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Hmm... so, basically, you're saying that countering a lowball offer, even if you only knock off a hundred bucks, is like negotiating with yourself?
Scenario...
Seller has house to sell for 350k. (this figure is supported by fresh comps)
They list for 365k.
The get a "lowball" offer of 300k.
They counter with 360k.
They receive a counter offer of 305k.
They counter with 359900.
The buyer either jumps up closer to the mark, or they stop negotiating and tell the buyer that they'll take 360k. Firm.
Why does this ruin anything for the seller if the seller would've taken 350k and they have had a chance to see if the buyer was just testing the water, or truly shopping much higher than their pocketbooks would allow?
Would you explain? I will contend that I may be missing something here.
I would never suggest that a buyer offer their rock bottom price to someone who is very far from their rock bottom price (unless the buyer is not getting any offers and desperate to sell, in which case, it could not hurt... you never know).
You are missing something- you're assuming the seller overpriced the property, or "left some room for negotiation" - if $350 is the value, why play games, as a seller or a buyer?
If the comps say $350k, that's my price, and don't waste my time with a $300k offer, because it isn't going to happen. Show me comps that say mine are wrong, or look at smaller/dumpier/cheaper houses.
The premise that "you never know, the seller might need money, so I'll offer low" is on its face, insulting. Having access to a pile of cash is not a "superior" position to having title to a property. Too many buyers think that scraping up a 3% downpayment makes them an honorary "Donald Trump". It doesn't.
Well, I just had one yesterday. 15% below list price.
Seller said "thanks, but no thanks", and we didn't formally counter.
I did call the agent and explain to him that we appreciate the offer, but the home is already the lowest priced in the area, and a good value at list price. I invited him and his buyer to submit a new offer based on current market activity and told him I'd be happy to share with him the comparable sales that I think are the closets matches.
The response, "so, the seller isn't willing to at least meet us half way?". No, he's not. Send a new higher offer and we'll go from there.
Steve
Steve
See, that mindset (meeting half-way) is the problem I have with lowball offers. If I (realistically) price my house at $200K and someone offers $150K, aren't they expecting to get me down to $175K? Aren't they expecting the counters to be in increments of $5K? In my price range, there is just not that much wiggle room and every thousand bucks means a lot. And as a side note, are sold short sales/foreclosures counted in the comps and thereby dragging the price down?
You are missing something- you're assuming the seller overpriced the property, or "left some room for negotiation" - if $350 is the value, why play games, as a seller or a buyer?
If the comps say $350k, that's my price, and don't waste my time with a $300k offer, because it isn't going to happen. Show me comps that say mine are wrong, or look at smaller/dumpier/cheaper houses.
The premise that "you never know, the seller might need money, so I'll offer low" is on its face, insulting. Having access to a pile of cash is not a "superior" position to having title to a property. Too many buyers think that scraping up a 3% downpayment makes them an honorary "Donald Trump". It doesn't.
Well, I'm not much saying I would either, but I cannot see why a person wouldn't counter at least once.
I do think plenty of it is emotional. Why shouldn't the buyer (or the seller, for that matter) try to get a good deal?
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See, that mindset (meeting half-way) is the problem I have with lowball offers. If I (realistically) price my house at $200K and someone offers $150K, aren't they expecting to get me down to $175K? Aren't they expecting the counters to be in increments of $5K? In my price range, there is just not that much wiggle room and every thousand bucks means a lot. And as a side note, are sold short sales/foreclosures counted in the comps and thereby dragging the price down?
I see your point.
I also see the reverse happening.
Comps say a house is worth 500k. Seller lists at 600k.
Buyer offers 500k, because the comps indicate this is a fair price.
Sellers expect the buyer to meet THEM halfway.
It's not the buyers fault that the seller has a warped sense of what the market says their house is worth any more than its the seller's fault (in your example) that the buyer doesn't have a realistic picture of what the market says the seller's house should be worth.
In the end, they all sell for whatever the buyer and seller can agree is a fair price.
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.....and the quandry is, neither the buyer nor the appraiser will add legal fees and commissions to the house value but for many sellers, it's the only source for those funds.
That same buyer will want to add those amounts when he becomes a seller.
.....and the quandry is, neither the buyer nor the appraiser will add legal fees and commissions to the house value but for many sellers, it's the only source for those funds.
That same buyer will want to add those amounts when he becomes a seller.
Good point. These should be paid by the seller, though. Not because I'm in favor of the buyer getting a better deal.
Because I think that every time you roll all that into an offer, it artificially inflates the value of the homes in a given area. It seems like it would create confusion regarding comps if sometimes it was paid by the buyer and sometimes by the seller.
Hmmm.
Or maybe I'm still sleepy and need to rethink this.
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