400K might sound great now (vs 500) but do you want to be in a place where in future things could go even lower and you could end up looking high even at 400? Sounds nuts, I know, but think about that side of it.

Would that realistically happen? That a house would drop in price 100 or 150,000?

$100k is nothing (depending on the market). I've been following the condo market in Las Vegas for awhile since I'm considering a purchase out there. Check out the price reductions on this condo (MLS# 689285):

Price Reduced: 03/22/07 -- $624,900 to $599,900
Price Reduced: 04/18/07 -- $599,900 to $574,900
Price Reduced: 06/29/07 -- $574,900 to $549,900
Price Increased: 08/08/07 -- $549,900 to $569,900
Price Reduced: 09/20/07 -- $569,900 to $549,900
Price Reduced: 09/20/07 -- $549,900 to $549,000
Price Reduced: 10/10/07 -- $549,000 to $529,900
Price Reduced: 11/22/07 -- $529,900 to $499,900
Price Reduced: 12/26/07 -- $499,900 to $475,000
Price Reduced: 03/04/08 -- $475,000 to $449,900
Price Reduced: 05/01/08 -- $449,900 to $399,900
Price Reduced: 05/09/08 -- $399,900 to $350,000
Price Reduced: 06/10/08 -- $350,000 to $325,000
Price Reduced: 07/08/08 -- $325,000 to $300,000
Price Reduced: 07/24/08 -- $300,000 to $250,000

If someone "lowballed" this one when it was first listed in March 2007 and bought it for $100,000 below asking, they might have thought they got a good deal. However, a year and a half later, and they would be in the hole for over a quarter of a million dollars!

Now that's a haircut!

Those are insane price drops.

Lucy, what my thought was about this particular subdivision is that the homes are very well built, the schools are excellent, and the neighborhood is wonderful, and those factors don't change (well, maybe the school could), which makes it a good place to live for 10 years, and in 10 years the property value should go up significantly. I'm looking at it sort of like the stock market where I know it's a good, solid stock but the market is doing so horribly right now that even though it may drop more after I buy it, eventually it will perform very well.

My question was more along the lines of how do you present an offer that much lower than what the seller is asking to have them not reject it out of hand? Is there a good way to present a lowball offer and a bad way?

Obviously a bad way would be to have the offer contingent upon this house selling-we'd have a contract on this one first (however long that's going to take), but are there other less obvious ways to present lowballs?

I got a low ball offer with all the usual contingencies and did not accept it.

I would have accepted it if it had no contingencies, a larger earnest money deposit, and a shorter time to closing.

Would you make an offer with no contingencies (none, not even title insurance) and plan to lose your earnest money if you can't close? The contracts that I have seen have a check mark for seller's election of remedies, and one choice is keep earnest money with no suing to force the contract; so you couldn't lose more than that if the seller agreed in the contract.

Basically, you are offering them money to let you try to buy the place at the lower price, like an option. If you can't (your house doesn't close, you can't get financing, bad home inspection), they at least get paid for their time off the market.

Margaret

I was selling and rejected a home sale contingency for a buyer that already had a contract to sell their home. The closing was going to be 2 months away. They wanted a home sale contingency when buying my place. I realized that just because there is a contract on their home, it doesn't mean it will close. I wasn't willing to take that risk and sold to a different buyer that did not have any home sale contingency at all.

I say go for it with the $400k lowball. Just tell them you do not want to insult them and apologize if they are insulted, that you love the neighborhood and this is all you can afford.

Keep in mind, from 500k to 400k is a 20% drop. I think you could get 20% off, but you will probably have to make offers on many homes before this occurs. Also you might as well realize that you will need to buy as-is for this price.

OP, even though you qualify for $400K, can you *afford* $400K? You may have already addressed that, but that's how a lot of people got into this mess.

Yes, I can afford 400k. Comfortably. Maybe I don't get that mercedes I've always lusted after, but we'll still be debt free except for the house.

I agree, a lot of people got into a big mess because they wanted more than they can afford.

I feel that this is an opportune time to maybe get my dream house at a price that won't put me in the poor house...

I think, sweet tea, that that's what me may end up doing, just starting with our favorite house in there and working our way on down. We like the neighborhood enough that we're pretty happy with any house we'd get in there...

What are the homes selling for? Have you looked at any comps? It is not impossible to get it but it may take awhile. Some sellers will not ever counter and others may. I guess it will all depend on how much they owe the bank and how bad they need to move.

The least expensive single family home for sale there right now is one that's half done by the builder at 449k. There's another one next door to it also half done by the builder at 495k. There's a finished resale at 469k. There are 4 in the 5-600k price range.

Then it goes up from there all the way to 1 million dollars. It's a unique live-work-play community that has condos/flats/townhomes/sf homes.

I haven't looked at what stuff has sold for, I'll have to go digging for that on trulia...

The irony is of course I'm betting *I'm* going to get lowballed, too, once I list. In our case we don't have to move so we'll do what most of the sellers in the subdivision would do, just counter near what we were asking if we got one...

The price that houses are listed for sale bears *some* relationship to their value but not as much as one might think. You really need to know what the houses are selling for recently. If several houses sold in the past couple of months for say $480,000 then you likely can't get a comparable house for $400,000. On the other hand if houses are selling for close to $400,000 or even if they aren't selling at all, then you might have more of a shot.

It is difficult to offer way below listing price. When we were looking at houses we made an offer that was well below listing price on a house (in fact some here criticized us for lowballing) but I had carefully looked at sale prices and the amount being asked was just too much.

The seller elected not to counter to the offer and we moved on (ending up buying a house for about $250k more than the offer we had made fwiw). While we were under contract to buy the house we ended up buying the seller's agent came back to our agent and asked if we were interested in making another offer. I think by then the seller had realized that our "lowball" offer wasn't really off the mark. Of course, by then we were about to close on a house we liked more so we didn't do anything.

If there really was a favorite house in your target neighborhood, you could hope for a situation like Kats_meow's: You could make a low bid. Then, when it's rejected, look around still, but wait on bidding for a week or three, and then, when you have a second choice, go back to the realtor:

"We're about to make a bid on another house. But before we do, is your client interested in re-examining our bid?"

If they're not, you move to the second choice; if they are, you see if you can find common ground--always with both of you knowing that you are willing and ready to move on, and they may lose you.

I had my agent send me the detailed list of everything that's sold, and the interesting numbers that I found were that the houses in terms of percentage of original list price to selling price ranged from 98% to (get this) 71%. Wow. The 71% was a house sold by the builder to someone in July. It's a *nice* house. Eventual sale price was 560. There are 26 active listings, three pending, and ten sold in 2008 so far.

Most of the sold numbers are in the 500's and up, but there are a few low 400's, so I think it's possible, just not easy...

"Those are insane price drops."

Well, it's a bubble after all. I'm sure you've seen HGTV shows where ecstatic owners were told that their house that they bought 2 years ago for $199k is now worth $899k.
This is just the other side of the coin.