How do I know how much to offer?
We’re thinking about putting in an offer on a coop. We’ve never done this before and I just have no idea how much to offer. Should I just offer something I’m comfortable with? A certain % less than the asking? I can look up some comps, but having not seen the apartments I have no…
We’re thinking about putting in an offer on a coop. We’ve never done this before and I just have no idea how much to offer. Should I just offer something I’m comfortable with? A certain % less than the asking? I can look up some comps, but having not seen the apartments I have no idea whether they’re comparable. Any guidance much appreciated!
In addition to the whether the asking price is a fair one given the recent accepted offers on similar apartments, it completely depends on the state of the market in the few weeks you are making your offer.
If the asking price is right, and there are many people out there making offers right now on that apartment, then anything that isn’t fairly close to the asking price isn’t likely to be considered. (That said, you can always offer low and come up if that doesn’t work.) But if there are other offers much higher than yours, unless there is something much better about the other aspects of your offer that would appeal more (all cash, much larger downpayment, or much higher income – remember the buyer has to pass the coop board), then the seller is likely to negotiate with the higher offers and ingore yours if it is way lower. (I ignored the one lowball offer I received when I sold and didn’t counteroffer – but then, that person wouldn’t have passed the board anyway on income over last 2 years.)
Sometimes the buyer is looking for the strongest financials to pass the board, and in that case, offering more might not help your offer at all – if you aren’t clearly a shoo in to pass the board on your downpayment, last two years’ income, savings left after purchase, and terms of your mortgage.
If the market is not so hot, and not many offers are coming in, then the seller will be more likely to negotiate an offer further below asking. The only way to gague where the market is in regard to this is to look at all the similar apartments, follow them in the Times and on broker websites, and talk to the brokers about how fast they are going. Some of the sites will note, and some of the brokers will tell you, when an offer has been accepted, or when a place is in contract.
You can also take advantage of little market blips. Like if something happens that has everybody worried about the markets for a week or two, and nobody else offers that weekend, you *could* be the only offer. I made my offer on my place in such a time (a minute pause in an otherwise hot market), was the only offer, and in hindsight, wish I had realized this and offered lower. But I had recently lost other apartements to buyers who either offered asking price when I offered a bit lower, or where we both offered asking price, but I had a smaller downpayment. So it was just as well, as I didn’t want to lose the apartment, if there’d been another offer, all for 10-20 grand – that doesn’t result in an appreciable difference in the mortgage payment.
Do research on craigslist to see what everything is selling for. Look on Property Shark for recent selling prices.
But most importantly, offer what you think it is worth to YOU and only offer what you can afford. If you want to do renovations, please, please, please consider doubling your construction cost estimate so we don’t have to have you on here in 6 months complaining about how you used a cheap contractor to save money and he screwed you over. There’s too much of that happening in the city. So be careful.
P.S. If you are putting an offer in on a property without seeing any other similar apartments, you probably have absolutely no way of telling if it’s right-priced. You should visit as many other properties as possible.
Offer what you think it’s worth – and if you’re not sure, strongly suggest doing some research and hitting every open house you can within a mile of the price point – and 10 miles of the neighborhood – you’re looking at. To me firsthand knowledge gained by eyeballing is the only way to do it.
Good luck!