Dear Edith: I want to make an offer on a house. I want to offer less than market price. What is a good rule of thumb? What percentage below market price should I offer? What can I expect as the counter offer? What other negotiating tips do you have? — K.

Answer: As so often, it all depends.

There's no rule of thumb, because every seller is different. Some list at a rock-bottom price because they hate bargaining. Others tack on something extra just to see what happens. One may be eager to sell because he's bought another place and is paying on two houses; another might not really care whether she sells this year or next.

Every bit you can find out about the sellers' motivation is useful. Beyond that, learn everything you can about what's been paid recently for nearby, similar properties. You probably already have a good idea of how this house's price stacks up against its competition on the market. If you're using your own buyer's agent, you should be getting some good advice on price there.

Some people think a first offer should be lowball, then the seller counters with a reduction, you come up a bit and that goes on till you reach a compromise. But it doesn't usually work out that way. Too many counteroffers can kill the deal. Emotions start to run high. Someone says, "It isn't the money, it's the principle of the thing" and there goes the whole ball game.

Make your first offer pretty close to what you'd finally pay if you had to, something high enough to tempt the seller to accept it there and then, just to get the thing settled.

If the house is new on the market, reasonably priced and seems to be getting a lot of buyer interest, and if you really want it, offer full price, and promptly.

Up For Sale

Dear Mrs. Lank: When I put my house up for sale do I have to keep paying on my loan? — J.

Answer: Yes

Hidden Treasure

Dear Ms. Lank: The hidden pistol situation in a recent column reminded me of another situation mentioned by columnist and real estate lawyer Bob Aaron. You can read it at www.aaron.ca/columns/2001-05-05.htm. It's a bit different and refers to Canadian law, but perhaps it's of interest nonetheless. I look forward to hearing more about this intriguing situation. — M.

Answer: The item you refer to was about a reader's discovery that the family home sold a few years ago may contain some valuable Civil War pistols hidden there.

Thanks for the interesting link. Yes, the pistol business is intriguing, and I do hope we get to hear what happens next.

Seller Financing

Dear Edith: I was surprised and disappointed in your advice to D.K. and her sister about taking back a mortgage on the sale of her property. I've used this method twice, and it worked very successfully both times. The secret is in the down payment. If you get enough cash up-front, which will be an indication of the buyer's financial situation, the best thing that could happen is if a default occurs. In that scenario, you've had money in the bank, or invested and you get your house back as well.

I'm also curious about how many times you're going to answer the capital gains tax question for sellers. It seems to me I see it at least once a month — in fact, wasn't it one of the questions you published just last week? — D.P.

Answer: You're right about a good down payment representing safety for seller financing. Taking back the house of a really rotten housekeeper who's trashed the place and left stuff behind, though, could be a real headache.

As for that home sellers capital gains exclusion: I do indeed try to hold it down to once a month, but the questions come in every single day. I suppose it means new readers need the information all the time.

Selling In A Hurry

Dear Edith: We bought my brother-in-law's house six months ago. He had bad credit and was coming close to his adjustment on his loan. Things are not turning out as we wanted. I am sure there is a penalty we would have to pay, but we would like to consider selling it. Could wait six months if we had to. Any suggestions that will not financially break us? — via e-mail

Answer: I don't know of any penalties on simply selling real estate, no matter how short a time you've owned it.

Perhaps what you're concerned about is a mortgage. If you're worried about prepayment penalties, refunding subsidies on some special mortgage plan, or FHA regulations on "flipping," read your mortgage document carefully and then talk with your mortgage company.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.

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