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Actually for most Americans the bulk of their net worth is tied up in their home, therefore offering them a lowball offer is a personal matter to them. Youre asking them to sacrifice their entire net worth simply because you dont want to pay market rate for something. Its not a business transaction because this isn't the owners "inventory" nor are they a business. In the OP's case the sellers jumped because of desperation. Its like when a military family is moving and needs to sell something ASAP. Youre taking advantage of their desperation. A transaction should be a win win for both parties.....
The market value of a home is pretty much determined by how much someone is willing to pay for it .... not by what the seller paid for it at the peak of the market or the sentimental value attached to it. Reliable comps and even an appraisal do not really dictate what houses can be bought and sold for (although the bank will typically reject a loan where the appraised value is significantly below the agreed sales price).
Buyers are preparing to tie-up as big a segment of their net worth as sellers; and can be just as limited as sellers by only having $XXX to spend on a home ... yet, wanting to get the best possible neighborhood for their family. Are sellers taking advantage of and limiting the future hopes and dreams of these buyers, by being unwilling to sell at a lower price? Of course not! - That is why it is important to keep the house sale on a 'business' not an emotional basis.
If someone makes a low-ball offer, it may either represent a funding limitation ... or a negotiating tactic that is simply asking the seller, "how much they are willing to come down in price?" It is naive and foolish for a buyer not to ask if the seller will sell for less. It's easy for the seller to to simply say "no" or come back with a counter-offer. The seller who gets their feelings hurt and responds on an emotional basis -- may sit on an overpriced house ... until the bank takes it away!
Buyers know that when a house has been sitting on the market for several months or even a year, that it is overpriced (regardless of what the seller hopes or thinks). But, some sellers seem to be living in a 2005-2007 time warp ...and take a lot longer than buyers, to figure out their house is overpriced.
Of course it's true. It's just not pleasant. That's what you actually disagree on: you don't like that people can have two bad choices in front of them and that sometimes a good person ends up losing and a subjectively less good person ends up with a deal. I don't like it either, but it's the least bad system we have.
What's the alternative, really? Let's say we make a special case for sellers who can show extenuating circumstances. We do, after all, allow for plenty of special circumstances with respect to military deployment. Even hard-nosed conservatives don't usually have a problem with this, and I certainly don't either.
Now we've anointed somebody - probably a government entity - to wade through the real estate market and pick out who the special cases are. What happens when the buyer is a special case? Do we show them favorable treatment? What if both the buyer and the seller are? Who gets to pick which favored group gets preferential treatment, and the degree of that preferential treatment?
The fact is that minute anybody 'has' to sell their house for $X, where $X is determined by their debts (whether under their control or not - say, medical emergencies) -- they are at a disadvantage. The market does not care about your circumstances. It cares only about what you have for sale and what others will pay for it. When we want to deal with this kind of unfairness in a systematic way, we set up NGOs and charities to help out folks so that they don't reach the position of "must sell house for $X" - in part because we realize that, by then, it's too late. None of this is the buyer's business, much less their fault.
My parents' home was sold at a loss because of bad, extenuating circumstances, some of which were under their control and some of which weren't. A pretty big loss, as it happens. If they'd been able to hold out for another couple years, it would've meant a lot of money in their pockets. I don't see how I can blame the people who came along and bought it, though.
On the house where the owners were going into assisted living, they may very well have been willing to take any offer, to be able to move on with their life. They may have enough money and/or insurance to take care of themselves, and had a big problem. Th at is how to get rid of a house, that was keeping them from moving on in their life. The price the home sold for, was not nearly as important as the fact they were rid of it.
When I was in the investment real estate business, I advertised I would buy homes at a discounted price. When I got an inquiry I explained what I would do. I would determine the fair market value of the property, following the same procedure I would if I was asked to do an appraisal. I would then discount it 21% without charging a commission. I would discount 7% to cover commissions and selling costs when I sold it. Another 7% to cover any holding costs, as I would leave it vacant till I sold it. I would then discount 7% for me to make a profit on the home as I felt I would deserve a profit to handle the home. For a total of 21%. I would determine the true market value that could be expected within 90 days of listing, less 21%, and I would close within 7 days from the time of the contract. I averaged 1 to 3 houses a month this way.
Sellers were like 1 elderly woman. She came to my office, and we discussed it. She had talked to 3 Realtors about possibly listing it, and had 3 different price estimates all within $1,000 of each other. My estimate was the same as the highest estimate, so she knew I was not trying to jerk her around and felt the 21% was fair. She went home and called her son who was a top officer with a large corporation, that he and his wife were moving her to be next to them in their guest house by their home. He told her to rush over and sell before I changed my mind. She was back within 15 minutes, and she was the happiest woman in the world that I would buy the home so she could move to be with her son. Money was not her motivating factor. When we closed in 7 days, I had already sold it to an investor for 10% under market value who bought it as a rental, and closed with his money. The seller was extremely happy, The investor was was extremely happy, and I was was extremely happy with my 11% profit. It was a win, win, win proposition. If I had not bought it and it it would have remained on the market unsold for months, and she needed to get rid of what was a problem to her. When we closed her son had flown into town, to drive her to her new home which was about 1,000 miles away and she needed to move herself and car. He took me aside, and thanked me for helping his mother and felt that under the circumstances I had done real well by her.
Another was a man that came in on Friday, and the home was already scheduled to be foreclosed on the following monday by the V.A. and they were losing half of the value of the home. I called the V.A. and told them to send me the papers as I was buying the home. They were happy not to have to foreclose. I arranged from the seller to be able to rent the house at the same amount they had been paying in payments. They were happy they did not have move and I saved more than half of their equity. They faithfully paid the rent, even though they did not make payments. That kind of thing I never learned to understand about people. When he walked out of my office, he moved some items from the back seat to the trunk of his car. I had already resold the home to an investor on the phone before her got out of the parking lot.
Another time the seller was being transferred by his company. The company (big IT corporation) had already determined what the house was worth, and had agreed to pay for sales costs, as well as any discount he had to take to get the home sold. I wrote a contract. He took it to the personnel office the next day, and they signed an agreement to pay him the difference between what I paid, and the agreed on value.
I always had investors standing by, that were ready to buy homes for rentals on long term basis at 10% under the market. Homes in the area were increasing in price by 12% per year at the time. Hold 3 years, and they could make a decent profit on them. They would own several homes, and I would package them together, and exchange them for larger pieces on income property as the down payment. Win, win for everyone.
There are always people that are ready wiling and able to take a discounted price, if one is properly presented to them as my offers were. They do it, to solve a problem. No on is taking advantage of them, as they have a problem, and they are looking for a solution to a problem. I never approached them, they approached me asking me to buy their homes.If you look for sellers that have a need for an immediate sale, there are lots of bargains on homes out there.
I've purchased a home from an elderly seller who had gone into a rest home. It made no difference to him how much the house sold for because Medicare was paying for the rest home and medicare takes whatever assets you've got away from you. So whatever he received for the home went straight to medicare to pay for the rest home.
Didn't know that? Medicare even goes after assets that you sold two years before going into the rest home.
There are several instances someone will sell a house, etc., real cheap.
In the case of the rest home, all he owner wanted was to get rid of the problem and sell the home. He was not going to get the money anyway.
One I know of, was a friend bought a home real cheap, thousands of dollars under the market. A woman in a divorce was ordered to sell the home she lived in and give the proceeds to her ex-husband. Boy did my friend get a good deal. After the mortgage and selling costs were paid, husband got something like $500 instead of a tens of thousand dollars. I hear through a friend of hers, she took the lowest low ball offer of several offers, to screw over her ex. I head he complained to the judge who told him, it was his own fault . He was the one one that insisted she be the one to sell the home and give him the money to humiliate her. He was one angry man, but quit complaining in public about it real soon, when everyone but himself just laughed at him and tormented him for being so stupid as to insist she be the one to sell the home.
Some years back we were friends with a couple that would do this every few years. They were selective, wanted the house, and would make a written low ball offer along with a deposit check. They were in no rush and they basically would not negotiate. Every so often someone bit. In some six years they went through 3 houses. From a tiny ranch to a lovely, large home on a hill over looking a river and they got them for a steal.
The catch was they were in no rush and if it hit, good. If not, they moved on.
I've purchased a home from an elderly seller who had gone into a rest home. It made no difference to him how much the house sold for because Medicare was paying for the rest home and medicare takes whatever assets you've got away from you. So whatever he received for the home went straight to medicare to pay for the rest home.
Didn't know that? Medicare even goes after assets that you sold two years before going into the rest home.
My next door neighbor is trying to figure all this out herself. Her dad had been taking care of her mom for about three years when he could not do it anymore. He had her placed in a Skilled Nursing Facility. He would go there every morning and stay with her the entire day. Their daughter, my neighbor, moved into her parents home to help out. She is in her 60's and retired herself. because the parents did not have any money, other than the house, Medicare took care of the bill.
The mom died and then within 6 months the dad died. My neighbor, the daughter, had been told that eventually medicare will come to collect the money for her moms care. she has spoke to a few lawyers and nothing has happened yet. Aparently they can take over the house and sell it to cover the cost. I guess in a situation like that someone could say, screw the government and maybe help out someone else. Or they just stop caring because they are going to lose it anyway.
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