Types of counteroffers

i've never purchased real estate but the fact that they countered at all is a decent sign, no? move up a little more (if you want and can afford to) and see what they do.

You might consider rethinking the negotiation process. The starting point is always fair market value of the unit. Not the offer price. If the fair market value, based on comparable sales within the building and similar units in similar nearby buildings, is lower, then I would include in a written offer the basis for your offer. Explain your rational briefly for your price. Simply lopping 20% off any ask price is not logical and likely will make no sense to the seller.

If the unit you are interested in is on a lower floor than a recently sold similar unit and in worse condition, you could mention this.

If the seller's offer price is reflective of comps, then coming in much lower will understandably yield little response and movement on price. If the offer price is aspirational compared to recent sales and market conditions, the seller will perhaps be more motivated to consider your offer and adjust the offer price if you explain your rational.

uwsmom, thanks for your response. I really couldn't tell what the seller was thinking from the counteroffer, but you're right that if we move up a little, I'll see how the seller responds and have a better idea. I just wasn't sure if I was completely wasting my time. Thanks for your help.

kylewest, I spent about 1 1/2 hours this morning rereading your very helpful thread entitled, "Negotiating Better- Fundamentals of Effective Negotiating" and thank you and all the other contributors for your insights. There weren't alot of recent comps in this building, but we did include comps from similar neighborhood buildings with our offer. I just wasn't sure if the seller's inital counteroffer was a polite way of blowing us off.

I would take it as "you aren't even close".

Personally, I wouldn't have bid on something I thought was asking near 20% over what I thought it was worth.

looking2return, is that because you would asume that the seller was overvaluing his apartment and wouldn't consider an offer more in line with current market prices?

For a while I was pulling all the co-op sales and calculating the listing discounts. There're very few where that approaches 20%, which suggests that stuff tends to not move until the seller accepts the market and gets the asking price down to where buyers will (a) look at the place and (b) not be deterred from making an offer.

There's the kind where your sitting at a counter and a couple comes along that needs two seat...you move over one and there you have it...counter offer.

NWT, I have seen the same thing in my saved sales. The typical discount from list is usually 6-8% for the stuff that actually sells. There are some exceptions, where the seller hasn't done any price cut, and the listing has been sitting there for over 6 months, sometimes the closing reveals a 10-15% cut, but that is the exception.

Oh and Lobster, before you up your offer, ask their broker to show what comps they use to come up with the listing price. Make them justify their price, so you can understand where they are coming from. If they don't want to bother, you'll have your answer about their intent.

Thanks NWT and Maly. It's very helpful to learn that apartment sales are now commonly occuring when the listing discount is less than 10%. It seems that there will be many situations where the buyer doesn't want to overpay in terms of current market conditions and the seller may not discount the property more in line with comps from same/neighboring buildings.

I would have done $999k to avoid mansion tax and say something like, I have an aversion for going above $1mm, plus the fact I would never never never bid on just one unit. It turns a buyer market into a seller's just based upon one's laziness.

In this mkt, if they countered I'd answer with a $999k with no financing contingency as that's worth 10% in this market to ppl that it matters to.

Hey falco let me get a cheeseburger with fries with that counter offer.

Oh and if you can't do a no financing contingency at $1mm, i really don't think id be buying in the mkt. To elaborate, I'd do 40 to 50% down, with 20% in reserve. If bank says no, id up my dd.

Id say 20% of ALL transactions are having issues with financing. You can use that for your advantage as a buyer. 1) to re- cut deal or 2) go fish for desperation.

Oh shit didn't even read the counter. Let me decipher that for you. In re english a counter of $10k off is fuck you you cheap bastard.

This is great. Id counter their counter with $1.04mm. That's a polite 'go fish' right back at them. Plenty of ppl in 6 months will wish they'd taken at the time 'lowball'. It happened bf it's happening again.

Am I the I the only one on the board? Helllo w67th. Well hello w67th. Howz your nite? Well fine thk you.

Listening to poker final table live. I know the Bear Stearns guy playing.

http://www.bluffmagazine.com/live/

Several friends of mine were in his poker group. All 20 of the group are in Vegas watching. They each get 1% of his winnings (minimum $1.2 million for 9th place, $8+ million if he wins))

Don't you wish you played poked instead of being on se. I gotta find a paying blog gig WTF?

i've read a lot of posts on here from people who said they low-balled and never got a counter offer from the seller. you have no idea what price they are willing to accept unless you negotiate/play this game. of course their first counter is going to be small. they don't want to give the apartment away. they want you to move up as much as possible. and maybe they aren't willing to budge anymore. who knows. i wouldn't take this counter offer as a f-you. i would, however, take a f-you as an f-you, and that my friend, you did not receive.

Uwsmom. I must humbly disagree. There is deal fatigue in the bantering back and forth. Most of my best and cleanest deals are 1) bid 2) one counter 3) final bid and then done or walk. To give $10k on a $1.25mm is to insult the bid IMHO. Cause if the bid ask spread is $10k, a broker could give 1% to get deal done.

So given the magnitude of price and bid, a $10k discount from offer to a bonafide. Id is indeed a f u. IMHO.

A serious counter IMHO would ve been $1.1mm to $1.2mm, with $1.2mm from a stronger seller saying 'i'll play'. A $1.1mm saying 'let's get a deal done'

lobster - you probably want to listen to w67 over me. i have NO experience with any of this stuff. i would naively play the game.

i'm still seeing deals come in at over 20% off final ask. not as many, but still. it all depends on how much you care. in an ideal world you'd care very little, and pay what you believe something is worth. most people aren't good poker players, most aren't good at negotiating real estate. it's tough work. if you have a reasonable amount of cash to put down, time is not of the essence. even if you don't, it probably still isn't since rates most likely will only be allowed to rise modestly prior to next year's elections. after that, the game may change. and then if you have cash, you'll only welcome the rate increases. take a deep breath, and quit trying to psych out the opposition. there are numerous personality types, many of them riddled with neuroses, you can't possibly be expected to know what the other side thinks. come up with a plan that seems reasonable to you given a certain set of circumstances, and stick to it. if you REALLY need to buy now, you may have to make concessions to that paradigm. personally, i'm of the make a bid and walk if they don't take it mentality. and it's worked. but that's my comfort level.

good luck.

my grandpappy taught me how to play poker when i was 4.

Who taught you how to unstop a toilet?

but, any counter basically means "willing to negotiate"...unfortunately, you may have to move up a lot more (maybe more than you want to) to get this deal done. i would still play and i wouldn't be generous.

Why would someone sell at 20% (or even close) to below their ask? (assuming it's a fairly normal apt.) There are people that won't even make offers on them. If you are not rational enough to lower your ask, I probably don't want to bother with you. (But frankly, my tolerance for sellers is pretty low so take it for what it is, one person's opinion.)

why play? if they tell you that they think your offer is crap, with their counteroffer, tell them that you think their counteroffer is crap by refusing to play.

if minds are too far apart nothing will get done. save the listing and come back if it seems wise in the future. they may come back to you. unless of course you really want it and will pay more. then you have to reconsider. that's why i love my personal approach. known as take it or leave it. and i have made a couple of full-price offers, btw. after seeing so many places that i knew exactly what i was getting when i saw it.

be a reasonable player, but never be a supplicant.

why play? = > you want it and will pay more.

looking2return, take all that psych out of it. you never know what is happening that might make someone willing to take the 20% below. i'd much rather find a property that i think is fairly priced. but if you find something, and for whatever reason, you think it's worth 20% below ask (and that can include signs of estate sale or distress, which is a bit vulture-like but smart), then ask that. it takes very little time to make a phone call. and how do you think the sellers learn that their properties are overpriced? the first couple of lowball offers can be dismissed, but after that...

if you've got the comps, you've got the comps.

if you want it and will pay more, then you start a tough game when you begin negotiations. you always need to have in mind your absolute ceiling for any given property. and it really shouldn't change. i did say if you really wanted something you might need to adjust.

people like to bargain, both buyers and sellers. they think they're getting something, creating a deal. often it's not, at the end of the day, necessary. on UD there's a great post right now about how people are elevating sales prices to provide room for negotiations. well, if you've elevated by 10%, and you're self-aggrandizing belief as to the gloriousness of your apartment added 10% before that elevation, your early list will be way off.

AR,
At this point, even a few minutes is too much to waste on those places...for me. I've banged my head on that wall enough. If I miss something because of it, I'll live. Both if it floats your boat, go for it.

The seller who has no offers after a couple months should know their place is overpriced.

It's interesting reading everyone's opinions and hearing different views. I was interested to hear from buyers, sellers, brokers, etc. what a $10,000 drop in price meant in this scenario and if there was a consensus in how everyone viewed this drop in price. I've been reading SE posts for several months now and among the many things that I've learned is to place your own value on the apartment and negotiate within the price range and conditions that are comfortable for you regardless of the seller's wishes. Thanks to everyone for their helpful opinions.

good luck lobster!

and i agree with ar. it's useless to try and guess what's in someone's head. best to force it out of them.

Just a correction. I didn't mean that you should disregard the seller's wishes. Just that you have to decide the value of the property based on many factors including the condition of the property, comps, etc. and that if the seller's view of the property differs greatly from your own view, then you can either adjust your asking price upwards or walk away.

if you look at elliman's 3rd quarter report it says that for coops the discount from last price was 12.5%.i assume this means average.

That co-op listing-discount analysis doesn't jibe. Per MillerSamuel it's %12.5 on co-ops, up from %3 in 3Q2008. I assume that's an average, as median seems to be around %6-7. But then they go on to say "Despite the increasing willingness of sellers to discount to these new price levels..."

Wouldn't a *lower* listing discount reflect that?