Determining price for off-market sale

[Anonymous]

Anonymous wrote:Op they’d be crazy to sell it to you without going on the market unless your offer is higher than they think they’ll get.

This is not necessarily the case. There can be a lot of value in not having to get the home ready for market, and not having to deal with putting it on the market. How much value is there depends on all the facts and circumstances, it might be a lot for some sellers, or it might be a little. But the value is there.

[Anonymous]

Only the seller typically pays realtor commissions (for buyer and seller) so you're not really splitting that.

[Anonymous]

I'll tell you how it went for us as the seller. We had a price in mind, based on recent comps. The neighbor/buyer offered us 89% of our asking price. We said no. The neighbor/buyer offered us 97% of our asking price. We said no. The neighbor paid 100% of our asking price.

We didn't mind that they tried to negotiate but we had no incentive to compromise.

[Anonymous]

I think you sound a little naive about the market with suggestion #2. The seller is in the driver's seat right now.

We are in this situation. I consulted with two realtors as a prospective client to see what they'd list for. That got me thinking what I'd take. Listings in our area are going within a week, with multiple offers and no contingencies. I need a price that makes it worthwhile to not list it (avoid the hassle) and give up a potential bidding war.

[Anonymous]

Anonymous wrote:OP seems to think this transaction is like a divorced couple when one buys the other out of the house. The sellers are in the driver’s seat here; it’s their house! You pay them a price they are willing to take or they put it on the market. What’s “fair” is subjecting it to the market. As buyers you are already getting an unfair advantage by not having to compete with other buyers; you have to pay a premium for that privilege.

This. OP, your ideas are ludicrous. The seller is in no way bound to you to accept any sort of deal.

[Anonymous]

You pay want the seller asks or they put it on the market. Pretty simple.

[Anonymous]

Anonymous wrote:I'll tell you how it went for us as the seller. We had a price in mind, based on recent comps. The neighbor/buyer offered us 89% of our asking price. We said no. The neighbor/buyer offered us 97% of our asking price. We said no. The neighbor paid 100% of our asking price.

We didn't mind that they tried to negotiate but we had no incentive to compromise.

We purchased our place off market. The seller was firm on the price, but we were able to negotiate other things, like getting the HVAC system serviced and in working condition and a small credit for unseen water damage. It can be done.

[Anonymous]

For those saying the seller has all the power, and the buyer shouldn't get anything out of this... Even financially, this is not completely accurate. Suppose seller thinks they can get $1.4M on the open market. Assuming buyer seller agents take 5% ($70K), that nets seller $1.33. Seller and buyer can split the difference and transact at $1.365M for a win-win.

And that's before you factor in any value the seller gets out of doing a quick off-market transaction. So while seller should drive what they expect to get on the open market, the win-win transaction is splitting the foregone agent fees.

[Anonymous]

Anonymous wrote:For those saying the seller has all the power, and the buyer shouldn't get anything out of this... Even financially, this is not completely accurate. Suppose seller thinks they can get $1.4M on the open market. Assuming buyer seller agents take 5% ($70K), that nets seller $1.33. Seller and buyer can split the difference and transact at $1.365M for a win-win.

And that's before you factor in any value the seller gets out of doing a quick off-market transaction. So while seller should drive what they expect to get on the open market, the win-win transaction is splitting the foregone agent fees.

Agreed but if they have a good selling agent they should be getting above what they’ll get without one bc the agent will tell them what repairs to make, help stage it, etc and then argue the comps w/ any appraisers. The tension of having it on the open market psychologically pulls at people and they know they need to be competitive if they want it. The sellers are giving up the chance of a bidding war. Yes they’ll save 5% but they’ll also have to coordinate everything themselves w/ the settlement attorney, appraisers, present the comps to the appraiser, etc.

[Anonymous]

Anonymous wrote:For those saying the seller has all the power, and the buyer shouldn't get anything out of this... Even financially, this is not completely accurate. Suppose seller thinks they can get $1.4M on the open market. Assuming buyer seller agents take 5% ($70K), that nets seller $1.33. Seller and buyer can split the difference and transact at $1.365M for a win-win.

And that's before you factor in any value the seller gets out of doing a quick off-market transaction. So while seller should drive what they expect to get on the open market, the win-win transaction is splitting the foregone agent fees.

Maybe in a cold or neutral market this makes sense. In a hot (seller’s) market, no. The benefit the buyer gets is knowing they won’t have to outbid anyone else. That’s worth a lot in the current environment. Seller pockets most or all of the (saved) commission. If the buyer doesn’t like it, they can take the chance that they’ll have to pay more in a bidding war and that they might not get the house — which I believe is in the neighborhood that they are already renting in, right?

[Anonymous]

Anonymous wrote:

Anonymous wrote:For those saying the seller has all the power, and the buyer shouldn't get anything out of this... Even financially, this is not completely accurate. Suppose seller thinks they can get $1.4M on the open market. Assuming buyer seller agents take 5% ($70K), that nets seller $1.33. Seller and buyer can split the difference and transact at $1.365M for a win-win.

And that's before you factor in any value the seller gets out of doing a quick off-market transaction. So while seller should drive what they expect to get on the open market, the win-win transaction is splitting the foregone agent fees.

Maybe in a cold or neutral market this makes sense. In a hot (seller’s) market, no. The benefit the buyer gets is knowing they won’t have to outbid anyone else. That’s worth a lot in the current environment. Seller pockets most or all of the (saved) commission. If the buyer doesn’t like it, they can take the chance that they’ll have to pay more in a bidding war and that they might not get the house — which I believe is in the neighborhood that they are already renting in, right?

This.

[Anonymous]

I would not try to negotiate them down. Let them name the price, if you can swing it accept. Don't get greedy.