The townhouse had a loft overlooking the master bedroom, as well as solid oak cabinets in the kitchen. And the young doctor who wanted the Chapelgate property knew it was priced at least $10,000 below other homes of its kind.
Still, believing no one should pay full price in a buyers' market, the doctor offered 2 percent under list. But while he waited confidently for a counteroffer from the seller, the property was sold to another bidder.
"When the house is a good value, it can go quick. If you don't jump on it, you can get your heart broken," says Ed Haywood, the agent who brought the doctor to the Chapelgate home.
When deciding on how much to bid, consider each house on its own merits rather than employing some arbitrary rule, says Mr. Haywood, who sells homes through the Phoenix/Hunt Valley office of Coldwell Banker Grempler Realty Inc.
A buyer who has shopped the market and knows precisely what prices similar homes are commanding shouldn't feel foolish if he offers full price when it is warranted, real estate specialists say.
"A lot of times people think that because the market is slow, you can go in and steal things. The fact is that, even in slow markets, houses sell closer to their listed price than buyers like to think," remarks Roger Reitzel, a consultant to real estate brokers throughout the United States.
As Mr. Reitzel notes, statistics show that in fast markets homes typically sell within 3 percent to 4 percent of their list prices. They usually go for 5 percent to 7 percent off list in slow markets.
But the numbers are only averages. And, as the young doctor who wanted the Chapelgate townhouse learned to his disappointment, there are always exceptions to the rule.
"What it ultimately comes down to is how badly you want the house and whether it's priced right to begin with," Mr. Reitzel says.
Here are pointers for homebuyers on bidding for a house:
* Ask your agent for a "comparative market analysis" on homes similar to the one which interests you.
Although agents are not usually appraisers by training, most can quickly gain access via computer to precise information on home sales. Such home-sale data is the same basis on which appraisers reach their conclusions.
In helping a seller price a property, agents are accustomed to preparing a "comparative market analysis" using computer data on recent sales of like homes.
There's no reason why your agent can't prep the same data if you're a homebuyer about to bid on a house.
Suppose, for instance, that you're drawn to a development of 5-year-old contemporaries with front doors of elegant Italian leaded glass. You're planning to put a bid on one of these look-alike houses but you're not sure how much to offer. That's where the "comparables" -- or "comps" -- from the computer come in.
Ask your agent for information on the selling price of three to six similar homes from that neighborhood, Mr. Reitzel says. If the market there is stable, it's fine for these comparable sales to be as old as six months. But if it's a rapidly changing market, seek sales for the last two months only, he says.
These comps will be a starting point. Add value if the home has extras -- such as built-in bookshelves. Subtract value if it's in below-average condition.
* Never underestimate your competition for an attractive, well-priced house.
"Buyers nowadays shop around more than in the past. They don't usually jump at the first thing they see. Most of the time they know a good deal when they see one," says Mr. Haywood, the Coldwell Banker Grempler agent.
While some properties may sit on the market for months, others will be snapped up much more promptly if an unusual value is present. This means that, regardless of overall market conditions, you could be punished for procrastinating when the deal is a good one, Mr. Haywood says.
* Make your first offer a strong one if you're serious about a home.
Granted, there's a place in real estate for "bottom fishing" -- or bidding well below the market in the hopes that a desperate seller will be pressed to accept your offer or counter with a still very low bid. Investors, those with time to spare, or those who are indifferent about several available properties, may be willing to resort to this long-shot strategy on the off chance of getting a sensational deal.
But for most homebuyers, bottom fishing is a losing strategy, says Celeste Pushkin, an agent at the Pikesville office of Prudential Preferred Properties.
One problem with back-and-forth negotiation over a home purchase is that most sellers -- like most human beings -- are acutely uncomfortable in protracted negotiations, Ms. Pushkin says. This is especially true if the item being negotiated is as personal as a home.
The fact is that you're more likely to gain a fair price for a property if you come in at target -- or close to target -- on your first try. Don't expect three rounds of negotiation in most home deals.
Another problem with low-balling on your first offer is that you run the risk of insulting the seller. Due to their emotional attachment to their homes, most sellers take such offense by a low-ball offer that they won't even counter, Ms. Pushkin says.
"Coming in very low says to the seller, 'I'm playing a game with you.' It insults the seller," she says.
(Ellen James Martin is a columnist for The Sun.)