How should I counteroffer?

Question

I am in a process of negotiating a deal on a house that has 4 beds, 3 baths, 2298 sqft, the house is in a fair condition, no flooring in living room, kitchen and hallway. They took out carpet and stained the concrete but they didnt do very good job on staining. In the baths and beds, new owner which got the house from trust his deceased parents passed on to him replaced new carpet. Everything in house is still original wall paper, etc.... The house needs a really bad painting job which owner had a bid $3500 to repaint whole house and trims. Asking price is $225K. I put 1st offer in at $179K. He countered offer back$220K. I then countered offered back at $183K? Is it too low? WHat are counteroffer strategies?

Also, I have listing agent put offer in for me. AT first, he seems to be nice to work with but then when I told him that I wanted to counteroffer back at $183K . He flatted out told me seller not gonna consider it.... And basically talk down on me from that point. I have this thinking in my head to ask him what can he do to represent me and help me with this deal? Or should I get a new buyer agent that will help me push through this deal? Please give me your honest advice! This house has no mortgage on it currently.

Thanks

Ross Greene · Answer

When someones goes through a listing agent to try and get a "good deal" blows my mind. I don't understand that thought process and how people think the agent will represent themselves as the buyer the best. Obviously he is looking out for his seller and his commission.

I see it happen so much and to this day I am mind boggled on that thought process.  Get your own representation who will work for you and not the seller.

Russell Brazil · Answer

I think that you and the seller are just too far apart for a deal to materialize.  $40k is a big difference at this price point.  What I would do is not continue negotiations and just tell the listing agent that they can be free to come back to you if they do not get any better offers if the seller changes their mind.

Billy Runyan · Answer

Ok, the deal with "dual agency" is a slippery slope and as said above, many don't know what they don't know.  The first priority in a "conflict of interest" situation is to "not be involved with the conflict" in other words and agent that know about this subject will steer clear of ANY discussion on the point.  After all its his license that's at risk.  Rather than go into more detail about that subject it would serve better if I made a suggestion on how to negotiate a little better.

The experience of the sellers agent is showing in that you came at them with a super low-ball offer (most deals never get to 5% off asking).  The standard counter to a low offer is a high counter.  That said, you've only got 1 more chance to get it right.  Split the difference or go as high as you can with a full accounting of the details needed to fix the property.  Suggest they do some or all of the work or you'll find another house to buy.  Sometimes it works, but often it does not.  Buying wholesale is a hit and miss proposition but if you get 1 in 20, your still a winner, and as we say in Las Vegas "chicken dinner"!

Steve Vaughan · Answer

I would obtain a quality, competent buyer's agent from a different brokerage and offer what works for me.  If your last offer was countered or expired, a fresh offer from a different broker shouldn't cause too much trouble.  It it works out, great.  If not, you have learned and will be better prepared for the next one @Katie Do!

Jonna Weber · Answer

HI Katie - The listing agent is representing the Seller, not you.  A good buyer's agent really can be your friend, and work solely on your behalf to represent you and get you the best deal.  Many people will argue and state that they prefer to go directly to the listing agent. I just don't agree in most cases.

That said, at this point, I don't think a buyer's agent will help you on this particular transaction..  it will probably just  tick the listing agent off.  Figure out your highest and best, and stick to it.  There are other homes out there!

Good luck!

Laurie Johnson · Answer

IMPO this is not a deal at all. No matter if they accepted your first offer. With your higher offer after repairs, holding costs, closing costs and realtor commissions you are WAY over retail price. I would find another property. Just my opinion.

David Moore · Answer

I would say get used to disappointment dealing with realtors.  Good ones are the rarity.  Even if you had a buyers agent, remember, in reality, they are working for the seller, because that is where the commission comes from.  The important thing is that you have run your numbers, and you know what a good deal is.  I rely on the calculators on BP to analyze my deals.

I've heard from many to consider getting a realtor license yourself.  It is a tempting offer, since you can then submit offers and collect a good percentage of the commission, and then know you have a good buyers agent (you!).

Katie Do · Answer

Thank you Jonna Weber for your suggestion!

@Laurie JohnsonARV of the house is probably be $230K-$260K. My estimate cost of repair is $36-$40K. I am planning to buy house fix it live in it for a while and have roommates and eventially sell it. So basically buy and hold strategy, i havent asked them about owner financing. I dont really know how that works?

Laurie Johnson · Answer

What is the ARV of the house? Asking price does not help with knowing if it is a deal or not. What do you plan on doing with the house buy and hold? Or fix and flip? Any repairs est. need to be rechecked by you. Cause my brother will fix my roof for $200 and as you know that is not a legitimate estimate.

As far as the agent situation the selling agent will be talking the owner out of letting you buy it so low for 2 reasons 1. lowers the commission and 2.get owner more money. What is there number? Will they do owner financing? If there is plenty of money left on the table after repairs to sell retail have them finance the entire amount fix and split the profits.

How should I counteroffer?

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