LowBall Offers, Buyers and Reality

By
Real Estate Agent with Meridian, Idaho
Balance ScalesThere has been some talk (complaining?) among agents and sellers about those goofy buyers who want to make "low ball" offers on properties.  Imagine; with more inventory than has been on the market for years and fewer buyers than were available just a short time ago, that buyers would not want to pay the same price that someone else did in the midst of the market frenzy.  How can they do this?!

Just a year and a half ago (seems like forever, doesn't it) buyers were watching homes sell for 3%, 5%, 10% or more above list price.  Buyers were suffering and some were getting priced out of the market.  Did sellers look around and say "Gee, my neighbor got $XX just six months ago; I don't think we should price it as high as the Realtor suggests."  No, of course not.  They ran with the trend and grabbed what they could and that was fair and right because that's what buyers were willing to pay and lenders were willing to lend.  That's how markets work. 

Yet now, when the market won't bid what we (in our agenty wisdom) think it should, based on what the neighbor got months ago (comparable sales),  we and the sellers get frustrated.

But this is not something to get excited about.  This is just the pendulum swinging hard in the other direction.  We had a frenzy going up and we'll have turmoil in the other direction until things settle out.  The hard part is for the party on the unfavorable side of the trend (Buyers then, Sellers now) to adjust to the present reality and move forward.

Our job as agents is to help our client get the best price and terms that best meets their needs at the time, whether we are on the listing side or the buyer side.

If we're the lister, we dig in hard and use the comps to defend price and get as much as we can.  We point out features and benefits and what makes a particular home more desirable than a competing property.  We do whatever we can to drive more traffic to the home and generate more potential offers.  We give up price and terms grudgingly and net as much as we can out of a sale.  If we did that, we did our jobs, even if the home sold for less than the neighbor's did 6 months ago.

If we're on the buy side, we look at trends and inventory and try to get the best value possible.  We point out the surplus of inventory in similar properties.  We recognize that there probably isn't a "perfect" home and look for the best one to meet the buyer's needs that we can get at the best value to the buyer. 

We, as agents, (and our clients, too) need to remember our role in the dance.  We don't make the market, we interpret it.  We work within it and work to maximize our client's position.  We provide information and advice.  But in the end, it's up to the buyers and the sellers, the actual principals, what too much or too little is.

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Rainmaker
782,779
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate
We written. This always happens when the market turns in the opposite direction. We see more complaints about change than anything.
Jul 26, 2007 09:58 AM #1
Rainmaker
570,044
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos
Buyers are so hesitant to jump in a little early and fear they might be overpaying.  To create a hedge they offer what the market might be 6 months from now just to be sure.  The buyers are just as brutal today as were the sellers 2 years ago !
Jul 26, 2007 10:28 AM #2
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Rainer
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Steve Norris

Silvercreek Realty Group
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