Making a private offer on a listed property?

Question

Hey guys.

Over the weekend I came across a property that I really like. Based on comps in the area it is listed almost 100k over what it's worth. My question is, (and I'm 99% sure of the answer) but can someone try to negotiate an offer directly with the seller if The house is listed?

I guess you would have to wait til it expires?

My reasoning is that if you submit a low offer without actually talking to the owner they are much less likely to accept. Especially with the sellers agent in their ear telling them to pass on the offer.

Is it normal to submit an offer for 100k under asking price?

Thougts?

Account Closed · Answer

Drew

What do you think would happen if you knocked on the seller's door and said," I want to buy your house.  Are you open to an offer?"   Do you think you would be breaking any law?  You would not.  Why don't you do that?  Have him call his Realtor and the three of you sit down and make a deal.  I assume you want to buy.  I assume the seller wants to sell.  I am certain the Realtor wants a commission.  Realtors get in their own way .  They get in your way as well.  Call the seller.  Talk to the seller.  The seller is the decision maker.  As long as the Realtor gets paid, why would they object to you talking to the seller?   If it was my listing, I would not at all object as long as I get paid and if I did object, who cares.  Talk to the seller.

David Krulac · Answer

Yes, most Realtor listing contracts provide that all sales will result in a commission to the agent.  Some do not and you can find out by asking the agent or in some MLS it lists the type of exclusivity that the agent has.

Sometimes we have written into the sales contract, as a buyer, that we MUST be there when the contract is presented to the seller.  In general agents don't like this, but there have been times when we have demanded that.

One such example was where we put in a first day offer on a listing, it was all cash, but it was less than the listed price.  Typically a seller will reject that offer on the first day figuring that the property has not been exposed to the market enough yet and there might be a buyer who would pay more.  I told the seller that my offer was non-negotiable, and if not accepted, I would not entertain a counter offer, nor would I be putting in another offer.  Sort of take it or leave it.  I meant what I said.  However I was prepared, willing, wrote the offer that I would putdown a deposit of 100% of the sales price, which was six figures, and had the deposit check already written out for the presentation and kept waiving in front of the seller. The seller wanted more and did have a private conversation with his broker, but did accept the deal as written with no changes and I bought the property.

Mike S. · Answer

Or you can just contact the listing agent directly explain that you are a disciplined investor make your best offer and see how they respond.

This will save a lot of time and energy.

Bill Gulley · Answer

In any market you can find on the MLS the average price, the median price as well as the % of asking price homes sell for. You are getting into a low ball offer range when your offer is less than that norm.

What the system may not show are average % of asking prices obtained in different price levels. An offer say at 20% below asking price on a 60K home that is retail ready may be considered a low ball offer and may not fly, on a 1.5M home, an offer of 1,2M might be taken in a heart beat.

I suppose too you need to know the general "feeling" of Realtors in your area. In my area most Realtors have a sense of representation of their client, just as an attorney does not want his client being approached by some insurance claims guy or some creditor or by anyone related to the other side of the table, neither does the Realtor. There is a degree of professionalism taken in protecting the client from having to fend off inquiries, that's part of the job of their representative. The perceived approach of attempting to contact an owner will probably be that the listing agent will think or at least be aware of, the possibility that someone is attempting to circumvent them and the accepted process. That is not the customary way things are done.

So, you knock on that door, the owner may be agitated but wants to sell and calls the agent to come over. The agent arrives and isn't pleased about the apparent attempt to circumvent him, but moves on to see what is to be presented.

While the acceptance of an offer rests with the owner, let's not be naïve, there's a reason most owners hire a Realtor and it's not as if the owner is going to disregard advice. Now, the owner may have gotten a Realtor that has no interest in his client, they may only be interested in getting a deal and a check, but I'd say most Realtors have a higher level of professionalism, business ethic and a feeling of obligation to their client.

My thought on a door knocker with my client would be one of at least distrust, that either two issues that exist, one, the knocker has no clue of the process and accepted practice or two, they were hoping to get a deal circumventing me. Either way, such disrespect of my representation duties to my client warrants a closer eye on that door knocker, a tad more scrutiny will be used.

Now, couple that with some low ball offer and I'd call strike two. One more pitch and he's out of there.  I'll also be pre-qualifying that buyer on the spot.

Do I need to have a buyer fill out a loan application and do ratios to determine who I'm dealing with? No, not initially.

I have someone sitting at the kitchen table telling me they are an investor, or giving their spiel about an offer. I can spot a blow hard in a second, there are many very sharp Realtors out there who can tell by the way you talk about RE, how you want to structure a deal, how you present yourself and your offer if you're full of it or you're the real thing. As a newbie, you are most likely to have strike three and you're out of there.

There are good reasons why those new in RE should not be dealing with a listing agent, you may well open your mouth and insert your foot, probably likely if you talk about pricing or any confidential information about you or your business.

Now, back up. Use your Realtor. The listing agent has no issue with you, you didn't attempt to circumvent them so you're in good graces. The listing agent also doesn't have a chance to size you up, if you're new full of guru ideas, that's another plus. So, the deal is presented by your Realtor, professionally I'd think, and the low ball offer, while it may not be a joyous moment, a counter offer may be in order and the listing agent will present the offer with their advice. The owner might accept it or they will counter.

While investors and operators often see themselves as wheeler-dealers, killer negotiators that offer almost nothing, skip over the usual and customary as if they have special skills in getting homerun deals, that is probably only the case in their mind. Hearing advocates of operating lose and with disregard seems to impress newbies, sounds cool, but that certainly not the way professionals conduct business, at least here and I'm in the heart of the Ozarks, not the most sophisticated business environment on the face of the earth. LOL

There can be exceptions, when you deviate from the norm you need to be able to justify yourself. I suggest you know what is customary and act accordingly. :)

Mike S. · Answer

@Drew Farnese you asked

" Is it normal to submit an offer for 100k under asking price?

Thougts?"

It depends on the price if the home is listed in the 7 figure range then the answer is probably yes, if the home is listed at 150k then probably not... think about it in % terms

Drew Farnese · Answer

Thanks for the answers everybody. I do have a real estate agent working with me, and I'm not opposed to making a low offer. I just want to make my low offer sound more appealing.

Fran Flanagan · Answer

Why are you trying to dance around the listing agent?  Just put in an offer and see what happens.

I'm hardly as experienced as some, but I put in a 430k offer on a house listed at 520k, intending it for my primary residence.  I'm sure they were offended, but such is life.  I ended up going as high as 453k, my planned max, and it sold for 462k to someone else.

Even though they were probably annoyed, my initial "low offer" was 26k closer to the final sale price than their listing price (which was almost 60k higher than the sale price).

Bill Gulley · Answer

Since basic contracts come out of the NAR, nationally and are then adopted to state and local requirements, I've never heard of a broker's listing not have a procurement of sale clause. Not impossible I guess, but chances are pretty good your owner has that to deal with. I wouldn't ask the agent, that's kind of like asking "hey, when can I buy without you getting a commission" think about it. You could ask the owner.

Another point, you might get a door slammed in your face and told to see my agent. People list for more reasons than just to sell, a good one is that they won't be bothered with door knockers, showings and dealing with the public. It's why the got an agent!  :)

Bill Gulley · Answer

A listing is a contract between the owner and broker. It also has an expiration clause that allows the broker to be due a commission as the procuring cause of any sale after the contract expires, usually about 6 months. If someone gains knowledge or information about the property through any effort of the broker, the broker is seen as the procuring cause of the sale.

Interfering with a contract between two parties can be a tortuous act and can get you sued.

Get a Realtor an make an offer. :)

Making a private offer on a listed property?

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