One of the biggest reasons to use a good Realtor is this they go into this as a business deal. Buyers and Sellers bring in emotions. You can’t let your emotions allow you to over pay, not even for your dream home. You must get the right deal or walk away.
The first thing you want to know is how much the Seller paid and has the property been upgraded. I always tell buyers that how much the Seller paid doesn’t matter. This is a rare exception. It is important to know this not as a part of coming up with your offer price, you simply want to know if the Seller is able to sell at a fair market value. The Seller may still owe more than the property is worth, this however is not your problem. If your seller owes more than what is now the current market value they either can’t or simply won’t come down on price .If this is the case I suggest walking away. However, if they have room to come down to what the property is truly worth you have options on how to make that happen.
If you are going to need a mortgage to purchase the property and you have made a realistic offer which gets countered still above true market value try this. Counter the seller back at appraised value as determined by the lenders appraiser not to exceed the sellers counter price. Your mortgage contingency clause in the sales agreement will protect you and your deposit. The truth of the matter here is that the property must appraise for you to get the mortgage any way. This way it’s the lender and the appraiser dropping the price, not you.
If you are a cash buyer it is simple. Don’t write the offer as a cash deal. Write your offer with a mortgage contingency clause and simply follow the instructions above. You can always change your mind and pay cash later. When it comes time that you need to present a mortgage commitment letter present proof of funds instead. The seller doesn’t care where the money comes from as long as it gets there to close the transaction.
In many cases a transaction like this is much like a court case, it doesn’t matter who is right or wrong, it often is the side with the better Attorney that wins. Here in many cases it is the side with the better Realtor that wins. There is no substitution for experience. Always make sure you have a good experienced Realtor representing you and your family. If you have any questions on how to handle a over prices Seller you can contact me personally at [email protected]
F. William (Billy) Hineline
Resident Real Estate Expert and Contributor
President FWH Professional Group