How much under the list price can I offer?

May 21, 2009 · Adam Chinn

This is a question I am asked quite often. Many people get their real estate news from what they hear on the radio, watch on tv, or read in newspapers. What many do not do is actually speak to the people who are in the business and have up to date information on the current market. Although I encourage my clients to ask any questions that comes to mind, it is my job and responsibility to explain to them what I have experienced in the market and where I think it will go from here. Of course, I can not predict the future, but if the facts are studied, trends can be found. I feel it is very important that I educate my clients on the current market, so that we can work together to accomplish the common goal.

To answer the question, it depends. Of course anyone is able to offer whatever price they would like, but I’m assuming they want to offer just enough to get their offer accepted without paying much over the next highest offer. What I have been experiencing with Bank Owned Homes (REOs), is that many of them are listing the homes under current market value in order to get more buyers and agents into the property. Therefore, I tell my clients that to submit an offer based off the list price may not be the best thing to do. My best advice for them, lets sit down and take a look at the comparables, similar properties that have recently sold or are currently pending sale. Many other factors do come into play such as, how much they want the house, if they have seen any other homes that they have liked, etc. Each transaction is different and unique and that’s part of what makes the real estate industry so interesting to me personally. There are always things to do and learn, so I will definitly never get bored.

Have you asked this question before? Been asked this question? What answer did you give? What answer were you told?

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Filed Under Important Thoughts, Local Trends, Neighborhood News, Real Estate for Buyers and Sellers, Real Estate in the News

Tags: Adam Chinn, bank owned, Bank Owned Homes, bank owned properties, foreclosure, list price, Prudential California Realty San Bruno, REO, REOs

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6 Responses to “How much under the list price can I offer?”

Larry Franzella on May 22nd, 2009 10:23 am

Adam,

Great advice. If the property is listed under the current comparables a cleint might actually have to offer more than the list price. Quite often it is difficult for buyers to understand that in this market, especially when they hear all of the media reports.

This is one of the jobs of a good Realtor; to educate the client and provide all of the information so they can make an informed decision.

Larry
Lee Ginsburg on May 22nd, 2009 11:12 pm

I try to make sure buyer understands they are offering over the list price but and this is a big but not over the market price.

To make them feel more comfortable I remind them the bank and I will not let them pay over the market value.

Truely the best way for them to understand the market is to jump in. Let them write under the list price and lose out a few times. They will learn quickly if they are serious buyers. People learn better from their own mistakes rather than someone else’s.

Lee
Michael Monozon on May 23rd, 2009 11:03 am

Adam
Great question, and so many correct answers. As you stated what is the objective, just to write offers, or to purchase the home?
And then there is the mentioned twist of how was it priced to begin with, at market, below market or higher than the last sale?
thats a lot for anyone to get an understanding of, and points out why your role as the Realtor to provide factual information is so vital to each and every person or family that is looking to purchase a home or investment property.
Communication and factual information equal no surprises.
Jean Joh on May 23rd, 2009 2:28 pm

Great post on a very relevant subject Adam! I’ve been asked this question many many times, and my answer is like yours – that rather than basing on the list price, they need to consider the recent activity in the market and also how much they want the home and would be willing and comfortable to pay for it. It’s important for our clients to know that the listing price is just a “price tag” and not necessarily the market value of the home.
Adam Chinn on May 23rd, 2009 5:38 pm

Thanks to everyone for their comments,
I especially like Lee’s comment, “To make them feel more comfortable I remind them the bank and I will not let them pay over the market value.” We do need to remind out clients that both us and the bank that is providing the loan is going to look out for their best interest. If the home is not worth the amount they offered, it would not appraise.

Thanks again everyone,
Adam
Brian Boisson on May 26th, 2009 9:22 am

Adam,

Great observations and comments and like you mentioned, it all depends on the individual situation.

One good question to ask a buyer who you think and they think finally found the right home and they are pondering what offer to make is: If you did not get this property and in six months you drove by and saw other people living in it, would you feel you made a mistake?

Brian