What percentage is it reasonable to lower your offer when you want to bid on a house that's been on the market for over a year?
I've been looking for a house in a nicer neighborhood and I think I finally found one that I'm in love with, but it is just a smidge out of my price range. However, the house HAS been on the market for about 14 months, so I suspect the owner migh be willing to go lower than their original asking price which they haven't really lowered it seems. What would be a reasonable sort of offer on the original asking price in terms of percentage? Could I get away with something as low as 80% or will I just hurt my chances of negotiations by going too low? Help!
Answers ( 1 )
There are a few things to consider - of course, location, condition of the property, and comps for the area. But what you have to ask is whether they are higher than other homes selling and if they have lowered the price at all in the 14 months. If they are high, and if they haven't reduced the price in that time, then they are not motivated to sell. They may well have had other offers and declined if they haven't lowered the price in all that time.
So what do you do? An easy solution is to offer a 10% reduction in price - that's an easy consideration to make for any house that hasn't had movement in three months or more. For a year, I'd say a 15% reduction wouldn't be unreasonable. Though 20% would likely be too much. But look at the numbers - on a $400K house, a 15% reduction would reduce the asking price $60,000, to $340,000. That's pretty substantial. On a $500K house, that's $75,000, to $425,000.
So, I think an 80% offer would likely be too low - unless you have a lot of information that can justify that low an offer. But look at the comps, look at new listings, and the location and condition of the property. If a lot of work is needed, if considerable updating is needed, then 80% might work, but your offer would have to include some persuasive arguments.