Watch CBSN Live

When Sellers and Buyers Disagree On Price

Q: I'm a first-time buyer, and I thought it would be a great opportunity to take advantage of the real-estate crash to buy my first house. The only problem is, the same situation keeps happening: we find a house we like and make a bid, and then the seller comes down in price but doesn't come down enough. At the end of the day we are five or six percent apart, and I just can't overpay by that much -- but I'm sick of losing out. What to do?
A: The key question when looking at this market is, "once you walk away from these houses, do they sell?"

If the answer is "no" -- the homes are not selling, then you have to decide what's happening to the market in your area. If it's improving, then the sellers may be deciding to keep their homes on the market until better times roll in. If it's not improving, then time may be on your side.

Go to the seller of your favorite house and say, "our final offer is XX. I know that's 5 percent under what you want, but we really love the house, and think we still will in three months. So please keep our number and call us if your bottom line changes."

And then, be patient!

If the answer is "yes" -- then you're underbidding. You're going to keep losing out on homes because your idea of what a home is worth is less than what the market thinks it's worth.

There are three ways to deal with this situation:

  1. Get out of the market. If you don't want to buy at the prices the market is charging, spend your time and energy finding a really nice rental instead.
  2. Raise your budget. Since it's clear you'll have to spend five or six percent more than you're offering, be prepared to raise your current offers.
  3. Look for a flaw that you can tolerate. When buyers want to pay less than the going rate, they need a property that's discounted because there's something wrong with it. Maybe the home is a little bit dark compared to the other homes on the market, or needs a new kitchen. You just have to find the flaw that you can tolerate. It's like buying a shirt with a button missing; for some people, that's inconceivable, for others, it's worth the effort of replacing a button to get the discount.