Typical percentage below asking price?

[Manuel A.]

When I look online obviously there aren't any extraordinary asking prices on the fixer upper houses so I'm curious, when you put out offers how low below the asking price do you typically go? I know it its variable but is there a point where you know your offer price is way to far from the asking price so you just skip it altogether? What's the most you've ever knocked an asking price down in terms of dollars? What do you think is typical?

Thanks

[J Scott]

Are we talking about REO properties? Short sales? Or private, non-distressed sellers?

For REOs, there are no typical discounts off list price. The reason for that is that there is nothing typical for what the list price is relative to market value. I've seen REOs listed at 300% above market value, and I've seen them listed at 50% below market value...and everywhere in-between.

Your offer should be relative to what you are willing to pay, how much competition there is for the property and how badly you want it.

That said, these days, for most properties listed less than 30-60 days, you probably won't even get a counter-offer if you don't offer at least 80% of list price. Even for properties listed longer than 90 days, a smart asset manager will reduce the price to garner some competition before they give away the property for less than 70% or so of list price.

As for short sales, the list prices often have absolutely nothing to do with the eventual approved price. Generally speaking, you can get about 10-20% below the BPO price, depending on the type of loan, the lender and how long it's been on the market. Of course, it's unlikely you'll know exactly where the BPO came in (if it's already done) or where it will come in (if it isn't).

So, for short sales, just offer what you're willing to pay (actually, offer 10% less, so you have some negotiating room when the bank counters).

As for private transactions, the more information you have about the seller, the property, any outstanding loans, etc, the better negotiating position you're in. Some sellers may take deep discounts off list price if they're desperate and have the equity to take the hit. Others may not be willing to budget at all (as an example, I currently have my house listed for sale...I won't take less than list price, as I really don't care that much if I sell or not).