Before showing up at the property yesterday, I asked my real estate agent what he thought the seller wanted for the place and he gave me a low price and a high price with about $200,000 of room in between them. When I was at the house, however, I saw some literature a prospective selling agent put together for the seller which suggested a number at the higher end.
My agent thought I should bid close to the middle of the range, but once again, I do not find myself agreeing with this advice. Since the middle of the range is the absolute most I would pay, I think it’s best to start low and move up if necessary. I still haven’t heard an actual price directly from the seller, so for all I know, if I do this deal in cash and waive a bunch of contingencies, I can get it for substantially less than even the seller was thinking. Maybe it will fly and maybe it won’t, but since three out of the four beneficiaries are attorneys, I can’t imagine they wouldn’t be up for some negotiating!
That in mind, I’ve decided to put my first offer in at $100,000 less than the bottom of the range my agent gave me, $300,000 less than the top of the range, and $150,000 less than what I’d feel 100% comfortable with. The offer is easy to justify, especially when using the first prospective house that I didn’t get as a comp. I’m writing in no contingencies (not even financing) except for a quick geotech inspection and hoping that the seller will value a quick close to a solid buyer who really wants to make the place shine again. If I were the seller, I would favor selling to someone who actually wants to live there instead of a developer. Also, it’s well known that end-users like me will generally pay more than developers for properties like this because our time horizons are far longer and we’re not in it for the profit.
I do not expect this first offer to be accepted, but I do expect it to be a starting point.