net the seller about $275k after closing. Chances are very good that a 1 or 2 year old house doesn't have that kind of equity to give away.

Feel free to offer anything you want, your agent is obligated to present your offer, but expect that yes you'll not only insult the seller, but in many cases you'll also PO the seller and that won't help you close the deal. 

[Anonymous]

2Kids2Cats I knew for a fact that I'd not be responsible for a penny but I am putting myself in the sellers position. Something people like you never do! You sit there and tell me how it is cool for a seller to lose almost $30k to both realtors because they chose to sell their house within a year of buying it.

I still stand by what I believe, 5-6% of sale price is too **bleep** and the government needs to do something about it.

Pipeguy, so your property sold for $45k less than it was listed for, although I have never bought a house before that tells me there is a chance this house listed for 340k could sell for 30k less than the listed price?

[Anonymous]

The government does not need to have a say in every single thing and in fact your are free to do your transaction without a realtor. It is called "for sale by owner" or "unrepresented" it is similar to representing yourself in court because you don't want to pay a lawyer. Oh yeah brush up on those laws because there are many that need to be known in real estate. Also even if a agent isn't a broker they have to purchase many items they use such as yard signs (start up costs for a realtor under a broker in 1997 was $3000).

Regardless- You will have continued frustration if you continue to make out of reach real estate come down to you. $310, $315 maybe. HGTV has given some false ideas about scoring discounts in housing. If the house isn't worth the asking price, it seems to be a process for the owners to realize it ... house across the street is over priced by 20,000 but she will not budge and will sit on it because she has renters... it is her decision.
If the house is the right price but doesn't fit your budget then that is your issue....

[Anonymous]

Margins on a 800,000 - 30k are way different than 340-30k. Do the math.

[Anonymous]

---

@Anonymous wrote:

Margins on a 800,000 - 30k are way different than 340-30k. Do the math.

---

+ Perfectly said. NIM, a simple math calculation would tell you otherwise.

[StartingOver10]

OP, your original question was about your offer relative to the list price.  You fail to mention what your offer was relative to the market.  Some properties are priced above market and others are priced at market or even below - depending upon condition, view etc.

If those two homes are priced within the market, and the seller is anxiously wanting to sell, then making a low ball offer may work - but most of the time it backfires and you either lose the deal entirely or you end up paying more for it than if you came in with a thoughtful offer. You have to know all the elements (or as many as you can find out) to make a well thought out offer. Pulling a number out of the air and saying the government needs to step on Realtors commissions is not helpful to your immediate goal of buying a home.

Btw, commissions vary all over the board.  You have no earthly idea what the commission is for either of these properties unless you saw the listing agreement.  Each commission is negotiated by each listing agent with each seller - and it is none of your business if you are the buyer since you don't pay the commission. 

As one of the others pointed out - look at homes that you can easily afford.  From your post, it looks like you should be looking at homes less than $300k and not over $300k because it is out of your preferred budget. 

[pipeguy]

I put the property out there for $840 knowing it would get "discounted" when I reduced it to $800, that was my actual "want" price and I got 795,100 open to close 6 weeks as far as the sale (actual closing was 4 weeks later) and I "gained" 1.5% in commission (over $12k). Selling and buying real estate, like any property is not set in stone, buyers usually think they could have gotton it for less and sellers think he could have got more. But IMO you "screw the goose" by insisting on what you want rather than make a deal for a reasonable offer. That said, lots of houses out there, I'm sure you'll find one in your price range if you'll settle on features and price, no one said it has to be just what you've seen so far. 

[Anonymous]

In the neighborhood I'm shopping in Orange County, one of the hottest markets in the country, the average selling price is 70k UNDER the listing price. Learn your market. It's all about submitting an offer that the market will bear in my opinion. The only information the seller's listing price has gotten me is an indication of how reasonable they'd potentially be in negotiations.

Aside from landing a fantastic realtor, my advice would be to take more of the purchase process into your own hands. It's so easy to look up comps and other supporting information to determine a home's market value these days. At the end of the day it is your money, and nobody is ever going to care more about your money than you. Good luck!