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How does owning free and clear make you a target for low ballers? I'd think with no mortgage payments it's a lot easier to sit on a property while for sale.
The lowballers may be dumb, but at least they don't deal in short sales... Often a distressed homeowner sets the price based on what they owe, otherwise it really isn't theirs to sell. I recall in 1989, a really nice Boulder agent was telling me about condo sellers bringing 20k to close.. I almost couldn't believe it... Real estate always goes up, right?
We recently sold our house in cheapskate WNY. The housing market was the "hottest" in decades, according to our agent. We had some ridiculous lowball offers offers, which the agent handled. We went back and forth a few times but the people were not serious and had a reputation for being "lowballers" and never buying anything. We finally found a serious buyer after 10 months and wound up breaking even after 10 years. The house was in one of the best areas, with great schools, everything close by and was totally updated including new kitchen and bathrooms.
How would you respond to a ridiculous offer (the property is wonderful and priced appropriately in the market, the market is kind of sluggish but not seriously a problem)
Always respond to every offer, even if it's low ball. Never turn your back on a potential buyer. Counter with a price a few thousand below and they may get into negotiations. I can't believe anyone's ego gets in the way of a sale. They offered to buy your house... work with them.
When I was buying, we got to the point where the sellers' agent said to come back with my best and final. They said they had another bidder. I know they wanted a quick close and I was a cash buyer, so they really wanted to sell to me. I was under no pressure to buy, so I gave them a price that was $16k under their current ask (which had already been reduced). Then they came back and asked if I would go up $2,000. I told my agent, nope, that was best and final, but they could drop off the requirement of $500 for a warranty, because I don't really like using those warranties anyway. They still wanted another $1,500. Not a big deal, but it was the principle of them trying to continue to negotiate at that point. Ultimately, the agents each chipped in 50% of the difference and the deal was done.
I'd love to see some actual numbers, or even just anecdotal guesstimates from the real estate professionals on how often something that starts with an extreme low ball, such as 40% off a reasonably priced property, actually converts to a sale.
I suspect it's a low number, and that most low ball offers are just trolling to see if a seller is desperate. As I said upthread, I would respond with a very small reduction off the asking price, but I suspect that in most cases, that's the end of it, and there is not a counter from the low ball buyer, or at least not one that makes it seem as if negotiation will be productive. Either an investor hoping to buy low enough to make a profit, or maybe a legitimate buyer whose eyes are bigger than their wallet who is looking at properties above their price range and hoping to get lucky.
Now obviously circumstances matter, but a property has been sitting for a long time (objectively or just in comparison to what is normal in that market), then I would argue that the listing price isn't necessarily reasonable to start with, so maybe the offer isn't actually a lowball. But for the purposes of this discussion, I accept the OP's premise that it was 40% off a price that was realistic for that property in that market at that point in time.
Always respond to every offer, even if it's low ball. Never turn your back on a potential buyer. Counter with a price a few thousand below and they may get into negotiations. I can't believe anyone's ego gets in the way of a sale. They offered to buy your house... work with them.
Responding to a lowball offer with the original listing price stated is responding to the offer.
How does owning free and clear make you a target for low ballers? I'd think with no mortgage payments it's a lot easier to sit on a property while for sale.
Owning free and clear means they can sell it for whatever you can talk them into selling for. A mortgage company won't release the lien on the title until it's paid off. If a mortgage company is owed $100K on a property and the owner wants to sell it for $50K, someone has to come up with the additional $50K to pay off the mortgage company.
After all of this discussion, what actually constitutes a lowball offer? I offered 90 percent of ask and thought I was going quite low, but I see people talking about 60 percent (40 percent off). At what point does an offer actually become a lowball? I ended up paying 95 percent of the reduced list price, but that was 90 percent of their original list. At what point does an offer become a lowball and would you treat an offer of 80% of list different than one of 60%, 75%, etc.?
As a former Realtor, I considered any offer on a home in good condition that was 30-40% or even lower than the list price was considered lowball. Unless explicitly instructed by my client, I forwarded all buyer's offers to my sellers that were in writing even if I did not think they would accept it.
Some might think the percentage is 10-20%, but each seller is different and may have different motivations to sell. For many sellers, a lowball offer is an insult
After all of this discussion, what actually constitutes a lowball offer? I offered 90 percent of ask and thought I was going quite low, but I see people talking about 60 percent (40 percent off). At what point does an offer actually become a lowball? I ended up paying 95 percent of the reduced list price, but that was 90 percent of their original list. At what point does an offer become a lowball and would you treat an offer of 80% of list different than one of 60%, 75%, etc.?
In the poll question, the OP defined it as "40% below market for an updated property in a good area" for the purpose of this discussion.
Whether there is any standard definition would be a different discussion, but I'd personally say something in the 20-25% range off (reasonable) asking or more
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