Low Ball Offers, Not All Homes Are Distressed Properties

Please do your homework and get educated about making low ball offers. I have been on both sides of a transaction that included a low ball offer and have learned a great deal of what to and not to do.

I will NEVER forget my first low ball offer on a home that my Buyers wanted to make. I couldn't find any reason to offer a lower price than it was but my clients insisted that they low ball. "Lets ask 20% less because that is what all the TV shows say to do" is what they told me. This was my clients' dream home. They absolutely loved it but wanted to see if they could get real deal. I advised strongly against it but did as they asked. Days went by with no word from the sellers agent. Finally, the agent called me back to tell me that they are rejecting the offer and do not want another offer from my clients. WOW! I was not expecting that. I had the unpleasant task to tell my clients. They were not happy to say the least. I asked the other agent why they don't want another offer from us, you know what he told me? Because he has been in Real Estate for 50 years and knows that my clients will NEVER be satisfied~just by looking at the offer received. His clients were totally offended.  After about 30 more homes and a closing that almost didn't happen due to my Buyers, I realized that he was right. From that point on, I advise my clients in advance about putting in offers.

Some things to consider are:

Do your homework:

1.  Is the home priced correctly? Is the home in distress? If it is, advise your client of those facts. You will have a better chance to have a "low ball" offer accepted if the home is a short sale or foreclosure. 

2. Are you adding in concessions to your "low ball" offer?If you are, it probably won't happen? Not only are you asking a much lower price on a home but, to add salt to the wound, you want the seller to pay for closing costs/prepaids/escrow and a home warranty. Rejected!

3.  Low-ball offers that are accepted are not good to the neighborhood.Homes that are purchased at a significantly low price than its real value have a negative impact on the neighborhood's real estate market~It lowers the value of the homes within the neighborhood. Because of the strict CMA's the banks use (they only go 3 months out in our area), the house sold will become a comparable item for making CMA's. New sellers would consider the selling price of your home so that they can name their price tags. Moreover, buyers use them to lever their offer. If you sold it cheap, future offers for homes in your neighborhood will also be within the range price of your acquisition.

4. Earnest Money.A seller will be more willing to work with a buyer if they give a larger amount down for earnest money. Don't skimp here. If you don't have the money to put down, you are not coming across to the sellers like you are serious buyers and seem like you are just "testing the market" as a Buyer.

5. And this is a doosy! If you are already working with an agent, don't call the Sellers' agent and say that you are not working with any other agent to get information about the home (information that the buyers agent could have found out) and then proceed to state that you had put in an offer on another home which was rejected by the Seller because of low balling!?!?!

TRUE STORY! Got the call. A person called and inquired about one if my listings. The first thing out of my mouth was "are you working with another agent?" Her reply was "well, not really." She had seen my listing on the MLS for many months and noticed the significant price drop ($10,000). I told her all about what the house has to offer and that the Sellers wanted the home to be the best priced home in the neighborhood (which it was). She was extremely interested but then proceeded to tell me that she fell in love with another home recently and offered $149,000-which was way below what the listing price way. Told me that the Sellers countered with $10,000 morethan the asking price (which they had already dropped $25,000)! YIKES. She wanted my opinion as to why that would be. I told her that most sellers don't like to be low balled and they probably added the price of all her concessions into the price of the home that was already a good price.  I then ask her who her agent was? She tells me. I tell her that if she would like to go see the home, to give me a call. Yep, you got it. She was playing us both and was working with another agent (after a quick phone call on my part). Next thing I know, WHAM, got the same kind of low-ball offer on my property from this Buyer~which happens to be $15,000 less than her rejected offer.

Agents, please also advise your clients to not speak with the opposite agent-even to just get information, That is YOUR job. Buyers, you have a way of letting things slip pertinent to your offer.

A Buyer and their Agent need to communicate. In today's Buyer's market, most home prices are dropping to what they should be. Save the low ball offers for those homes which are over-priced, short sales or foreclosures.

Happy House Hunting.

Diane Casale, Coldwell Banker First
 

 

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Comment balloon 109 commentsDiane Casale • September 06 2010 05:00PM

Comments

Diane,

Buyers and sellers for that matter really need to not watch so much TV.  Good grief and I cannot tell you what a headache Zillow's Zestimates are.  If a buyer really wants to not have the house then by all means insult the owner.  

Posted by Larry Story, Total Care Realty, LLC, Greensboro, NC Real Estate (Total Care Realty) about 8 years ago

Those are some great tips Diane. I also talk to my clients upfront about what is acceptable and what is not before I even write the offer.

Posted by Tina D Saporito, Your Dedicated Palm Desert, CA Realtor Since 2005, Call (760)799-8460. www.JustListedinPalmDesert.com (Ronald Christopher & Associates. Proudly serving Palm Desert, La Quinta, Indio, Rancho Mirage, & Palm Springs.) about 8 years ago

Gutsy things some people do, don't they, Diane? I wonder if that buyer thought you really wouldn't put two and two together! Anyway, great post...and although I know most buyers want to think they got a "deal" there are more aspects to getting a "deal" than purchase price...how 'bout these LOW interest rates we have nowadays? :)

Leilani

Posted by Bob & Leilani Souza, Greater Sacramento Area Homes, Land & Investments (Souza Realty 916.408.5500) about 8 years ago

Hi Diane,

In my market, South Florida, low ball offers are not working in any situation....

Bank owned properties received upwards of 25 offers and sell quite often for more than listing price so a low ball offer has minimal chance of getting accepted.

The short sales are not much different, especially if priced correctly to begin with... I often receive 2 or 3 offers for my short sale listings and they sells for listing price or very very close to it.

The same applies for non-distressed listings... the market is good and buyers are paying what the sellers want to have their dream home.

Posted by Patty Da Silva, Davie, Southwest Ranches Cooper City, Plantation, Weston, REALTOR, Top Listing Broker (BROKER of Green Realty Properties® - 954-667-7253) about 8 years ago

Larry~You are right! Guess what? I watch those shows and, since I know better, I just shake my head.

Tina~You will always get those clients who listen to everybody else BUT their agent. Good for you on doing something right!

Leilani~Thanks. You are right. With interest rates being so low they don't really need to low ball.

Patty~Same here. The foreclosures and short sales are priced to sell here. They don't need to be low balled. Actually, most homes prices here are dropping to great numbers (to where they should be).

Posted by Diane Casale, REALTOR®, ABR®, CNAS®, SNP, Selling North Alabama (Coldwell Banker First, Huntsville, AL) about 8 years ago

Hello Diane;

Yikes- consumers have gotten more aggressive, but this seems to stretch any semblance of reasonableness. Doesn't this scream, "I don't play by any rules and you can't trust me"?

Posted by Brian Rugg, Sun City TX Real Estate - Georgetown, TX Real Est (Rugg Realty LLC Sun City Texas 512-966-3200) about 8 years ago

 Brian~yes it does! It is just par for the course in my books. Just wait until they get their counter-offer. lol.

Posted by Diane Casale, REALTOR®, ABR®, CNAS®, SNP, Selling North Alabama (Coldwell Banker First, Huntsville, AL) about 8 years ago

I cringe when I find my clients talking to the other side. A fast way to unravel any good attack plans.

Posted by Rob D. Shepherd, Principal Broker ABR, GRI (Windermere/lane county) about 8 years ago

Attempted low-ball offers are all too common these days unfortunately.  We advise our sellers to always counter back even if it is at list price to get a better idea if the buyers are really interested in negotiating for a home or just looking for an investment and great deal.

Sue of Robin and Sue

Posted by Robin Dampier REALTOR®, Hendersonville & Western NC Real Estate Source (Coldwell Banker King) about 8 years ago

Rob~I totally agree. I actually tell my clients that is one thing I do not find acceptable. I am their agent and will do one heck of a job if they let me.

Sue~We are countering back-the other side just won't like it. My client said "If they have the _____ of offer this, than I have the ______ to counter back with this." lol. I love the attidude of my client.

Posted by Diane Casale, REALTOR®, ABR®, CNAS®, SNP, Selling North Alabama (Coldwell Banker First, Huntsville, AL) about 8 years ago

Too much media, some folks think that everyone is desperate to sell, then of course, there are sellers who think the market is still where it was 2 years ago.  Somewhere between those two extremes makes for bettering pricing of property.

Posted by John Sweeney (Crye-Leike Elite Realtors) about 8 years ago

Diane - Been there.  It's tough to have to put on a sunny smile and present an offer that you know is ridiculous because your it's your legal duty as the agent to do so.  I've gotten used to saying that it's my job to offer their highest and best offer but the farther they are from the list price, the bigger the likelihood that they will lose the opportunity to purchase.  It's helped a few times recently when I just couldnt stomach the offer I was asked to write. Thanks for the post!

Posted by Peter Clay - NoCo Home Team, Sell Smart, Buy Wise & Live Well in Nrthn Colorado (Fort Collins Realtor @ C3 Real Estate Solutions) about 8 years ago

Diane - I think you hit the nail right on the head!  Buyer's agents should be running comparable listings and know the market before advising on price.  If the property is priced correctly there is no reason to lowball the offer.  And I can't tell you how often I get phone calls from buyers where they state they are not working with an agent and then I find out in a round about way that they really are.  Not a good way to start a relationship if the buyer really does want to make an offer.

Posted by Lori Mode, Real Estate Made Simple (Keller Williams Realty - Elk Grove, CA Homes for Sale) about 8 years ago

Even if the property is a foreclosure if it's priced well a low ball offer will be rejected flat out. Especially if it's new to the market.

Posted by Cameron Wilson, The Short Guy - Murrieta,Temecula,Menifee Californ (Labrum Real Estate) about 8 years ago

Great tips indeed !  Buyers at the end of the day just need to go through their process.  Sometimes they have to lose one or two properties before they get it.  Along the way hopefully they get educated by a good buyers agent !  Great blog Diane !  Just subscribed to your blog !  : )

Posted by The Somers Team, Real People. Real Dreams. Real Estate. (The Somers Team at RE/MAX Access) about 8 years ago

I worked with a Cash Investor recently, who went Low Ball on a number of inexpensive properties (none of them were REO or Short Sale). 

When I say low, I am talking 60 -70 cents on the dollar.  Cash, quick closing contingent only on inspections and clear title.

He had no emotional attachment to any of these houses. 

I informed the Listing Agent(s) that this offer(s) was truly "take it or leave it; do not counter".  I did not attend the Offer Presentation, I left that to the Listing Agent(s).

Most of the offers were rejected outright (some with choice words from the LA) -    but two of them were Accepted, the Investor closed on both.

Posted by Fred Griffin, Licensed Florida Real Estate Broker (Fred Griffin Real Estate) about 8 years ago

The media still gives buyers the impression that every seller is willing to give away the property.  Unfortunately for the buyer and the agent, it takes losing a few homes for the reality to set it.

Posted by Rodney Mason, FHA 203(k) & HomeStyle Renovation-AL,FL,GA, SC, TN (On Q Financial) about 8 years ago

I had a buyer who insisted on low-balling everything against my advice. She lost a home she was in love with. Two weeks later the same model around the corner came up as an REO, though in slightly less pristine condition, and she saw some reason this time and got the home. Despite multiple offers on everything, she still thinks I should have helped her get a better deal on it. Grrr - !! She would have lost that one to a better offer, too! I'm still friendly with her but she still whines about losing that first one every time I see her! She also still whines that property values have fallen further since she bought and she should have waited! As if that were my fault! I jokingly told her that next time she buys a home, she needs to call the Psychic Friends Network for an agent, and to get me some good tips on the stock market while she's at it. You just can't win with some people.

Posted by Virginia OnullConnor, Realtor - Temecula, Anza, SoCal (Realtor®, Photographer, Artist) about 8 years ago

John~You are right. The market is definitely NOT where it was a few years back. The public needs to be aware of that. Thank you.

Dee~Thank YOU for your response. I feel much better knowing that I am not the only one.

Lori/Bruce~not a good way to start any kind of relationship. Thanks.

Cameron~You are right! They are pricing the foreclosures at great prices at market value right now. No need to low ball.

Christopher/Stephanie~Thank you so much.

Fred~WOW! Good for your client. Investors have their pick right now. Keep up the good work.

Rodney~I have been dealing with this for some time now. Buyers definitely get the impression that since it is a Buyer's market they can determine the selling price...WRONG. Thanks for responding.

Posted by Diane Casale, REALTOR®, ABR®, CNAS®, SNP, Selling North Alabama (Coldwell Banker First, Huntsville, AL) about 8 years ago

Virgina~That made me LAUGH!! See, you can't please everyone all of the time! Thanks for responding.

Posted by Diane Casale, REALTOR®, ABR®, CNAS®, SNP, Selling North Alabama (Coldwell Banker First, Huntsville, AL) about 8 years ago

WHOOHOOO...thank you all for my SECOND Featured Post!! YEAY!!

Posted by Diane Casale, REALTOR®, ABR®, CNAS®, SNP, Selling North Alabama (Coldwell Banker First, Huntsville, AL) about 8 years ago

My definition of a lo ball offer is somethingat least 10% less than market value as determined by my cma. I will submit any offer a buyer wants to make but only two lo ball offers. For the folks that cant learn that property sells for market value (no more and no less) I have developed a buyers brokers agreement that calls for a $2000 non refundable retainer.

If you reject my advice twice without success; you will either follow my advice after that, or pay me $2000 for my time.

Posted by Ron Parise (LocateHomes.com) about 8 years ago

Diane, Lowball offers are tricky.  Many buyers have read too much. Not all areas are distressed  For instance, in Naples, on the water or a luxury golf course,  where most of the owners were cash buyers and this is their second or third or FOURTH home.....well, they are not interested in any low ball offers.  In any market.  They are offended.  End of discussion.  They wait.

Posted by Marcia Hawken, Naples Luxury Specialist (WILLIAM RAVEIS ) about 8 years ago

In my opinion buyers have become far more greedy than sellers were at the top of the market.  People don't realize that all this wheeling, dealing, and stealing just leads to a race to the bottom.  It's quite silly.  Good post Diane and best of luck to you.

Posted by Jerry Murphy, CRS, SRES, Anthem, Phoenix, and Scottsdale AZ Real Estate (Long Realty West Valley) about 8 years ago

An offer starts a negotiation.  As the listing agent who often receives low ball offers, I have educated my sellers to the fact that the media makes people believe they can make crazy offers, so don't take it persnally.  We have also countered higher than listing price and have also turned a low-ball offer into a win-win!

Posted by Marnie Matarese, Showing you the best of Sarasota! (DWELL REAL ESTATE) about 8 years ago

Funny but, I was going to say exactly what Marnie said!  I warn them and then we prove our list price and then work through it to make a deal.  The media is not good to us in that respect!

Posted by Debe Maxwell, CRS, Charlotte Homes for Sale - Charlotte Neighborhoods (www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310) about 8 years ago

Diane - I had a rant not too long ago about buyers who think our current market is a license to put pennies on the dollar offers in on non-distressed properties.  Bless you!

Posted by Peggy Noel, Bouchard, ABR, CDPE, SFR (RE/MAX Commonwealth) about 8 years ago

I totally agree with you and Peggy says it perfectly. Why do buyer do this? The media is the problem.

Posted by Debra Davis, Realtor - Atlanta, Decatur, Snellville, Loganville (Keller Williams Realty Atlanta Partners) about 8 years ago

You need to make sure your buyers are educated before you take them out.   20% below fair market value is ludicrous.    You should still make the offer, but why waste your time with clients who are unrealistic.  As a listing agent, we love all offers.   We had an offer that was coming in and even though we expected it to be really low, but it enabled us to call an investor and tell him we were getting that offer in and he got his offer in and we moved forward to get the house sold.

Posted by Yvette Chisholm, Associate Broker - Rockville, MD 301-758-9500 (Long & Foster Real Estate, Inc.) about 8 years ago

Thank you, but I got to tell you all the homework in the world with some buyers will not do it.  I have one that always puts in low ball offers he is an investor, and I need to tell you I have closed 4 deals with him this year so....

Posted by Ken's Home Team LLC. | 360.609.0226 | Portland, OR & Vancouver, WA Real Estate Team, - SOLD IS OUR FAVORITE 4 LETTER WORD - (Ken's Home Team LLC.) about 8 years ago

It is frustrating when people don't pay attention to price reductions.   We had a property reduced and people then want to low ball it.  Very frustrating for sellers.

Posted by Alan Bruzee (Long & Foster Real Estate, Inc.) about 8 years ago

The comments are very interesting, but I'd like to give my sense of what I see today.  I write feature housing market articles for www.realestatechannel.com.  I research markets around the country and have seen sales volume really collapse after June 30.  In Bridgeport, CT near where I live, there were a total of 7 closings between $70,000 and $150,000 in the nice north end part of the city (near Trumbull) for the two months of July and August.  That's seven closings in two months.  Six were either foreclosures or short sales.  We are talking $54-75 a square foot.  This is Connecticut, not Detroit.

More than half the current listers on zillow.com have refused to drop their asking prices in the last 18 months.  You brokers need to lean on your sellers and tell them to get real.  If most of them don't drop their asking prices substantially, the homes will just sit ... and sit.  I see ridiculously overpriced homes throughout CT all the time while prices crumble in the state.  I seriously doubt that things are better where you are.  Reliable Phoenix stats show the same thing there even though prices have already collapsed from the peak.

I'd like to see more homes sold.  Any home will sell if it's priced right.  In today's market -- after the tax credit expiration -- that means taking a good, hard look at the listing price.

Good luck!

Posted by Keith Jurow about 8 years ago

It amazes me that people come from all over to buy a home and they want to compare markets and let us know what they heard on TV about getting homes for 50 cents on the dollar. Show them a market analysis for the property they want to make an offer on and they still want to lowball. If I am the listing agent I have already prepared my sellers to the fact this may happen and to not take it personally but to counter back and just find out if they really want the home or just fishing.

Posted by Surprise Arizona Realtor Jim Braun Sun City Grand Active Adult Communities, Surprise AZ real estate Phoenix West Valley (Coldwell Banker Residential Brokerage Jim Braun Sun City Grand Az ) about 8 years ago

I'm not a real estate agent....just proud of my wife, Diane ! Excellent post, Kidd !

Posted by Johnnie Casale about 8 years ago

I've even had a buyer that was angry his offer was accepted...  He blew it when the inspection came around though...

Posted by Lane Bailey, Realtor & Car Guy (Century 21 Results Realty) about 8 years ago

A lot of Buyers think they can name their price.  If you represent the buyer, you certainly can do a CMA showing a realistice price.  Once you have done that, you can tell them, this is what the market shows.  Do you like the home well enought to buy it, or don't you care if you lose it.  

Posted by Jerry Morse, BBA,GRI (The Morse Company) about 8 years ago

 

In the case you are discribing - the buyer is totally without scruples and completely untrustworthy.  Unless they made a totally fabulous offer - I would hope that your seller would turn it down on that basis.

I just got a crazy low-ball on a property that I have for sale.  When the Buyer's agent said his client noted the condition of the kitchen and bath - I replied that the gutting of the kitchen and bath had been worked into the price and that a comparable unit fully redone had just sold for $55k more than we were asking.  The put in an offer for 20% less than our asking.  This is a coop!!! The wildest renovation in the world wouldn't come close to $55k let along the additional $50k this guy wanted off the price.  If this guy really wants this place, he will have a tough time because he has kind of poisened the pot.

Posted by Ruthmarie Hicks (Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605) about 8 years ago

 

In the case you are discribing - the buyer is totally without scruples and completely untrustworthy.  Unless they made a totally fabulous offer - I would hope that your seller would turn it down on that basis.

I just got a crazy low-ball on a property that I have for sale.  When the Buyer's agent said his client noted the condition of the kitchen and bath - I replied that the gutting of the kitchen and bath had been worked into the price and that a comparable unit fully redone had just sold for $55k more than we were asking.  The put in an offer for 20% less than our asking.  This is a coop!!! The wildest renovation in the world wouldn't come close to $55k let along the additional $50k this guy wanted off the price.  If this guy really wants this place, he will have a tough time because he has kind of poisened the pot.

Posted by Ruthmarie Hicks (Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605) about 8 years ago

Diane good article. It's good to see someone else from Alabama on here, and featured too! I just wrote a similar article about Alabama's land market and understanding what a "buyer's market" really means. Had a seller 2 weeks ago tell a potential buyer he could never set foot on his property again because his offer was so low. Congrats again on a good article.

Posted by Jonathan Goode (AlaLandCo (Land for Sale in West Alabama)) about 8 years ago

I think that you are right about explaining to your buyers the possible outcomes of low balling their "dream" home.  But it is also in the seller's best interest to consider offers and for the listing agent to be objective and not let the sellers reject or counter offer unreasonably due to being offended.  Sometimes it is the attitude on both sides of the table that ends up killing the deal or making it work.  Great post!

Posted by Karen Feltman, Relocation Specialist in Cedar Rapids, Iowa (Cedar Rapids/Iowa City, IA KW Legacy Group) about 8 years ago

Bring on the low ball offers. I see it as "fish on." Time to start getting these two sides together. Sometimes it just doesn't work but heck man don't shoot the messenger which is the other broker. 

I've see it all the time from both sides but never let it slow me down. I just had a buyer offer 50% of asking and it was accepted. Sooo....ya never know.

Posted by Steven Beam, Parker Colorado Real Estate (RE/MAX Alliance - Parker Colorado Real Estate.) about 8 years ago

Ron~WOW, $2,000 retainer?! Go get 'em!! Wonderful!

Marcia~ You are right, they get VERY OFFENDED.

Jerry~Thank you very much and you are right.

Marnie and Debe~exactly but try telling that to a seller who has already priced their home below the neighborhood (even after a total remodel). I do try to be the voice of reason and then go home and let it all out to my husband over a big glass of wine. lol.

Peggy~Thanks

Debra~The media is a HUGE problem in a lot of things-Real Estate is one of the biggest.

Yvette~You are correct. That will NOT happen again on my part. Thanks.

Ken~WOW, good for you. See, everybody want to act like an investor when they clearly are not.

Alan~You are right. The agent should pull the history, among several other things, of the house before counseling their client on an offer.

Posted by Diane Casale, REALTOR®, ABR®, CNAS®, SNP, Selling North Alabama (Coldwell Banker First, Huntsville, AL) about 8 years ago

Keith~Thanks for responding. You are right. I think that if more people would drop their home prices down to "pre-home buying hysteria" ~ where they should be, we would see the housing market pick back up. Huntsville is a little different than most markets. It came to a slowing right after the June deadline but has picked up a bit. What is crazy is that the homes priced in the $200,000 to $700,000 range are selling faster than the homes priced under $200,000. CRAZY TIMES.

Jim~Thanks, we will soon find out how this transaction goes. I am keeping my fingers (and toes) crossed.

Johnnie~Thanks for reading Sweetie. Love you!

Jerry~That is what I always do. You sure learn to get tough being an agent.

Ruthmarie~OUCH! I thought mine was bad! Good luck to you.

Jonathan~Thanks so very much. I am going to go check you article out now!

Karen~We are countering and hopefully it will work out. Thank you.

Steven~WOW! 50% off the asking price?!?! WHERE? I want to move there! lol. Thanks.

Posted by Diane Casale, REALTOR®, ABR®, CNAS®, SNP, Selling North Alabama (Coldwell Banker First, Huntsville, AL) about 8 years ago

Diane,

I always do a buyers CMA. If the offer they propose is stupid, I tell them so. I've been embarrassed in the past professionally.

Posted by Terry Chenier (Homelife Glenayre Realty) about 8 years ago

You sure hit a nerve on this one! I have also been on both sides, and after some years in the business don't get upset, but see it as a opening conversation. We sure see some low-ball offers here in the Phoenix area. But, so many are short sales that go to the bank, so maybe it is not as dramatic as an offer to a normal family.

Posted by Bryan Watkins (LRA Real Estate Group) about 8 years ago

The very first offer I ever wrote for a client was an embarrassingly low lowball on a property that had been listed for 3 days.   They had also been watching lot's of TV and were convinced that they could look significantly above their price range and then lowball an offer to get the house of their dreams.  Turns out, when we did find the house of their dreams and it was within their price range, they actually offered slightly more than list because they were afraid to lose it!

Posted by Gayla Worrell, Real Estate Webworks (Windermere Real Estate/Everett, Inc.) about 8 years ago

I spent an entire day and 180 miles on my car and the buyers made an offer of 52% of the asking price on a REO.

They have since tried to run me around to send visual tours of places they are not ready to buy. I had to put a stop to it.

 

Posted by Kathy Denworth, Realtor in the Florida Keys, Islamorada, Key Largo (Century 21 Schwartz Realty) about 8 years ago

Most likely all the great tips they here on TV are from Realtors that didn't make it in the business.  All decisions have to made on current statistics, and not across the board.  Location, price, condition, time on the market,  all have significant weight on the offer that is made.  It has to be a case by case basis.  We have to advise our Sellers upfront and educate them that these things may happen and not to take it personal.  The listing agents have to not take it personal as well.  Yes, they have done their homework, but that doesn't mean the motivation is not there to take less.  Until it is on paper and laying in front of the Seller, then don't sweat the small stuff.

Posted by Don Spera, Serving York and Adams County, PA (CR Property Group, LLC) about 8 years ago

Good post.

Only problem is that what one seller consider a "low ball," another doesn't. I've seen instances where the seller already thinks he "giving the house away." Usually, he's not. Often, the house is overpriced. But, still, that's the seller's mindset. So when an offer comes in close to, or moderately less than, the real value of the home--in neither case a true "low ball"--the seller rants and raves about the "low ball" offer.

On the other hand, I've been in the position of advising clients to make a higher offer. But they refused. (In this case, it wasn't a problem of having watched too much television. They came from a culture where a buyer always negotiates, and always purchases for 30%-50% less than the asking price.) I couldn't persuade them differently. It was a short sale and they were the lowest of 11 offers (in a 72 hour period). They were absolutely shocked when I told them that their offer had been rejected.

Posted by Donald Tepper, DC area investor helping heirs of inherited homes (Long and Foster) about 8 years ago

I can see not countering, but I don't quite get the "don't make another offer."   Some people aren't slow learners and may come back rather quickly with a serious offer. 

Posted by Stephanie Williams, Realtor Murrells Inlet (Seaside Properties) about 8 years ago

If I hear the "I've been in the business for 50 years or 30 years or 20 years comment" you know you are going to be dealing with somebody thats going to be difficult no matter what.  They will definitely have an ego to deal with and a know it all personality.

Posted by Morgan Evans, LICENSED REAL ESTATE SALESPERSON (Douglas Elliman Real Estate) about 8 years ago

Diane, you make some very good points. I always educate my sellers there is always the chance of getting a low ball offer. Don't get offended and always counter at a price you will accept. Keep the negotiations going.

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA about 8 years ago

I have also been on both sides of the table. I have had low ball offers rejected and the seller not wanting another offer from that buyer. All the explaining in the world does not make a difference.  At the time the seller is so offended.  If the listing is truly overpriced, then it's reality to the seller. As for buyers, I try to educate them of the neighbourhood and prices.  If they still don't listen, we must do due diligence and present. I always keep my fingers crossed so that I don't get thrown out on my ear. We are the messengers.

Posted by Betty Bart about 8 years ago

Michael has the right approach. An offer is an offer. Its better than something on paper than have 100 people march through an open house and make no offer.

Having watched my neighbors house sit on the market for nearly 2 years (through 3 listing agents) being $60,000 over valued on $150,000 comps you have to think every agent is overpricing their listings.I have seen 3 licensed, experienced agents deliberately over price a house. What would you have me do? Offer $210,000 just because that is the listing price?

Nice article!

Greg S

www.loanmodkiller.com (for all the people who can't sell)

Posted by Greg Shepherd, Greg Shepherd (eXp Realty ) about 8 years ago

Low ball offers are part of the game. If you dont like them, youre in the wrong business. It really erks me to hear agents complain about a low ball. Just counter it! Full price if necessary. Or dont counter. The point will get across. As both an agent AND an investor i can tell you i dont wanna pay more than i have to. Your owners financial situation is the least of my worries. Most properties being sold right now are either distressed or the owners just wanna cash out ( and unrealistically so i might add) and are just seeing if they can "get their price". If you dont need to sell why would you at this juncture in time????

I think low balls help keep owners realistic and agents doing their jobs.

 

Posted by Sergio DeCesar, C.D.P.E. FL. Licensed Broker (Loss Negotiation Services) about 8 years ago

An inquiry came in the other day from someone who presented me with an opportunity to purchase some homes....via low-balling. I passed....... The day of Steal and Deal is gone. Now, you get what you pay for.

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) about 8 years ago

Diane - As usual any new client relationship is best served with education. We need to educate our clients as to why this is a bad idea and what the possible ramifications are of offending the seller. However, when a client directs us to submit a low ball offer it is our job to do so or end the relationship.

At the end of the day, real estate is a business and it is market driven. If low ball offers are accepted or rejected it is an aspect of the current market...

Posted by Brent & Deb Wells, Prosper TX (LivingWell Properties) about 8 years ago

 "Lets ask 20% less because that is what all the TV shows say to do" is what they told me."

That would have been my cue to offer them two options - work with me and rely on my advice, or work with the folks on the TV show....

Posted by Tony and Suzanne Marriott, Associate Brokers, Serving Scottsdale, Phoenix and Maricopa County AZ (BVO Luxury Group @ Keller Williams Arizona Realty) about 8 years ago

I agree with Patty #4 comment, it's pretty well what I see in the market. On my own listings, short or regular sales, I always ask the buyer agent calls me before submitting their offer. I usually work around the low balls to save us all some time, and often after a discussion, I don't even receive them.

Short sales in particular, lenders have wizened up, and will no longer accept low balls since their get all the properties BPOed. The situation is pretty well summed up by Richie #56.

Posted by Richard Bazinet /MBA, CRS, ABR, Phoenix Scottsdale. Sellers, Buyers & Relocations (AZuRE Team - Realty ONE Group) about 8 years ago

Diane,

You have a very nice blog!  I am glad I found this through a re-blog and came over to check it out.  I am subscribing to your blog!

Posted by Lori Churchill Cofer, Realtor - 509-330-0086 - Pullman, WA (Beasley Realty) about 8 years ago

I hate it when someone is "looking for a great deal" and not rational at all in what they want to offer. They just pick a low number out of the air. But I can understand if they have reasons that the property is not worth what the seller is asking and want to submit a lower offer.

As for investors, I don't mind working with "real investors". They've done their homework and know what they'll pay for a property depending on what they plan on doing with it. I don't like working with those that add ridiculous contingencies and then want to offer a $10 earnest money deposit.

Posted by Gary Burleson, Myrtle Beach Homes, Condos, Foreclosures, Investment Propery (Beach Water Realty - www.beachwaterrealty.com) about 8 years ago

I agree with every point, except # 3. A seller should sell the home at the best price they can get, and sometimes that sales price is the lowest in the neighborhood. If he has several offers on the home, he does not need to take a "low ball". If the low ball is the ONLY offer, the seller has not many options. I consider 5-10% below comps a "workable" low ball, i.e. negotiation could be successful. A 20% below comps would not get a response in our market. Such a buyer is not serious and would be discarded.

Posted by Sylvia Jonathan about 8 years ago

Diane - Great points!  I had a seller many years ago who actually refused to even look at a low-ball offer.  She was so insulted.  The buyers did send a new offer which was only $2,000 below her asking price but she was so mad at them at that point that it made for a very difficult deal.  The buyers did eventually buy the house but the seller (who is now my good friend) is still mad!  Sometimes, I think it does the buyers a great disservice to low-ball.  Once the seller is mad, it's hard to get them to feel good about the transaction even when it does go their way!

Posted by Lisa Ackerson, CRS - Dallas Fort Worth Area Expert (Fathom Realty DFW) about 8 years ago

Excellent advice all the way around.  Low ball offers seem to be the norm right now, especially on higher priced properties but I see it on lower ones as well.  Buyers should be focused on the low rates right now and finding a home that will suit them for years to come.  They will thank themselves later for it.

Posted by Russell Benson (Berkshire-Hathaway HomeServices/Anderson Properties) about 8 years ago

I dont believe these conditions pertain to every market. #56 may be right in HIS market but not in mine. we still find deals. Quite honestly, 20% below market is a subjective value. I may pick something up for 20% below what YOU call market but in reality when trends are considered, location considered, availability to credit and property condition, it was dead on or maybe 5% below the REAL market. Realtors arent always right in their assessments of value: present and future. Shall I cite the last 4 years?  Comps in many cases are not comps. Just because a house sold across the street for $x doesnt mean your will get that or not get that on your property. Price per sq ft, amentities, structural condition etc all play the part is REAL value. Also, what a seller or lender is willing to take vs foreclosing will wash alot of offers out. The problem i see, is, values have dropped well below the threshold of what can be shorted vs Foreclosed upon. So unless the lenders adjust for reality, what may be viewed as a deal may not even get sold because the lender may figure its cheaper to take it back. that will prove dangerous as we may have a glut of REOs that may sit there because the list prices may be too high.

Sure like to know the logic of turning down an offer for $90K then taking it back and selling it REO for $80K......

 

Posted by Sergio DeCesar, C.D.P.E. FL. Licensed Broker (Loss Negotiation Services) about 8 years ago

Diane I loved the points you make about education and research.  I try to educate my buyers about price every time I'm out with them.  Unfortunately, we have an agent in the area who always makes low ball offers.  She recently made an offer on one of my listings.  We had just dropped the price $5,000 that day and $10,000 the week prior,  My seller is motivated but wants a fair price on their home.  This agent showed the property and made an offer that was almost $50,000.00 less than the asking price.  We countered with a $1,000 reduction,  the agent balked, said I wasn't playing fair, that the counter wasn't a real counter.  My response was when you present me with a real offer, I'll get a real counter for you.  She did bring me another counter up $5,000.  We did counter with a $5,000 deduction in price, that was the end, they withdrew their offer.  The following week, she showed another listing from our office and made another low ball offer, by the same customer.  This time when she wasn't satisfied, she called the Owner of the home, to try to pursuade them to to accept the offer.  That Seller, immediately called their agent to make him aware of the situation.  They were livid! and told the agent she was banned from the home.  She denied the whole thing, but the seller had caller ID and the numbers matched her office number.  Just today, we have a propety that has an accepted offer and the owner has choosen to not show the home to any other potential buyers (cash offer, no contingencies).  This morning she tried to chew us out about it.  She even tried to throw around the "Ethic's Word".  A hoot comming from her.

Posted by Virginia (Ginger) Schott, Assoc. Broker, CBR, CHMS (Century 21 Geba Realty Assoc.) about 8 years ago

I had a similar exp. recently that I wrote about on ActiveRain,  " The Standoff".  My buyers also came in low and wouldn't budge.  THis exp. taught me a great lesson in buyers and educating them about market value and not being insulting to a homeowner.

Unofortunately, it seems the majority of buyers right now think that all sellers are desperate and will accept any offer.  and I agree, the public is gullible and more willing to believe the media reports than the professionals (Realtors) that work the market everyday and know their local market values.

Thanks for the Post , Diane.

Posted by Roberta Soares about 8 years ago

Diane And Tina, You'd be doing the ActiveRain community a true service, by sharing with us the dialogue you present to buyer clients in advance for trying to avoid impossible lowball offers. 

Posted by Richard Coake.com, Save The Most Money When Buying, Selling & Owning! (Keller Williams Realty) about 8 years ago

Good post -- I agree with your statements.  Most low ball offers are just a shot in the dark by an uneducated buyer.

But, if the home is overpriced and listed by a desperate or unrealistic agent, then I am more than happy to present a "low ball" offer, but it would have to be justified with current market data, and take into account the current condition of the home.

I was listening to "The Ric Edelman Financial Show" last sunday on the way to host an open house.  He had some outstanding advice for buyers and sellers. It was something to the effect of:  "Sellers, be realistic - if your home is not selling, lower the price" and "Buyers, you aren't going to steal your next home - make a rational offer based on current data".  I would like to play that back for everyone in my market...

Posted by Don Corson (Coldwell Banker King Thompson) about 8 years ago

We all come across folks who want to put in those low ball offers, however, education, education and more education will help them understand the facts and hopefully see the light

Posted by Deborah Grimaldi, (401) 837-9633 (Albert Realtors) about 8 years ago

When a buyer comes to me with a serious low ball offer I try to have a heart to heart as best as I can with them and depending where our relationship is at that point.  The best thing is education, or an expierience like with your buyers, that will likely change thier tune.

Posted by Tatyana Sturm, Denver Realtor, GRI, Denver/ Aurora CO Relocation (Exit Realty DTC) about 8 years ago

I've gotten many low-ball offers accepted (not at the low offer, but with negotiations we arrived at a mutually agreeable price).  I always prepare my sellers for the possibility because of the market, the news and HGTV, they might get low offers and I tell them to take a step back and not get offended, but negotiate.  I like the term used here, buyers are "fishing" in this market.

With buyers, I always create a CMA and if they still want to lowball I write the offer and present it.  Sometimes, as others have mentioned, it takes losing a couple to realize they're not going to get away with such low offers.  Other times, the home really is priced too high and I have a comp or two to justify my buyer's low offer.

 

Posted by Judy Orr, SW & Near West Chicago suburbs (HomeSmart Realty Group) about 8 years ago

I recently had a low-ball offer on one of my listings. It came for an agent/buyer. The offer was lower than all the other short sales in the neighborhood! And this was a traditional sale. The excuse he made was that the cabinets were pine and he wanted cherry. The countertops were laminate and he wanted granite. He also wanted to replace ALL the flooring with hardwood. The house was in perfect condition, and he was asking for a discount for cosmetic reasons. I advised the sellers to counter $500 and see what came back, but they didn't even want to bother. Great discussion!

Posted by Judy Chapman (Referral Network of Illinois LLC) about 8 years ago

Has everyone heard: they are getting rid of all appraisers and assessors....WHY YOU ASK, BECAUSE ZILLOW HAS ALL THE CORRECT PRICING.( These professionals are no longer needed.)  Buyers seem to think so, except when Zillow has way too high of a ZESTIMATE on a property. Then for some reason Zillow credibility doesn't seem to come into play.....until the next home they look at has a low ZESTIMATE on it, then they are pricing super stars..... I am sick of the "Zillow low ball". And the media low ball too, where TV tells everyone to come in 30% under any asking price. The sooner all this goes away the better. Twenty six years in the business darn near reduced to zero credibility by media and Zillow.

Posted by Larry and Marilyn Mennetti (FIVE STAR REAL ESTATE) about 8 years ago

Buyers who are serious about owning a home that meets their criteria make reasonable offers, those that low ball are simply fishing without any intent to own, knowing they can back out because their offer won't be accepted, yet hope to see if the seller will counter back to their target price. The negotiating strategy is to discover how much higher the buyer needs to go for a similar property or continue fishing.

Investors are usually responsible for low ball offers and depending on the circumstances, SS, the seller would agree to the offer to avoid foreclosure, so not all low ball offers are a nuisance.

Posted by Kimo Jarrett, Pro Lifestyle Solutions (WikiWiki Realty) about 8 years ago

I have had so many issues myself with clients that want to make a low-ball offer, and then when the offer gets accepted the transaction is usually very hard.  Neither party is willing to make any inspection concessions.  Thanks for the post.

Posted by Rob Rosa, Personal Real Estate Expert (Berkshire Hathaway) about 8 years ago

The ONLY time an offer is Low Ball is...in an UP market.

 

Since we are in a downward trending market...Low Ball Offers should now be called OFFERS.  and sellers ought to be counseled to consider them VERY carefully as there might not be a second offer that high.

 

Maybe the Listing Price is too high if you're getting what you call:  LOW BALL OFFERS.

 

What sold last week, month, year, is NO indication that the property will sell for anything near that price today.

Posted by Tom Waite, So Cal-Apartment Bldg Investments (Thomas Waite Real Estate Broker) about 8 years ago

I am in exact same situation as we speaking, and I did warned the listing agent. I told him that my clients are liking the house, but because of all Media they feel that they just MUST low ball. 

No matter what I say to my "first time buyers"they still will not go higher. Their words were:" Let see what they come back with". I also told them that they may not even get counter offer, because seller may feel insulted, so they told me" will be another home". I know for the fact after working with them, that this home is the only home for them so I am hoping that sellers will understand( they have been on the market since Feb),and begged listing agent to respond with their almost best offer, because I sense that my client just need to feel that they bargained and got a "deal".

Liliya

Posted by Liliya Sag about 8 years ago

<!--StartFragment-->

There are many great points in your article. As a seller, we are emotionally connected to our homes, particularly if we raised our family there. If you are working with a good agent, the home should be properly priced. Everyone expects to give concessions, but no one likes to be offended by the buyer.

 

We are seeing some of the bank owned homes priced well below market value to create bidding wars. I advise my clients to put a substantial amount down. This tells the seller that you are serious and qualified. If you really want the home, a larger earnest money deposit will increase the chances of your offer being accepted.

<!--EndFragment-->

Posted by Doug Kaller (Academy Mortgage, Reno, NV) about 8 years ago

I have been on both sides--receiving lowball offers and unfortunately presenting one---neither is fun.  I take very seriously the task of trying to educate my clients on the "fair" price of the property. Sometimes that is all we can do. CMA's are an agents best friend!

Posted by Loreto Stribling American Canyon (First time home buyer specialist) about 8 years ago

Thanks Diana.  I always let them know that we need to provide some sort of data.  If we're going to go low we need to let the seller know that our "low" offer is reasonable based on a recent closing in the area.  If the comps say that it's worth more...then we are wasting out time as well as our unrealistic client.  It's one thing for me or my buyer to say the property is overpriced, but if "the market" says that then we have a reasonable offer.

Posted by Josh & Julie Hambarian (Josh & Julie - Steele Realty. North County San Diego Coastal) about 8 years ago

I responded to another blog post similar to this earlier but want to add:

When a buyer flings a lowball offer out there on a home they LOVE and it gets rejected and another buyer hops in there and buys the home with a good offer, it teaches lowballers REAL QUICK to stop messing around and if they want the home make a decent offer. It's happened to me (as a buyer's agent) quite a few times in the past couple of years - well, happened to my clients anyway!

Posted by Tiff about 8 years ago

Great blog, Diane, it came in time for me as I have been working with this particular buyer who has already gone through pre-approval for a home loan, etc.  He was referred by his co-worker who has been a client of mine just a few months back. He is a first-time homebuyer and wants a nice home in North San Diego County and I have shown him several properties which included those he found in Redfin.com. Obviously, he is an avid fan of this website and I can not seem to persuade him with CMAs prepared for homes he was to make an offer on, he said Redfin.com gives him a better comparable, therefore he low-balls all his offers like he is a cash investor/flipper. I try to educate him, but he does not want to listen.  Long story short, I am dropping the jerk today  - NEXT...

Posted by Cynthia Bushman about 8 years ago

Re comment #83

From:

Cynthia Bushman, GRI e-PRO, Century 21 Wise Ol' Owl Realtors, Cerritos CA 90703

Posted by Cynthia Bushman about 8 years ago

Low ball offers are part of the game? They are a waste of time and energy, the buyer should be educated to what the market is and not what the media tells them. Funny how there are good deals to be had, but some think that they are getting a property for next to nothing...

Posted by Francisco Garcia, Jr., 480-277-2922 http://franciscogarciajr.com (FG Real Estate) about 8 years ago

Even low balling distressed homes around here is not a good idea. They are typically priced to move and will receive multiple offers, often over list price.

If I perceive the buyers think they can steal a home we will be having a long discussion about it.

Posted by Bruce Swedal, Denver Real Estate about 8 years ago

Some folks would rather take advice from a late-night TV huckster than a professional. Stupid, but true.

Posted by Marte Cliff, your real estate writer (Marte Cliff Copywriting) about 8 years ago

Hi Diane,  interesting post and comment thread.  Going around you to speak with the other agent is really tacky !

Posted by Bill Gillhespy, Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos (16 Sunview Blvd) about 8 years ago

This topic is a petpeeve of mine.

Educate the buyers agent and the buyer. DO NOT bother to write "low-ball" offers on any of my Santa Cruz County Short-Sales.

"Low-Ball offers"=  anything below 10% of the listed price: 20% below listed is insulting to a seasoned Sort Sale or REO Listing Agent!

•1.    Smart or experienced agents that have 10 years behind them and that represent the Seller in a Short-Sale and closed 20 short sale deals or more won't accept them. If they do they are using your offer to halt a Trustee Sale, so they can generate another buyer that will get bank approval. Banks approvals are all about NET. They are not retail deals!

•2.    Stay away from "buy it at wholesale" then do an A to B to C transaction.  The banks are "wiser" and are currently changing their approval letter to blow such a deal out of the running. If you don't know what I am referring to than go back to buying something retail.  

•3.    Problem that arises with this type of offer is the Lenders will complete a "BPO" (Broker Price Opinion) or an appraisal on the property and will (believe) know what the current market value of the property is. There is only 5% chance they will ever approve the "low ball" offer that was submitted. The reason why 5% get approved? The property is undesirable, so much so you can't get a loan on it and to be candid probably "sucks".  

•4.    When the "low ball" offer is not approved, the Buyer simply moves on to the next property, however my Seller may not have enough time to obtain another offer before the last stage of foreclosure can be stopped where its = SOLD AT AUCTION. 

•5.    On top of that: We know some Buyers are encouraged by their agent to write numerous Short-Sale offers and after a 3 month wait they hope 1 gets approved. When they are approved that Buyer will be thrilled. However, the clock kept ticking to whole time for my Seller.  That "low-ball" offer just wasted precious time my Seller did not have. 

Posted by Patti Lyles, DIVORCE, SHORT SALE, FORECLOSURE SPECIALIST (Century 21 Showcase, REALTORS®) about 8 years ago

In an honest and fair market prices are only low or high in comparisom to what it is listed for.  Homes only sell for what they are worth.  My client went in 15% under asking on a property and that sounded like a big cut, but it had been on the market a long time.  The cut reflected the real market.  I do not like low balling and wasting time when I know the property is priced fair and will sell.

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) about 8 years ago

Great post.  I once had a buyer who just wanted to low ball everything.  I would show her the comps etc..she didn't listen...one day I asked my broker to sit in my office while I talked with her about ANOTHER low ball offer she was making.  When he mentioned the great research etc i did on the house she still insisted on going ahead with her offer.  My broker said you know with an offer like that you are probably going to insult the seller.  Her response " I don't care what the seller thinks"  Yes another offer bit the dust.  She was so surprised that no offers were accepted.   Because in (state where she was from) you could pick up houses for so cheap.   Finally got them into a house but that was because the husband finally listened.  I just think he got tired of house hunting.   She was still insisting up until closing that there had to be a better deal out there....oh yes she also changed lenders literally 14 days before closing to get a "discount"!   I tried to show her other HUD1's ( I had in the office) with same lender she was changing to and how the costs came out the same etc...wouldn't listen.  Closing was delayed of course and she wondered why!  

I do prepare my sellers for low balls and do tell them they can't take it personally.  I have only had a few that absolutly refused to ever deal with the buyer again.  

 

Posted by Andrea Curtis United Country Premier Properties Certified Military Relocation Professional, U C INTERNATIONAL DIRECTOR OF MILITARY PROPERTIES (United CountryPremier Properties) about 8 years ago

Hey Diane,

 Thanks for posting this information! I think that buyers need to be made aware of the pitfalls of presenting low ball offers.

Posted by Robert Amato (Bob Amato of Empire Home Mortgage Inc) about 8 years ago

Thanks for great post. I am exhausted by buyers trying to "go low & get a deal"  I starting asking them -- "do you really want to buy this house ? or any house?If you want to go that low should I start showing you home in the lower price range. " Maybe they are hiding some other issues.

  What's even worse is a Seller that thinks anything less than full price is a low ball offer.  They have been told the facts but don't think they apply to them.

I wish both Buyer's & Sellers would stop squabbling over the small things --

Posted by Jennifer Marks (On Maternity Leave) about 8 years ago

A couple of random thoughts spurred by this post:

I don't think that there is any one formula or blanket statement that applies to how people negotiate.  The first step toward any negotiation is a dialog. Open the door, allow the dialog to happen.

  • I've seen plenty of properties that were "priced right" by the listing agent that were actually over priced.  (I love it when the listing says "priced to sell" and the property has been on the market for over 6 months.
  • I've seen "low ball" offers lke those described in the post above and I've seen "low ball" offers that were accepted... there's a seller mentality to over-price and see what happens... which is often accepted by listing agents. How many times have you heard, "we're going to list a little high, the buyer's can always make an offer?" (of course, that's not logical, we all know the buyers that would make an offer, are not likely to see the property when it's overpriced.) Angents should avoid allowing sellers to fall into this trap whenever possible.
  • A "low ball" offer on an over priced listing may actually be "at market". It's been a tough couple of years, prices have changed, seller's brains (acceptance levels) have not always followed suit.
  • When pricing unique properties it can be very difficult to determine the "right price". Not everything fits nicely into a price/square foot formula. Homes are not produce, they cannot be sold by the pound. Each has it's own characteristics and no two locations are exactly the same (even in a subdivision).
  • A low ball offer may be better than no offer. At least the parties involved have taken the time and trouble to sit down and formulate an offer, commit it to paper, which is no small time commitment.
  • If the buyer can't afford the property at the list price, they shouldn't have been viewing it (Showing agents, do not indulge clients in looking over their price range, they will be disappointed when comparing properties that they actually can afford to buy)
  • Don't blame the agent for writing a "low-ball" offer. The agent is trying to 1) make a living 2) comply with instructions from their client 3) may be trying to be sure the client learns the ramifications of their actions (of course, it takes time and energy on your part to respond, it's your job) 4) may actually think that what they are doing is productive 5) may actually know what they are doing.
  • Earnest money is "liquidated damages".  Not a chip. The idea that a seller may actually see the earnest money in the event of a sale fail is a non-factor as far as I'm concerned. There are too many opportunities for a buyer to bail out of a transaction based on typical contingencies. I've only ever had one sale fail in the last 11 years where the seller retained the earnest money. There is no amount of earnest money that will compensate a seller for the stress, time, trama and expense of a late in the game sale fail. Relinquished earnest money can help offset, but it won't fix it.
  • Cash does not give a buyer license to "low-ball". The seller is going to net the same amount if the buyer has cash or if the buyer (successfully) finances. Cash can (but doesn't always) make the transaction easier (depends on if the buyer wants an appraisal or not?)
  • If an agent wants to be successful they need to get along with other agents. Hassling another agent because of the actions of the buyer and/or seller may create an atmosphere of hostility which in turn can come back to bit you later... This is likely not the last time you'll need to interact with that agent (or an agent that they know)
  • Every transaction has it's tipping point. If the buyer wants to buy and the seller wants to sell working together to achieve those goals is what the two agents are supposed to do. When one side of the transaction pushes the other past the "tipping point" the transaction will fail.

I'm sure this debate will go on and on and on...  

 

Posted by Dava Behrens, Broker, Corvallis, Oregon (Coldwell Banker Valley Brokers) about 8 years ago

Diane:  Quite a story!  We always encourage sellers to treat each offer seriously.  We give them their options, accept, counter, reject.  We discuss the consequences of each and ask them to choose which way they wish to proceed.  We are not in the camp that suggests a seller ever ignore an offer even if it's a "low ball" one.  An offer is an offer and you never know where you might get if you give it a try.  Carrie

Posted by Carrie Sampron, ABR SFR & Kathy Sampron (303) 931-3629 Highlands R (Home Smart Realty Group) about 8 years ago

I agree with Dava in Comment #94 - A lowball offer may actually be an offer that reflects true market value - this happened to me recently. I sent in the most recent sold comps with an offer....on a home that's about $150K overpriced for our market....seller got insulted, refused to even counter. Nobody wins when homes are priced above market value....sellers get insulted, buyers get shut out, inventory keeps growing....just not sure how overpricing a home is good for anyone. And to my mind seller should ALWAYS counter, "lowball offer" or not. An offer just opens up door to negotiations. It's in the counteroffer stage that everyone gets a better feel for whether there can be a meeting of the minds.

Posted by Coleen DeGroff, Haile Plantation Real Estate - Gainesville FL (eXp Realty) about 8 years ago

I completely agree with this article on low ball offers. I had a client that kept wanting to put in low ball offers that did not make any sense. I thought I would be patient and do it once to show them I was telling the truth and you cannot believe everything you read in the paper. I finally closed (barely) at a higher price than if he had listened to me to begin with. After insulting the builder and his agent (which said inappropriate things to me because of the offer) we closed it with owner financing if you can believe that while the exact same floor plan except this was a middle unit on townhomes in Decatur, went for $100,000 less and my buyer passed it up. I was shocked to say the least but I made more commission and was happy to be done with that deal.

Last week I was doing a valuation on a foreclosure and the couple cleaning it started to say they wanted a "real deal" about 50% off and they had a recent foreclosure! PASSED

Posted by Barbara Martin Atlanta Realtor about 8 years ago

I agree with all of your points except for #3.  It really doesn't affect the buyer if the next 90-days of CMA are lower.  With offers being able to be written electronically and emailed back and forth it really doesn't take more than 5 minutes to put together an offer.  If my client want to put a low offer in and find out the hard way about losing out on a property then so be it.  Usually it leads to a much more realistic second offer.

Posted by Simon Mills (Mills Realty) about 8 years ago

Diane, What a great post...I HATE it when I have to present low ball offers that are unfounded.  If a listing is overpriced, I'm all for it...if we have a large inventory in that range, I'm all for it.  I have to laugh when they want to low ball an in demand price range.  Kills me!

I had an agent lose a buyer 2 weeks ago...went straight to the listing agent and wrote it up, AFTER my agent showed the home.  We'll have no more of that, lol.  

The media is making our buyers crazy, isn't it?

Posted by Elizabeth Cooper-Golden, Huntsville AL MLS (Huntsville Alabama Real Estate, (@ Homes Realty Group)) about 8 years ago

The market is totally upside down. Everyone was offering irrationally 10 and 20% more than listed price or market value just to get the home they really wanted and now we have people missing out on their dream home because they are offering 10 and 20% less than listed price or market value. The mind goes with the flow. We need buyers with a cartesian mind.

Posted by Christine Beaur-Mortezaie (Main Street Realtors) about 8 years ago

Any offer, low ball or not, is a good thing. If handled correctly by listing agent, and clients warned ahead of time, it should at the very least get a dialog going between buyer and seller which can lead to a mutually satisfactory and acceptable offer. Never lose an opportunity to get a dialog going between buyer and seller and keep it going. Always encourage the seller to counter back. Keep it going, try to manage the emotional aspects, and chances are good that you will get the home sold! Just my 2 cents. Good post.

Posted by Larry Hansen (Calif Desert Realty) about 8 years ago

Unfortunately some buyers are under the impression that it is a buyers market and they are going to get a STEAL, I mean DEAL! I had a buyer recently low ball a property at 40K below asking, and I told them "you are going to piss off the seller". I live in CT but that is the NY'er in me. I tell it like it is. I was embarassed putting in this offer but if I don't do it, they will fire me and find a newer agent who will put in the offer. The seller countered 2K less than asking. My buyers then jumped up 20K, now we had something going. We are still in the process, lets' see where it lands. When it comes down to it, if they go in with a lowball, as long as the seller doesn't get insulted...they might end up happy somewhere in the middle! If the buyer really wants it they will come up.

Posted by Ann Grant, SFR (KELLER WILLIAMS in CT) about 8 years ago

It is hard to be "matter of fact" with people for fear of offending them, easier as I get older.  I think this falls under negotiating skills for agents.  We need to be able to explain the consequences of low ball offers and still get them to write an offer. 

Posted by Dawnita Griffith, It does matter who you hire. (Meadow Lake Real Estate, LLC) about 8 years ago

I'm sorry to see these buyers are everywhere--not just Colorado!

Posted by Eliese Pivarnik, GRI, RSPS, ABR Broker, Colorado Group Realty (Colorado Group Realty, LLC) about 8 years ago

Great Article.  I think I have had these clients!!!  When I find myself in this position with this type of buyer and it is their dreamhome I always ask if they have a plan B.  This usually opens up the line of communication and we discuss the "what ifs".  It doesn't always change the outcome but it does give them food for thought.

Posted by Monica Atherton, Your Temecula Real Estate Gal (The Associates Realty Group) about 8 years ago

Sometimes it's good to try to get the buyers to wear the sellers shoes for a few minutes.  Most of the low ball buyers I have had, when asked whether they would have considered a 20% off offer on the home they just sold, would never consider it.  Sometimes this is enough to bring them back to reality.  Or at least it's enough to get them to understand how the sellers might react.

Posted by Ken Gramley about 8 years ago

It's funny that the supposed "low ball" offers of 2006 are significantly higher than today's list prices.

Posted by Steve over 7 years ago

well, i just read another post about low ball offers, that asked:'' Aren't the seller insulting the buyers by pricing the home unrealistically high?''

I agree, if you can find comps to proove the low ball offer, why not?

Posted by Inna Ivchenko, Realtor® • Green • GRI • HAFA • PSC Calabasas CA (Barcode Properties) over 6 years ago

Great post!

In a seller's market some sellers think they can name any price. If the list price is unreasonably high, then the "lowball" offer may actually be the true market value.

 

Posted by Dave Halpern, Louisville Short Sale Expert (Keller Williams Realty Louisville East (502) 664-7827) 11 months ago

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