First and foremost, have your agent prepare a market analysis on the house to give you a range of what the house could expect to sell for. Maybe that range is where the house is listed, maybe it’s higher or lower. Whatever that is, expect to probably pay close to that amount after all of your negotiations are done in most cases.
In Omaha, the average List to Sale price ratio over the last 16 months has been 96-97%. Of course you can offer whatever you wish, but if you really want the house, you may have to pay close to or over list price for it, especially if there is more than one offer in play, or if you are asking the seller to pay closing costs on your behalf.
Throughout my career, especially in the last two years, I have had several buyers who were bound and determined to make absolutely ridiculous offers simply because of the advice they have been getting. I call it the: “My Grandma’s cousin’s neighbor’s hairdresser’s Uncle Joe got HIS offer accepted!” syndrome.
You certainly can’t blame them. An excited buyer; especially a first time buyer, is getting information from ALL of the people in their lives. Well meaning friends and relatives, coworkers, any number of Internet sites, even a few ‘not-so-well-meaning’ friends or relatives. They all have the long lost relative twice removed who found that proverbial ‘needle in a haystack’ when they were looking for their house.
This summer, unfortunately, I had to let a buyer go out on their househunting quest without me. It was a nice young couple who were listening to all the wrong people. I met them at a home in the 140,000 range. I referred them to CBSHOME Mortgage and they got approved for approximately 105,000. The only houses they wanted to look at were listed between 140-150,000 and were houses in fairly good condition. They wouldn’t look at anything that needed work. This was because someone at work who literally, had an uncle Joe who got a 150,000 house (assessed value) for 105,000. Nothing I could say would change their minds about the price range they wanted to look at. I politely wished them well. Last I checked, they were still in their apartment and hadn’t gotten their ‘steal’ yet.
A side-note: There are certainly some properties in our market that come onto the market at a price that may be considered ‘a steal’. I’m not talking about those, just the ones that are priced fairly and competitively. Of course there are always those exceptions, those ‘needles in haystacks’ but trust me, they come along few and far between.
I also want to emphasize that I do work and negotiate very aggressively for the buyers I represent. But representation doesn’t JUST mean getting the lowest price. There are many more facets to properly representing a purchaser today in our market.
Please don’t let your search for a ‘steal’ keep you from finding a home that could suit ALL of your needs that you might have to pay close to a fair market value for.
And if you are “Uncle Joe”… Congrats!