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That is an excellent point that has been run right over in many of these discussions. If the seller is actually at the point of entertaining such offers the list price should be much lower. You can also play with the reduction sequence to get multiple price reduction notifications to those on the auto systems. When you think about it a little it is pretty clear that a seller should almost never accept a low ball. It should just kick off a price reduction.
I've used that before. Good strategy and it works. The seller either walks, comes up thinking they may lose the property if they really want it, or the seller reduces the home to a price more likely to sell. Win-win situation on all fronts because you find if the buyer is serious and it increases the homes chance of selling even if the first buyer walks.
It is in the best interest of a seller to lower their price before selling at an outrageous discount. They price at 430 and you want to pay 330... they are way better off to drop their price on the open market to 400 before accepting your offer. If the sellers agent is doing their job the owner will know this and your offer will not receive serious attention. There are ways to get huge discounts on homes but for the most part you will have less choice as to what you want.
Let's say the 430k home sold for 420 to someone else... would you wish you had gone higher? The seller has much room they can go before accepting a low ball offer. you will be submitting many ofers before one accepts I suspect. Without any prompting from me my owners generally tell me to ignore low ball offers. They won't even counter on most cases. Good luck, you will need it for this approach.
You're correct, but most sellers don't think like that. And if you suggest that (like I've done plenty of times previously), many realtors and sellers will accuse you of "giving it away" or your "way below local comps".
It takes a long time for sellers to change their outlook. For many years they could set a price and have a very good shot at getting list price. Now, reality is setting in for most and slowly they are realizing that they are going to have to be realistic in pricing their homes....
It should be an interesting dynamic this year. Usually you would expect resales to lag the current market price. In areas with high inventory and lots of new construction, it will be interesting to see if resales adjust or just sit on the market. My guess is that they will still lag and the best prices will be in new construction....
Location: Halfway between Number 4 Privet Drive and Forks, WA
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My guess is that they will still lag and the best prices will be in new construction....
I can agree with that.
Nobody wants to move into a new subdivision where the builder has went bankrupt or the spec homes are bank owned, which is becoming the norm. I would not be buying brand new anything unless the development was stable and nearly entirely sold out.
You're correct, but most sellers don't think like that. And if you suggest that (like I've done plenty of times previously), many realtors and sellers will accuse you of "giving it away" or your "way below local comps".
It takes a long time for sellers to change their outlook. For many years they could set a price and have a very good shot at getting list price. Now, reality is setting in for most and slowly they are realizing that they are going to have to be realistic in pricing their homes....
Now, ain't that the truth. You can often times tell a seller time and again what needs to be done with the pricing when offer after offer comes in and they are all low. Does it comp out? Sure. Will it sell? No.
As for other Realtors saying "you are giving it away" that too is true. I had a house in contract and the seller came in upset, said he wanted to change Realtors that the other Realtor had told him he was selling to low. I explained to him the consequences of killing the contract and also asked him if she could sell it for more, why didn't she? It's been on the market for some time, no? So, where's the buyer? I then called the Realtor and explained to her the consequences of interfering with a contract.
We closed.
Low balling can work, but if you buy as is, then your tatics can come back to haunt you. You never know, what the seller is faced with, so its worth a try, and should your ability to purchase happens, it could be, you misjudged the as is condition. I would never serve as a buyers agent, without strongly pushing for a good home inspection, cause what you see, is somtimes not what you get. A good agent keeps feelings and personalities from getting involved, as when that happens, nobody wins.
Now, ain't that the truth. You can often times tell a seller time and again what needs to be done with the pricing when offer after offer comes in and they are all low. Does it comp out? Sure. Will it sell? No.
As for other Realtors saying "you are giving it away" that too is true. I had a house in contract and the seller came in upset, said he wanted to change Realtors that the other Realtor had told him he was selling to low. I explained to him the consequences of killing the contract and also asked him if she could sell it for more, why didn't she? It's been on the market for some time, no? So, where's the buyer? I then called the Realtor and explained to her the consequences of interfering with a contract.
We closed.
Where are you getting offers from? That is completely contrary to the pattern here. We get very few showings and no offers. Got a condo...one of twelve in a very nice residental area. Been for sale for six months. We have come down around 10%. One or two showings a month and no offers. There are twelve others for sale including a bank REPO that is 12% lower than anyone else. Nothing has sold in three months. Check condos all over town same pattern...very low sales even on heavily reduced REPOs. The median price is actually going up with very low volume.
Similar pattern on SFRs. Very low sales even with a significant nunmber of heavily reduced REPOs on the market. And the regular homes do sell at reasonable prices...just very slowly.
I am inclined to believe that, for whatever reason, there are simply no buyers at this point in the market.
I work very hard for my clients, however, I will not work with someone who is just intent on lowballing. Lowballing is negotiating with a win/lose strategy. It is a technique to take advantage of a seller and get a house at a much lower than current market value.
This is not a negotiating strategy that I would use. I can only operate with a win/win strategy. I want both parties to walk away from the table feeling that they have made a good/fair deal.
If one wants homes at a lower than market value, then find a realtor that can get you foreclosed homes before they even hit the market.
When I present an offer, I like to meet with both the sellers agent and seller to sit down and explain the offer and explain how the buyer has arrived at the number. If my offer is in the ball park, even if it's not acceptable, it sets the tone for amicable negotiations so that a deal has a good chance of being made.
That number needs to be in line with the comps. The sellers agent will have access to the same comps that I have, and should be working hard to get the market value for his/her client. (I'm assuming that the house is listed within 5-10% of the current market value)
If I bring in a lowball offer, then I cannot negotiate from a point of strength because I cannot justify the price.
I could state that my client feels the market will decline further and consequently this is the most we can offer. However, the response would probably be to come back next year; but for now get real or get out of my house.
Bill
real estate in general is overvalued esp in areas which saw meteoric price increases over the last 5 years. rising unemployment, tightening credit and massive inventories are all adding to the drop in prices.
the attitude that buyers are trying to take advantage of sellers is a load of horse manure! buyers, like me, will lowball because we know where prices are headed and we want to protect our own balance sheets!
i am prepared to wait a year or two get what i want but there is no harm in giving some sellers a reality check and trying to speed up the process!
We are not lowballing just to lowball for fun. We want a house that we love for a price that is right. Prices have run up like crazy over that last many, many years. This pushed us to the sidelines during the frenzy. We have been patient and now we feel like the timing is right to be on our side for a change.
And no, our agent is good and understands that it will take work. Some sellers may be willing to take a low offer - we are highly qualified, won't ask for little petty repairs, will give seller complete flexibility in move out date, etc. Prices have gone up so much in the last few years, each of the sellers will do just fine compared to what they paid, even with the discount.
In general, we are looking to pay about 04 or 05 prices for a house today. I think prices will go down or flat for another year at least, and given the run-up, I don't think it is entirely unreasonable.
BTW - sorry you had to take a haircut on your place. I know that must hurt! My parents had to do that too in the last down market in the early 90s.
right on the money! i feel that so many sellers forget the FRENZY!
i personally think we have another 2 to 3 years to hit rock bottom and am offering accordingly! i have been putting some serious lowballs in because that is where i feel the market will end up.
if the sellers don't respond or get offended that's their problem! i was offended by the boom but that didn't stop them!
Funny, I know someone like that too! Our friend has done this 3 times and each time the home he bidded on sold for close to that price or less 8 months to a year later. Could it be the same person or are there others like this out there?? We recently sold our home in CA but did take $40,000 less then we were asking. But we were lucky--today that house is probably worth $150.000 less. We sold in March 2007. Just for the heck of it I have been watching the area and the comps.
my wish is for every buyer and every seller to read your post. it's a wake up call for buyers who are still paying market price and to sellers who are laughing off the lowballs!
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