Offer 25% less than asking

[Jen Salemi]

Hi: I have a question concerning the best strategy to get a seller to accept an offer 25% less than current asking price. Here are the facts:

Property is located in central New Hampshire and is over 100 acres and 2.5M dollars asking price.

Has been on the market for 3.5 years with several price drops, each approximately 10% of listing price. Most recently the price has dropped every 6 months, due for another potential drop in June.

The property, which was always a second home, is no longer owner-occupied, owners admitted to their motivation for selling being their age and health (they are in their late 70s).

The property is outstanding, the house is in decent condition but requires significant upgrades and renovation.

Comparables are hard to find: similar properties all have houses in better condition, but less land, or less private, or inferior views, inferior location, etc.

I will have to put about 400k in renovations into the house in order to bring it up to my standard of living. And I intend to keep it for 10-15 years. The housing growth in this area is slow but steady, but houses like this typically spend 3-5 years on the market. I don't want to overpay. But I also don't want to lose this house. Redfin's estimate is 2M. I want to get it for 1.8M, or close to.

What is the best strategy to employ? What questions should I ask the seller's agent to get them thinking in the right direction? Is there value in pretending I am interested in other properties? Is there a value in providing the listing agent with a heads up of what my offer would be, before I submit an offer? Do I put in a low offer, under 1.8M hoping to accept a counter at 1.8M. Or put in an offer at 1.8M and not budge much? If so, what is the strategy to avoid countering by always splitting the differences? I fear that anything under 1.8M won't even receive a counter offer. I've been told the seller would likely not consider an offer under 2M. Do I submit an offer with standard contingencies (financing/inspections) and pull those out in lieu of raising a price (I can pay cash, and since most of the structures will be removed/renovated I don't actually care about anything an inspection would find)? Do I run them down or get them "emotionally invested" by frequently seeing the place, meeting with architects, etc, prior to submitting an offer? Do I wait until their next price drop, which will likely bring the property to 2.2M in June?

I know 1.8M offer will be poorly received. The seller's agent has already said his clients are bummed out because they have already reduced the price 500k lower than their current assessed value. I almost feel that once the sellers get over their initial "shock" of this offer, they might be more reasonable....but just not sure they can get over it....is there a way to ease them into this?

Detailed responses most appreciated!

[Steve Racicot]

Price is not the issue. Regardless of the price you offer, they would not be happy.   They are emotionally attached to the property and having trouble letting go.  

I would include your offer, say 1.75M,  and with it I would include a letter and even drawings or pictures of what their current home will look like when you are finished. In the letter, you should appeal to their emotions. Let them know you will take wonderful care of the place. Maybe even invite them to see the place when it is all done.  

Let them know you will take care of the place they lived for many years,