Part 6 of Series..."What to Think About When Buying Lakeshore"

Part 6: How Much To Offer

"You can tell that...x#*f~!x/#%...to...!" That's probably not the kind of response you want from the seller if you are trying to buy a lake place you really like.

It's certainly no secret that the real estate market has had a bit of a downturn over the last couple of years. The media has given us all plenty of informative reports on that. But make sure you don't rely entirely on what you read in the paper or see on TV when you find a lake property that you know is the right one for you.

In my last article, I showed average list prices and sale prices for single family waterfront properties throughout all of 2007 in the Northstar MLS. What you will notice is that the actual average sale price ends up being about 95% of the list price most of the time. So when one particular lake cabin stands out from all the others you have seen with your real estate agent, how much should you offer on the initial purchase agreement? The best advice I can give is to put yourself in the seller's shoes. How would you respond to a similar offer on your property?

Let's assume the lake home or cabin you are interested in has been on the market for 123 days, and is priced at $379,000. However, it was originally priced at $399,000, so you know the sellers either are somewhat motivated or they thought the first price they listed it at was a little high. In their minds they have already come down $20,000, so anything you offer less than that is seen as an extra price reduction they are potentially giving - even if it was originally priced higher than it should have been.

The first thing you should consider is how this property compares to others you have seen in this price range. If you have seen a dozen places and this one stands out from the rest based on the quality of the lake, the type of lakeshore, the attributes of the lot, and the integrity of the structure, then you can be assured that other lakeshore buyers will be noticing these same things. You can probably be quite confident that if you aren't willing to pay somewhere near the list price, the seller will probably find someone else who will. If they have a good real estate agent representing them, that agent should be giving them this same advice.

Now that's not to say that you have to offer full price. But if you come in with an offer of $300,000, you probably won't get much of a response...or you might get one similar to the first sentence in this article. Once you insult a seller, it gets quite difficult to get them to want to work with you again, so be careful if you really want to buy their property!

I've seen plenty of buyers end up paying more than they would have had to for a home, just because they insisted on making the initial offer so low that it wasn't even reasonable. When this happens, the seller tends to either not counter the offer at all, or they make a counter-offer that is very close to their list price. Generally, that creates bad blood between both parties. But if the buyer really wants the place - which many times they do - they are oftentimes the ones that end up giving in the most. With a more reasonable offer at the outset, they very well would have ended up with a better price through more friendly negotiations.

Obviously, there are many factors to consider when you decide how much you will pay for any property, and there are plenty of them that are genuinely overpriced. But over the years I've found that lake property owners seem to have a special attraction to their unique parcels, and many times they are willing to wait until someone comes along who seems to appreciate their place as much as they do.

If you have decided that this is the right one for you - and that the price is not too far off already - make sure they don't think you are trying to take them to the cleaners. Otherwise, you might not get another chance at it.