Etiquette (?) of making a lowball bid
8 years ago
last modified: 8 years ago
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- 8 years ago
- 8 years agolast modified: 8 years ago
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Contractor raised price 50% from original bid
Comments (25)And be careful of the cost plus contracts. No matter how specific you are (we had a 20 page bid sheet, detailing all flooring, windows, walls, trim, paint, built-in's, plumbing, roofing, brick, stone, hand forged iron work) if the builder does not do his job your price just went up, PLUS the % he gets, even though he didn't do HIS job. Our builder did this, couldn't even be bothered to call the supply companies to get our pricing, therefore the house ended up being underbid by $500k!!! Which meant his fees went up quite a bit. It took a long 3 year legal battle to rectify. My best advice would be to have a specific bid sheet, and make him initial & date each item and date and initial the cover page and mark it as the Addendum to the contract. That's where we went wrong, it was difficult to prove that we gave him the spec's when he never initialed them. We won in the end, but what a mess. So make sure that your new builder initials and dates each item to say that "Yes, this price included this". Better yet, do a fixed price but do all your leg work and don't make any changes. That's the only way I would build again....See MoreQuestion on the bidding process
Comments (4)No compensation is needed for the other bidders. Just a call and a "thank you for the bid, but..." is all that is necessary. One recomendation - wait to see the winning builder's contract prior to dismissing the other builders. I know of a case in which an owner selected a builder only to find the builder's contract contained kooky terms that the builder refused to budge on (for example, financial penalties against the owner if the builder was at fault for taking too long to finish the project). Then the owner had to go back with hat in hand to the previously dismissed builders and ask them to do the work after all....See MoreLowballing a fixer-upper
Comments (14)The 1950's farmhouse that I was talking about originally listed in the low $400K range. It was never worth that price, even if it was completely remodeled and in perfect condition but the location is prime. When I stumbled upon it he had lowered the price to the mid $350 range. I offered something in the low $300's or high $200's - I don't remember exactly, its been a year and many houses ago. I know I made two offers around $20K less than what he was listed at and that I came back lower each time I talked to them. I hear nothing and go on with my life. Last November the realtor calls and asks if I'm still interested and that they will consider any offer. I do a walk through with a remodeling contractor (I had it inspected before the original offer) and lowered my offer again to $210K and after four months the bank accepted my offer. I close next month. In my uneducated mind the house is worth around $285 in this market IF it is completely fixed up. So patience won out. I got a great piece of property for less than I expected to pay. The things that make my story different than others is that I like where I currently live (10 minutes away from the new house). I didn't have to buy. I don't consider myself a hardened negotiator, I was only interested in the house if I got it for dirt cheap otherwise I can make some changes to where I am and be happy. In addition I was interested in things that most buyers care less about - the gardening potential, sun exposure, soil conditions, acreage etc. Low-balling won in my case but it took almost a year....See MoreMaking a bid: how much can I bid under the $price?
Comments (10)I totally agree with other posters. You make your offer based on FAIR market value, not on the asking price. Find out what sold recently, consider all factors i.e. location, shape of the house, extras. Find the closest comparable & go from there. Offer a little less to leave room for negotiations. Sometimes a comp is not a comp, although it may be indentical to the house your purchasing. There are circumstances where buyers sell for a lot less. If there is an emergency to sell, time of the year & other, the price usually drops tremendously because the owner needs to get out quickly. You cannot use that as a true comp. Those are the things that you consider when making an offer based on comps. I find asking prices are all over the place. Many buyers assume that everybody prices their homes too high because they are not familiar with close comps. Example: I went to an Open House yesterday. The house was overpriced by at least 100k. These people just put it on the market & threw up a figure, thinking the RE is appreciating like it did in 2004. If I were buying that house, I would make an offer for 120k less than the asking price. When I was selling my house, I already priced it 20k (579k instead of 599k)below comps. I would have been insulted with any offer for less than another 30k (550k) below asking. At that point, I figured 10% below what the true comparable was sufficient for the buyer. That's exactly what happened. I sold it for 550k. They got a good buy & I did ok, seeing that I needed to sell & it was in the dead of winter. Had I been selling in the spring, I would have wanted closer to my already lower than comps asking price. I may have settled around 569k....See More- 8 years ago
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