Buying or Selling a Home/ask and bid price

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Expert: John Hendricks - 3/4/2008


Question
Hi John,
When offering a bid on a house, single family and primary residents, percentage wise, how low should you start the bid from the asking price?
Example if the seller is asking $200k is 20% acceptable for the first bid= 160k, 25%? 15%? Then let’s say they make a counter offer, and then what percentage should we use? We are not afraid of rejection or losing the property to a higher bidder. There are just too many on the market in our area right now.
Would this percentage be different if you are buying from someone (family or person)  than buying a foreclosure from a bank or mortgage company? Assuming all parties are using a broker.
Thank you,
Randy
USA-MA


Answer
Dear Randy;

Thank you for your good question.

There are investors who just write low ball offers in hopes that they will get some sort of response. There are other investors who want to flip a property and simply make a profit. Their calculation is determined on market conditions, condition of the property, and how much profit they want to make when the property is ready to go back on the market. There are Buyers who find just the right home to buy for their family, but want a fair deal based on the market conditions that currently exist all the while not wanting to lose it.

My recommendation for all these examples and a few not mentioned is to do the following....

1) Find yourself a great Realtor... Not just a good one, a great one. Having a great Realtor who has the experience is real important because that experience will save you time, money, and disappointment.

2) Get pre-approved with a mortgage broker before any offer is written and presented. The offer presented would be subject to a ratified contract and a satisfactory appraisal only. This contingency should be able to be completed within 7-10 calendar days.

3) Line up your licensed inspectors for as many inspections and written reports as needed for your review and approval within the same 7-10 calendar days.

4) Be prepared to close escrow within 21 days or sooner if it is necessary.

5) Take your time… do your homework on a potential property that you may want to buy. When inventory is high, and sales are slow, you can afford to take more time to make the correct decision. Find out the Sellers motivation.

6) How does one find out a Sellers motivation? One method I use find properties that have motivated Sellers is to network with other Realtors to identify such properties. After identifying a property with a motivated Seller, I will usually call the representing agent and leave a message. I let them know that I have pre-approved buyers, all conditions can be dealt with within a 7-10 day period of time, and we can close escrow as quickly as the Seller would like. I will usually let them know that you are interested in 2 to 3 other properties as well, and would appreciate any information that will help my clients to decide on writing an offer on the house in question. I do not like talking directly to the agent, because I would prefer to have a returned voice mail message. I can then forward to my client the message to listen to and the agent will usually leave more than enough information which will help them determine if they would like to go further with an offer, or if it would be a waste of time.

7) The last way to determine what to offer on a property in addition to the Sellers motivation is to have your Realtor print for you all the properties that have sold in the neighborhood within the last 90 days. On the printout, look at the original list price of the home, compared to the actual sold price of the home. There will be an average difference of an original list price to sales price. This % that you can use to help determine what to offer on the property, combined with the Sellers motivation.

I hope this has helped you…If you need help in getting a great Realtor in your area, please do not hesitate to e-mail me back with your contact information. I do have a large database of qualified Realtors that can help you in the area in which you live in… Let me know if I can be of any help in that area….

Warmest Regards;
John Hendricks
JohnHendricks@Marin1.com

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John Hendricks

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As a California Realtor for 23 years practicing in Marin and Sonoma Counties, it is now time to provide counsel through AllExperts.com to those who need advise in real estate. My knowledge and experience includes a wide range of resale residential real estate purchases, new home sales, income related investment properties involved in 1031 exchanges, and land. Let me help you in any of these areas...

Experience

John Hendricks has established himself as one of Marin & Sonoma Counties premier Realtors. A native Californian, John is a well-known and respected Realtor in both Marin & Sonoma Counties who has resided in the Northbay since 1976. John began his real estate career in 1986, and since then has distinguished himself as one or Northern California's top producing Realtors. Before joining Frank Howard Allen Realtors, John was an associate of the Prudential California Realty from 1990-1992 where his outstanding sales achievements earned him one of the company's highest honors, the prestigious "President's Circle Membership", presented to the top 2% of associates for sales and earning excellence. Since his association with the highly regarded Frank Howard Allen Realtors in 1992, John has once again established himself as one of his company's Top 10 Producing Realtors in Marin & Sonoma Counties for the years 1993 through 2007 and now in 2008. Five continuous years of outstanding performance has now allowed John to join 15 other Realtors in the prestigious "Lifetime Hall of Fame" for Frank Howard Allen Realtors. John established a group of professional individuals who specialize in a variety of areas in real estate called, 'Lundmark-Hendricks Fine Homes' This group of professionals are dedicated to the success of representing clients with the greatest amount of care and service when either buying or selling real estate.

Organizations
California Association of Realtors National Association of Realtors

Education/Credentials
Upon Request...

Awards and Honors
Frank Howard Allen Realtors "Hall of Fame Member" Chairman's Circle for 10 consecutive years

Past/Present Clients
Joe Louis & Sharon Sigurdson We want to thank you again for your excellent representation of interests during the recent purchase of our home in Petaluma as well as the sell of our home in Mill Valley. We had the unusual pleasure of working with you during the last year both as sellers and buyers. We felt that our interests were always paramount and that we received a very fair price for the sale of the Mill Valley house as well as our purchase of our new home. This speaks particularly well of you, because of the recent unstable and chaotic real estate market. Will Finke "Quite frankly, we came out of a very difficult situation, which time does not allow elaborating on. This was one of the greatest experiences of our lives as clients. John Hendricks is one of the top businessmen I have ever met." Bruce & Nancy Rosentreter "I chose John Hendricks to sell my house. I picked him because I thought he was professional, aggressive, and that he could get top dollar for my house. He fulfilled my expectations completely." Joy Schuelke "Since we were trying to sell a high end home in a very tough market, and in the middle of a very rainy winter, the prospects seemed quite bleak. I was convinced at the time, and am even more so now, that without John's tenure, patience, and tenacity, we would have not been able to move the property." Lynn McCarthy "I cannot stress strongly enough how impressed I was with the service provided to me by John and his group. Throughout the entire transaction, John was always available, always forthcoming with excellent advice based on his years of experience, and always willing to put in the extra effort to make this a positive experience for me. I feel lucky to have had the experience of working with him." Lea Lieurance-Turk "Thank you John for your outstanding real estate services for the past 5 years I have known you. You have made my dreams come true as far as selling and buying property."
http://www.LundmarkHendricksFineHomes.com

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