Yesterday, I tried to get my Agent ( not the listing Agent ) to present an offer of 83.5% of the listing price. My Agent told me that "the Seller would probably ignore it and not even counter. I would be negotiating with myself". The Agent stop short of refusing to present the offer but made it very clear that I would be wasting my time and the Agent's. The home is South of 30-A in an area where the Sales price versus List Price ratio is in the 88-90% range ( I think ). I've worked long and hard with this Agent to find this property and have a good working relationship, but frankly I'm flabbergasted at this attitude.
Replies
78
Beach Fanatic
IMO owners and sellers always think their property is priced to sell! :rofl:
Why is it a train wreck? I have too much scotch & german blood in me to ever offer the listing price, but consider a little back and forth negotiating to be part of the process to get a price both buyer and seller are happy with.
Just curious... if you were the seller, and you had your property list priced at 80% UNDER current appraised value; then as the seller would you feel that the property is priced to sell? Or... As the seller, would you raise your asking price (in consideration & accommodation of those buyers who, as a matter of course, never offer list price)?
Should (or Does) a current appraisal matter to buyers?
SoWal Expert
I think every seller thinks their property is 'priced to sell', just like every parent thinks their baby is pretty! Reality does not always agree!
If I was selling I would set a price based on what I want/need to get, then jack it up a little so that there is room to negotiate but still meet the price I need.
Appraisals are all over the place (especially these days) so I take it into consideration, but rely more on what I view as comparables than appraisal value.
If I was selling I would set a price based on what I want/need to get, then jack it up a little so that there is room to negotiate but still meet the price I need.
Appraisals are all over the place (especially these days) so I take it into consideration, but rely more on what I view as comparables than appraisal value.
directionally challenged
Just curious... if you were the seller, and you had your property list priced at 80% UNDER current appraised value; then as the seller would you feel that the property is priced to sell? Or... As the seller, would you raise your asking price (in consideration & accommodation of those buyers who, as a matter of course, never offer list price)?
Should (or Does) a current appraisal matter to buyers?
That's a really good point Dune-Ahh. Unfortunately, what is "current" in a deflating market? I am one of those people who think we have hit the bottom or are very close to it but that $225 appraisal was 3 months old I think and the seller was convinced that their property was worth it. I believe we used the same appraiser because the buyer wanted the property so bad and the person brought it in at $215 3 months later. We all know that an appraisal is subjective.
Regarding list price being 80% under appraisal..... buyer's still want a deal and as SJ said, they are gonna come in lower so the question now becomes is another 2-3% enough to make the seller say "NO"? Only the seller can make that decision based on their particular situation and I know some seller's agents might not like it but we push the envelope every time because there are still lots of sellers that MUST take 75% of appraisal and unfortunately, this is gonna continue until every seller in trouble is forclosed upon.
SJ, I totally agree on sometimes offering more than asking. I remember in the heyday, there was a home listed at $799K, we recommended an offer of $815K. My buyer refused to go over asking. It sold at $815K and flipped for $1.299 in 3 months. My client wanted to kick themselves. It's rare in this market but can happen. The only good thing when that happens is there are many other good deals today if you lose one than there was 3 years ago.
Terms of Sale Report - this is for combined residential, 30A, for July 2008 only but definitely shows that cash (NONE) is king by almost 5%
Sales and Inventory History Report - "Average" sales vs listing price over summer has been 86%-87%
Gotta run, this was fun.
Edited
Beach Fanatic
I agree that all offers should be submitted to the seller, in writing. Leave it up to the seller to ignore it, accept it or counter it. In my experience, some sellers have been quite persistant with what they are willing to take, and in those instances, I would counsel my buyer to make a better offer. If the buyer doesn't budge, fine, submit the offer and present it to the seller (if the agent has access to the seller) or the seller's agent with a positive attitude. Let the market guide the course.
Beach Fanatic
That's a really good point Dune-Ahh. Unfortunately, what is "current" in a deflating market? I am one of those people who think we have hit the bottom or are very close to it but that $225 appraisal was 3 months old I think and the seller was convinced that their property was worth it. I believe we used the same appraiser because the buyer wanted the property so bad and the person brought it in at $215 3 months later. We all know that an appraisal is subjective.
Regarding list price being 80% under appraisal..... buyer's still want a deal and as SJ said, they are gonna come in lower so the question now becomes is another 2-3% enough to make the seller say "NO"? Only the seller can make that decision based on their particular situation and I know some seller's agents might not like it but we push the envelope every time because there are still lots of sellers that MUST take 75% of appraisal and unfortunately, this is gonna continue until every seller in trouble is forclosed upon.
SJ, I totally agree on sometimes offering more than asking. I remember in the heyday, there was a home listed at $799K, we recommended an offer of $815K. My buyer refused to go over asking. It sold at $815K and flipped for $1.299 in 3 months. My client wanted to kick themselves. It's rare in this market but can happen. The only good thing when that happens is there are many other good deals today if you lose one than there was 3 years ago.
Terms of Sale Report - this is for combined residential, 30A, for July 2008 only but definitely shows that cash (NONE) is king by almost 5%
Sales and Inventory History Report - "Average" sales vs listing price over summer has been 86%-87%
Gotta run, this was fun.
So psychologically:
It doesn't even matter if the list price is already A Deal...
if what everyone really wants is TO Deal
.
.
.
in order to feel like they got A Steal?
SoWal Expert
...After inspection, the buyer may still take the place without repairs but it could have structural issues, major mold issues etc so with all due respect, I wouldn't never recommend a purchase without an inspection.
Hold on a minute. I don't recommend that anyone write contracts without contingencies. I never said that, and think you will see that if you re-read what I wrote. I even went so far as to state that I don't think it is worth the risk, considering the little gain for the HUGE risk. The question posed was, what can make an low-ball offer look better to sellers. My answer is that if you don't want to risk no contingencies, make your offer higher.
SoWal Expert
If I was selling I would set a price based on what I want/need to get, then jack it up a little so that there is room to negotiate but still meet the price I need.
and that is why we have so many over-priced properties on the market. I'd rather have buyers competing over my listing, than to have it priced high enough that no one even looks at it.
SoWal Expert
A little wiggle room in the price to allow for negotiating is NOT why there are so many over priced properties on the market!
The flipping and speculating frenzy that made people think they owned winning lotto tickets instead of houses or vacant lots is!
And I'm sure folks working on commission did nothing to increase prices either!
The flipping and speculating frenzy that made people think they owned winning lotto tickets instead of houses or vacant lots is!
And I'm sure folks working on commission did nothing to increase prices either!
SoWal Insider
Yesterday, I tried to get my Agent ( not the listing Agent ) to present an offer of 83.5% of the listing price. My Agent told me that "the Seller would probably ignore it and not even counter. I would be negotiating with myself". The Agent stop short of refusing to present the offer but made it very clear that I would be wasting my time and the Agent's. The home is South of 30-A in an area where the Sales price versus List Price ratio is in the 88-90% range ( I think ). I've worked long and hard with this Agent to find this property and have a good working relationship, but frankly I'm flabbergasted at this attitude.
An alternative would be to use an attorney specializing on real estate and write your own offers. A lawyer won't have an interest in raising the price up, and will make all the low ball offers you want since they get paid by the hour. (Now I'm going to duck) :leaving:
got any pics?
Which brings up another good point. Always get the seller to counter. I've heard of sellers countering lowballs with the asking price or very close to it and buyers coming back with a signature. Some people just want to try and get a bargain. No reason a seller or the agent should have a problem with that.
:scratch: ............................
Beach Lover
I think your agent is being a bit lazy...some are really skilled at the negotiation stuff and some
aren't. We sold a lake house in Tenn this spring that was the result of a low ball offer from the
buyer. Initially we felt a little offended...thought about it and got back to them a week later and
the result was better for them but okay for us. The realtor did a really good job of smoothing over
the potential ego fall out! Emotions had to get put aside and on a practical note we realized it
might be our ONLY offer...we were very motivated to sell so we could buy in SoWal (and we did!
And thats a whole other real estate story).....
aren't. We sold a lake house in Tenn this spring that was the result of a low ball offer from the
buyer. Initially we felt a little offended...thought about it and got back to them a week later and
the result was better for them but okay for us. The realtor did a really good job of smoothing over
the potential ego fall out! Emotions had to get put aside and on a practical note we realized it
might be our ONLY offer...we were very motivated to sell so we could buy in SoWal (and we did!
And thats a whole other real estate story).....
SoWal Expert
If I was selling I would set a price based on what I want/need to get, then jack it up a little so that there is room to negotiate but still meet the price I need.
A little wiggle room in the price to allow for negotiating is NOT why there are so many over priced properties on the market!
I agree that a "little wiggle room in price" won't stop people from looking. The statement in bold above, is what why I say that we have so many over-priced properties on the market. People price the property at what they want or need to get, plus some, rather than pricing it at a price the market will support. Many people who are selling today, "need" to break even, but if they bought in 2004 or 2005, the chances of that happening in today's market is slim to none.
SoWal Expert
True, but implicit in my statement is that I am selling a house or property that I bought at a reasonable price and that I could AFFORD, not a cache of gold bars!
Several years ago a local made a great comment on the current flipping frenzy "I just want to have a chair when the music stops." Far too many folks didn't think to plan for when the music stopped!
Several years ago a local made a great comment on the current flipping frenzy "I just want to have a chair when the music stops." Far too many folks didn't think to plan for when the music stopped!
Banned
There's no such thing as a low ball offer. When you are a seller of something that is $100,000 or more you are jumping into a pretty big business.
That's why they call it an offer. If your feelings get hurt you may act in a way that stands in the way of your primary goal. There is always your right to counter, and so long as you don't narrow the negotiation down to just one thing no one has to lose. When you narrow negotiations down to price alone you have set up a climate where one party is going to lose and the other is going to win. That's probably not good Karma.
Many, many times offers that are substantially lower than list price turn into sales.
That's why they call it an offer. If your feelings get hurt you may act in a way that stands in the way of your primary goal. There is always your right to counter, and so long as you don't narrow the negotiation down to just one thing no one has to lose. When you narrow negotiations down to price alone you have set up a climate where one party is going to lose and the other is going to win. That's probably not good Karma.
Many, many times offers that are substantially lower than list price turn into sales.
directionally challenged
So psychologically:
It doesn't even matter if the list price is already A Deal...
if what everyone really wants is TO Deal
.
.
.
in order to feel like they got A Steal?
Yes Dune-Ahh that's been my experience. check that stats and see how many full price sales there's been. It's not that an agressively priced home won't sell, it's that our area is a lot of people buying for "investment". Buy low, sell high. There are so many distress sales right now that the selection for a buyer is phenomenol and there are properties out there that are selling with significant equity to the buyer. There are even properties that can be bought with cash flow or break even if they do the property management themselves.
Properties on the North side of 98 are a different buyer, of course. These are mostly people who are buying a home to live in there so the buyer's motivation is a little different and I think they are not "as" motivated by profit. The problem with that group is that I'm finding most of the people looking for a full time residence want to spend under $250K and there is a LOT of inventory that can be bought in that range.
There are soooo many short sale listings and when they become REO's, it's not gonna get any better. I hate this whole "short sale" thing. Have you seen that $6 million dollar home in Destin that the agent has listed for $10K? MLS #497144 The bid was up to $2.1 million when we last checked. The recorded mortgage is $4 million! NO WAY the lender would ever take $10K but people apparently believe they will.
I can't tell you how many calls we've had on that home and I can't believe that ECAR hasn't pulled it. IMHO, these kind of price misrepresentations are what's hurting our market. There is a ridiculous amount of properties being marketed as short sales and realtors are pricing anything they want on these short sales just to get offers. So when buyers search and they find that 3000 sq ft home listed for $229K, that's what they are asking to see. It's just a crazy time to be selling.
Hold on a minute. I don't recommend that anyone write contracts without contingencies. I never said that, and think you will see that if you re-read what I wrote. I even went so far as to state that I don't think it is worth the risk, considering the little gain for the HUGE risk. The question posed was, what can make an low-ball offer look better to sellers. My answer is that if you don't want to risk no contingencies, make your offer higher.
Thanks for clarifying SJ. Didn't mean to imply that you were recommending it. I know that you're a smart cookie ;-).
Initially we felt a little offended...thought about it and got back to them a week later and the result was better for them but okay for us. The realtor did a really good job of smoothing over the potential ego fall out! Emotions had to get put aside and on a practical note we realized it might be our ONLY offer...we were very motivated to sell so we could buy in SoWal (and we did! And thats a whole other real estate story).....
first
. You're exactly right conch. Ego is such a deal breaker in many cases when a win/win deal could be negotiated. But when agents hang up on offers, refuse to take them etc., they hurting their client. There was a day when these hard ball strategies may have been effective with inexperienced agents but those days are gone. Listing agents should be thrilled to get any offer and should do everything they can to help their seller accomplish their goal. If their goal is unrealistic, they need to tell them that. None of us know what will sell a home in this market but a mindset that a piece of real estate is anything "special" won't do it. Exposure, exposure, exposure of a bargain priced property and maybe you'll get an offer. There was a day when just being in the MLS would get exposure but with so many realtors struggling, it seems that I'm seeing more and more "inhouse" sales. We have even had a very "popular" realtor call us about a hot priced listing we had and tell us that they wouldn't show it unless we raised the commission. We split all commissions 50/50 and the total commission was 4% so it's not like we were trying to take the lion's share or ask them to show it for nothing. I couldn't believe it when my agent told me that! Who are some of these realtors working for
? That kinda stuff upsets me so much and is what gives people a bad taste about realtors.Beach Fanatic
There are so many distress sales right now that the selection for a buyer is phenomenol and there are properties out there that are selling with significant equity to the buyer.
You are kidding, right????
Since when do you walk into significant equity in a property that you buy that has been sitting on the market unsold for 6, 12 or even 24 months. If there is a higher price to be had, the seller will get it, not the buyer. The buyer is paying MARKET for the property and the market isn't moving up these days, it's still headed down.
If these "lucky" buyers actually tried to turn around and sell the property for say 20% higher than the price they just paid (ie:to recover this so called instant equity), it would more than likely languish on the market just like it had been previous to this buyer snatching up the property to cash in on this "instant equity." In addition, this "lucky" buyer would likely get offers at least 10% below list eating up half of this found equity. Oops, and then the real estate commissions and transfer tax would eat up the rest of the "equity".
This sounds like someone is hoping that 2008 will look like 2002, 2003, and 2004 all over again. People hoping to flip properties they just bought at a profit. Unfortunately, the investulators have disappeared.
No such thing (except in the most rare of occasions) as instant equity in real estate--especially considering commissions and other closing costs that would need to be covered upon resale.
If there is instant equity occurring in this market, please provide some examples. I don't even think the recent low auction sales at Sanctuary created instant equity. They just set a new floor on prices in the development.
Edited
SoWal Insider
Yesterday, I tried to get my Agent ( not the listing Agent ) to present an offer of 83.5% of the listing price. My Agent told me that "the Seller would probably ignore it and not even counter. I would be negotiating with myself". The Agent stop short of refusing to present the offer but made it very clear that I would be wasting my time and the Agent's. The home is South of 30-A in an area where the Sales price versus List Price ratio is in the 88-90% range ( I think ). I've worked long and hard with this Agent to find this property and have a good working relationship, but frankly I'm flabbergasted at this attitude.
Kick your "agent" to the curb like the flaming fudgebag that they are and get yourself another--problem solved.
.
Beach Fanatic
The selling prices I have seen on many properties lately has been lower than your offer price. You need a new realtor.
Do tell!!
Beach Fanatic
Yesterday, I tried to get my Agent ( not the listing Agent ) to present an offer of 83.5% of the listing price. My Agent told me that "the Seller would probably ignore it and not even counter. I would be negotiating with myself". The Agent stop short of refusing to present the offer but made it very clear that I would be wasting my time and the Agent's. The home is South of 30-A in an area where the Sales price versus List Price ratio is in the 88-90% range ( I think ). I've worked long and hard with this Agent to find this property and have a good working relationship, but frankly I'm flabbergasted at this attitude.
You've worked long and hard or your agent has worked long and hard? Good chance your agent knows the bottom line price but may have legal restrictions against disclosing that price to you. The wasting time comment sounds like code for I know what it's going to take and you aint there. Your agent might be tired of driving you around at $4.00 a gallon and might simply wish to write something they can actually close and get paid. I doubt in this market it has anything to do with the agent trying squeeze out a few more bucks in commission.
Banned
You are kidding, right????
No such thing (except in the most rare of occasions) as instant equity in real estate--especially considering commissions and other closing costs that would need to be covered upon resale.
If there is instant equity occurring in this market, please provide some examples.
We sold a home in Watersound West Beach late December. I showed it to someone I know in February and they offered to purchase the home from the owner for $50,000 more than they bought it for. No commission, quick close, and the new owner wasn't interested in selling at that price.
It's not much to some, but I thought it was acceptable income for 2 months ownership.
Beach Fanatic
You are kidding, right????
No such thing (except in the most rare of occasions) as instant equity in real estate--especially considering commissions and other closing costs that would need to be covered upon resale.
If there is instant equity occurring in this market, please provide some examples.
We sold a home in Watersound West Beach late December. I showed it to someone I know in February and they offered to purchase the home from the owner for $50,000 more than they bought it for. No commission, quick close, and the new owner wasn't interested in selling at that price.
It's not much to some, but I thought it was acceptable income for 2 months ownership.
Did it close? Nope-no instant equity there. You never know what can happen between verbal offer, written offer and close.
Banned
Did it close? Nope-no instant equity there. You never know what can happen between verbal offer, written offer and close.
You are probably correct. Thanks
Banned
Did it close? Nope-no instant equity there. You never know what can happen between verbal offer, written offer and close.
I've been thinking about your answer for a few while I was reading mail and posts. Isn't it instant equity if a person buys a home, there bank appraises it at 150,000 more than the purchase and someone offers to purchase it for 50,000 above their purchase price?
Is it only instant equity if you sell it to someone else? I'm not sure it would be called equity if you don't own it anymore. I think equity is when you own something and it is encumbered for less than it's worth. That difference is equity. I think what you were describing as equity is actually called profit.
What do you think?
directionally challenged
You are kidding, right????
Since when do you walk into significant equity in a property that you buy that has been sitting on the market unsold for 6, 12 or even 24 months. If there is a higher price to be had, the seller will get it, not the buyer. .
I need to disagree with you on this one. Unfortunately, not only "investulators" are going broke in this economy. There have always been "distressed" property owners where illness, death or job relocation necessitated them selling their home. In the "good" years, these sellers could still sell their home quickly and make a profit. During just the 2nd quarter of 2008, approximately 300,000 hard working people were laid off and salaries haven't kept pace with the rising costs of groceries, fuel and healthcare. Lots of people are losing their homes that they have owned for years due to situational changes. They have a choice, take a lowball offer and sell it for less than it's appraised priced (in todays market) or give it to the bank. That's why it's called a "buyer's market". What in the world makes you think that a distressed seller is in any position to hold out for their full equity in a market with so few buyers?
The buyer is paying MARKET for the property and the market isn't moving up these days, it's still headed down.
Well I don't have a crystal ball so I can't say if it's headed up or down and some areas are stronger than others. I've plotted the average sq ft price of sales in seacrest beach for the past 2 years and it appears that prices have stopped dropping and may be headed upward. We'll know a little better towards the end of the year but many people are watching this data very closely to buy before prices go up. I'm working on additional community trends and will continue to closely watch the market.
If these "lucky" buyers actually tried to turn around and sell the property for say 20% higher than the price they just paid (ie:to recover this so called instant equity), it would more than likely languish on the market just like it had been previous to this buyer snatching up the property to cash in on this "instant equity."
You comments appear somewhat sarcastic "instant equity" and "lucky" buyers are mischaracterizations of what i stated. I never said a person could flip property that they just bought. I'm not sure where you got the idea that anyone is looking to flip a property in 2008. I made no reference to flipping anything. Successful investors understand that the real estate market is a long term investment.
No such thing (except in the most rare of occasions) as instant equity in real estate--especially considering commissions and other closing costs that would need to be covered upon resale. If there is instant equity occurring in this market, please provide some examples. I don't even think the recent low auction sales at Sanctuary created instant equity. They just set a new floor on prices in the development.
Equity is the monetary value of a property or business beyond any amounts owed on it in mortgages, claims, liens, etc. I'm not sure why you're extrapolating this simple statement into real estate commissions, flipping, closing costs on resale etc. My statement is accurate. I'm assuming that you realize that the buyer pays for the appraisal and it's not public knowledge but I've asked the selling agent to see if she can get the appraised price on our most recent sale in Carillon. The sale price was $860 Cash. I know that the appraiser told her that the sales price was well below what it will come in at and that a comparable property just appraised at $895 and didn't have a pool which our sale did.
The term "significant" is subjective and what may be significant for one may not be significant to you. IMO 50K (or 5%) on an $860 purchase is significant in todays market. On a financed property, the return on investment is very good if you put down 16-20K and it appraises for 50K more than you paid for it.
Fisher, you certainly can do whatever you want and choose to think whatever you want but misrespresentation and sweeping statements like "If there is a higher price to be had, the seller will get it" and "the market is still headed down" are just not cool. It's your perogatie to live in your skepticism but some people are interested in facts. I didn't post to elicit a debate based on minutia or unfounded statements. I merely related my experiences and observations.
Edited
Beach Fanatic
Owners/Realtors - GROW UP!
Realtors- ask your Owners what is a true sale price subject to the major parameters in a Sale Contract.
Buyer Cash
Closing within x Days of Written Offer
Etc.
Owners: Give your Realtors the sale numbers; call them if things need to be modified.
That's it, verbal offers are tested by Realtors to make certain nothing has changed in te Owner's range of requirements.
Realtors- ask your Owners what is a true sale price subject to the major parameters in a Sale Contract.
Buyer Cash
Closing within x Days of Written Offer
Etc.
Owners: Give your Realtors the sale numbers; call them if things need to be modified.
That's it, verbal offers are tested by Realtors to make certain nothing has changed in te Owner's range of requirements.
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