Profile picture for tricerealtor22

Excuses for a low ball offer

It needs paint and carpet, and to update the kitchen bath etc.  Was a time when the sellers would give a carpet allowance for the buyer. In this market you can buy a flipper house with new carpet and paint probably priced slightly above the market value or you can buy under market value and do it it your self. But it will not be bought for half price because you think it needs remodeling! Slamming the list agent with why you offered below market value, may not get the response you want. But someone who offers a little below and writes how much they love the home might just get it done!
  • February 27 2012 - Temecula
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Answers (19)

Best Answer

Profile picture for Lisa and Goran Forss
Great comment, Tere. 

We often have relocation buyers coming from states where they have 12-18 months of inventory and telling us they'd like to make an offer on this turnkey Temecula home listed at $350,000.  "We are pre-approved for $300,000 and we would like to make an offer at $275,000 with 20% down, and we're willing to go up to $300,000K max".  First thing I do is to bring them in to the office and show the inventory in Temecula and what homes are listed and selling for.  An hour of market update saves the buyer lots of time.  We generally show the something like this:  
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  • November 18 2012
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If it's low ball it's low ball (meaning it's just not enough to purchase the goods).  Give the person a polite explanation and then let them walk.  There is no need to get heated over someone who can't, or is not willing to afford a product.  Just explain the situation nicely and let them walk.
  • February 04 2013
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When making really low offers you are risking the chance that the seller will not take you seriously.  If the seller thinks that you are wasting their time they may just move to the next offer without negotiating a better purchase price with you.  If you find a home you really like be responsibly in making your first offer.   
  • February 28 2012
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Profile picture for droopyd
As a buyer, we have made low ball offers.

As a seller, we have received them.

Ironically, when all was said and done -- months or years later when the properties finally sold -- the low ball offers were very close to the actual sales prices!
  • February 28 2012
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I also don't want to encourage lowball offers on my listings. I appreciate that some agents would like to see any offer on some of their listings some of the time; I am not one of those agents.
  • February 27 2012
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Cindy, I'm just talking about the way I do things. I can't control the way other people do things. 
  • February 27 2012
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Profile picture for Cindy Quinton
Mack that style certainly makes sense. However, buyers shopping in any price range tend to expect certain things in the homes they are looking for in that price range. If the home does not include that set of amenities, offers from that crowd won't be presented.

Now if that house listed at $400,000 happens to be surrounded by houses that have sold and are being listed for the $300,000 price range, and buyers happen to go see it on a whim or at an open house, and decide to make a $300,000ish offer, I don't think it's fair to call it a low ball offer.

I'm developing the idea that not all agents operate the same way.
  • February 27 2012
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You're right, Cindy, and I'm not going to encourage people to write 20% below list price on my listings. 

Everybody has a different style. My style - I don't care who knows this, by the way - my style is to collaborate with the seller in attracting buyers who are shopping in a particular price range. If I'm listed at $400,000 - I'm not looking for people who want to pay $300,000. Sorry, Dan. Wait until we come down to $325,000.

I don't need "the market" to educate my seller. They hire me to keep them informed, and they're smart enough - believe me, I work with a smart crowd - so they don't need to negotiate with lowballers. Really, honestly - get this: I'm listed at $400,000 and you come in at $300,000 - we counter at $400,000. (Probably. Count on it. Subject to seller approval!)

Understand this, though - I'm not saying that other agents with different ideas are wrong; I'm simply sharing my philosophy and my practice, and you don't have to like it - remember, I didn't submit it for your approval. 
  • February 27 2012
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Profile picture for the_country_hick
Suz, "And, let's face it. Some people are used to getting their way through intimidation."

That sounds like sellers putting to high a price on their property trying to force a higher sales price. That is what you meant right?

I see no way a written offer given by your own listing realtor that was handed to them by a different realtor that was written by a hopeful buyer can be seen as intimidation. Being 3 people away from the one who made the offer has a way of removing all intimidatory effects that might conceivably exist.

Saying that a buyer should not offer 20% less than listing and saying these reasons are excuses could also be seen as a form of intimidation. I guess it all depends on whose shoes you are wearing.
  • February 27 2012
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Profile picture for Cindy Quinton

@ Mack, I can understand an agent feeling a little offended when they have worked to come up with that exact fair market price...at least a little. But I see stuff on the market that EVERYONE knows is overpriced, not a little, but a lot, sometimes almost double the value. It's hard to shoot the messenger if it's been sitting there months with no offers, regardless of the amount.

  • February 27 2012
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My definition of lowball...

Lowball is a tactic used by some buyers to probe weaknesses. There are agents, too, who regularly use this tactic. The offer might be 20 percent or below the stated price. They don't mind if the offer is rejected right off the bat because they'll just move on to the next house. The tactic can backfire, though, if the buyer is genuinely interested. That appears to be the case here.

We do a good job when we find a home a buyer loves and we are able to negotiate a good price. On the other side, we aim to get the best price possible for a seller's home when we take listings. I live and work in Longmont, Colorado. We're just a few miles up the road from world famous Boulder, Colorado that is the darling of the media. The recession has barely touched Boulder. The story is a bit different over here in Longmont - but not a lot.

You can't hardly blame sellers for being emotional. Sellers were emotional when they got the sticker shock of what their home could probably be sold at. Remember, too, moving is stressful. I suppose buyers can become emotional, too, if they have been shopping for a while.

And, let's face it. Some people are used to getting their way through intimidation. 

Sellers, it is still a buyer's market. But things are not looking as bad as last year.

The Longmont market is coming alive. The weather is warm and that means more people are out shopping. There is an inventory shortage or one developing in many areas. 

It's unfortunate that there are people who are disrespectful. Hang in there, Tere.

Best,
SuZ
PML of Longmont



 
  • February 27 2012
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Profile picture for Vanessa Gray
I agree with Rita and Cindy. Present the offer because you never know what a client will take if the house has been on the market for a long time. With an offer you are closer to the price then with out one
  • February 27 2012
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Profile picture for the_country_hick
I either offer what I can afford with no room to offer more OR I offer what I think the place is worth. I might have $189 Billion but why should I pay $350k on a house I only think is worth $225k?

If a buyer does not see the value they offer the value they do see that house as being worth to them. Comps may be higher but the buyer is not someone who cares about the comps. They care about what they will be willing and able to pay.

Now what excuses do we have for those who list far to high and then never get any offers?
  • February 27 2012
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Profile picture for Rita Walker
I agree Cindy. Any offer is a starting point.
Why would anyone be offended that someone is interested in buying their home.

By the way, there are homes all over the place listed by Realtors and especially by FSBOs that are over priced!!! No comps to support pricing. Listed it at what the seller wanted as a sell price, just to get the listing. Home on the market long enough that the neighborhood comps have changed for the worse.

I have had 2 recent offers on homes that the price was not supported. I asked the listing agent for the comps they used and neither ever produced them.
  • February 27 2012
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Profile picture for JamesKuang
You can always counter offer.  They wouldn't bother putting their time to submit their offer if they didn't like the property.  Just counter offer at the listing price and see where they come back at.  That low ball offer is probably just their way of "testing the water" and they don't actually expect to get it at that price.
  • February 27 2012
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The listing agent should prep the sellers for all kinds of offers, especially when the house has been on the market for awhile, needs updating or is over priced.  Everyone is out to get the best deal for themselves.
  • February 27 2012
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A real estate agent should NEVER be offended at ANY offer, because it is not your decision whether to accept the offer or not. 

Basic real estate law 101 and the Realtor Code of Ethics:  ALL offers SHALL BE presented to the seller in writing.

If the listing agent is not properly preparing the seller for the current psychology of the real estate market and gets offended at an offer, they are not doing their job.  If a buyer doesn't feel they are getting a steal, they will move on to something else and you'll be left sitting on unsold property.
  • February 27 2012
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I have often told people that fixer houses are discounted twice - listing agents price them, taking condition into account; buyers look at the listing price and subtract the cost of work with a little more taken away for good measure.

Cindy, buyers are offended when homes are overpriced, you should only hear them! The fact is, we are talking about emotions, and most people make the decision to buy and sell homes emotionally.

I'm offended, as a listing agent, when we get a low-ball offer, because, frankly, I think the selling agent or the offeror (they're sure not a "buyer" yet) thinks I'm stupid enough to think that $300,000 on a $400,000 listing is a "starting point." No, $400,000 is the starting point. $300,000 is an opinion that you might as well keep to yourself, because I will advise my client to reduce the price to $375,000 before countering you below that.

  • February 27 2012
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Profile picture for Cindy Quinton
I have never understood the idea that an offer is somehow personallly offensive. The person offering for the property obviously likes it, they are simply trying to get it for what they think it is worth, and possibly all they have to pay. The seller has all the cards, they can simply say no thank you, or counter offer.

Wouldn't it be ridiculous if buyers in general were offended when a home goes on the market overpriced?


  • February 27 2012
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