Are Realtors® Prodding Buyers To Overpay For A House?

By
Real Estate Agent with Integrity Real Estate Group

Stack of MoneyThis week on my blog in the Washington Post- “Should you make that low ball offer?  a commenter suggested “many agents will try to prod you into offering more than necessary in the hopes that the seller accepts and the agent can collect his/her commission that much sooner.”

The comment made me think about how consumers get the impression that Realtors® are only driven by a quick commission.   In today’s Northern Virginia real estate market getting a deal from offer to closing gets harder and harder.  There are no deals that are a slam dunk unless it is a cash buyer with verified funds, a large earnest money deposit and no contract contingencies.  Quick commissions were left behind in 2005.

Will an agent prod a buyer to make a higher offer than they should?  Most agents will likely prod a buyer to make an offer that has a chance of being accepted or at least generate a counter-offer for consideration.  An agent who had done their homework and provided the neighborhood comps to a buyer will know close to what a home is likely to sell for.  The chances of a buyer paying to much for a house in Northern Virginia are also fairly slim.

If the offer is above market value the buyer’s appraisal won’t support the contract price.  Agents have no sway with appraisers.  Listing agents can offer an appraiser the comps used to determine the sales price but unlike the hot market in 2003-2007, it’s hands off.    If it doesn’t pass the sniff test the appraiser isn’t going over-value a property.

Then there are those pesky short sale and REO lenders.  They aren’t pushovers on low offers.  Yes you will  find listings in the MLS for undervalued properties.  But  guess what happens as soon as the bank  sends out their own appraiser?  Ask the hundreds thousands of buyers who have gotten a counter-offer from the bank well above list price resulting in either the property going back on the market again at a higher price or a buyer paying the lenders price.

The Northern Virginia real estate market is not the same as the areas that make the national news.  Seeing homes selling for 90% or more of their list price reflects our market has stabilized.  This is a good for for everyone and has nothing to do with agents prodding buyers to write offers just to earn a few dollars.

 

 

Originally posted at www.VaRealEstateTalk.com

 

Posted by

                                   Real People*Real Lives*Real Estate

If you are interested in learning more about the Northern Virginia Real Estate market including Alexandria, Arlington, Fairfax and Prince William Counties give Cindy Jones and Integrity Real Estate Group a call at 703-346-2213.

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Show All Comments
Rainmaker
404,880
Ellen Caruso
Daniel Gale Sotheby's International Realty - Glen Head, NY

I had a buyer who wanted to make an offer over 1 million under listing. Yes, in my mind I agreed it was overpriced, but I couldn't convince them to go higher so I just presented it. And yes, it was rejected, but then again it's been on the market for a year with no price change...someone has to give!

January 22, 2012 07:07 PM #1
Rainer
124,141
Chiara Petro
Realty Executives Associates - Knoxville, TN
Your KEY to Home Sweet Home - Knoxville TN

Cindy, your title was definitely intriguing, and I had no idea you wrote a blog at the WaPo! (Although I usually don't follow the WaPo for real estate news) -- congrats on that! 

I have to say, as a newbie (less than a year in the biz), I have had training that, in all honesty, validated that commenter's concerns. No lie!

At the same time, that sort of thing turned my stomach, it felt so wrong to me on so many levels. I've thrown that so-called training out the window. And I'm all the more thankful for not following that tripe.

January 22, 2012 07:14 PM #2
Rainmaker
954,532
Kathy Clulow
RE/MAX All-Stars Realty Inc. Brokerage - Uxbridge, ON
CNE - ASP - SRES .... Uxbridge Ontario Real Estate

Cindy - all we can really do is provide the same information to a buyer that we would provide a seller of the same property ..... regardless of what we say the buyer controls what they want to offer.

January 22, 2012 09:24 PM #3
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Liz and Bill Spear
RE/MAX Elite 513.265.3004 www.LizTour.com - Mason, OH
RE/MAX Elite Warren County OH (Cincinnati/Dayton)

Cindy, It's an uphill battle fighting the negative impressions out there.  Like you said, the appraisal process takes care of making sure the offer is in line with valuation.  I'd be more concerned with someone NOT using an agent overpaying because they THINK they're getting a good deal from that For Sale By Owner or that new construction builder.  Those are the cases where we've most encountered an overpayment situation.

January 23, 2012 06:19 AM #4
Rainmaker
1,072,011
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

Cindy you hit it on the head when you say "making an offer that has a chance of being accepted" It is something I preach often. A good offer is not always the highest, but the one written the best, eliminate contingincies other than a 7 day inspectionm and mortgage contingincy, close within 30 days for conventional and 45 for FHA, include your preapproval and make your best offer if there are other offers submitted, This is a great topic that is often misunderstood 

January 23, 2012 11:07 AM #5
Rainmaker
254,704
Robin Rogers
Robin Rogers, Silverbridge Realty, San Antonio, Texas - San Antonio, TX
ABR, CRS - Real Estate Broker & Investment Adviser

Amen, sister! Although I didn't get many quick commissions in 2005, either.

The time from offer to closing seems to take a lot longer these days, and there are a lot more complicated things to take care of in that time.

January 23, 2012 07:08 PM #6
Rainmaker
683,446
Kay Van Kampen
RE/MAX Broker, RE/MAX Solutions - Springfield, MO
Realtor®, Springfield Mo Real Estate

Heavens, if my buyers think that, after all the tutoring we do before they make an offer, we haven't done our jobs.  What agent is today's market would think the home would appraise for more than market value anyway.

 

January 23, 2012 09:27 PM #7
Rainmaker
484,879
Christine Bohn
RE/MAX Professionals - Gainesville, FL
Realtor, Gainesville FL

Cindy - It's a tough road. Yes, local markets are different.  Here our list to close ratio for 2011 is 94%.  But, the buyers are still making initial offers 30% under list price.  As professionals for the seller or the buyer it's our job to provide the comparable sales.  And, I agree we can't talk to appraisers here anymore either.  There is no such thing as quick pay days anymore.

January 23, 2012 10:26 PM #8
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Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

Ellen-I think there is a fine line between prodding a buyer to make the right offer and forcing them to make an offer they don't want to make.  If a home is overpriced an appraisal is going to let the seller know if they won't listen to their agent.

January 24, 2012 07:27 AM #9
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Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

Chaira-that's a shame to read.  I believe in laying out all of the facts to a buyer (and a seller) and helping them make a decision that will help them buy the house they want.  I've learned in my market that offers that are well below the asking price are going to be rejected.

January 24, 2012 07:29 AM #10
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Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

Kathy-yes they do control the offer and if there are ready emotionally for the outcome of a lowball offer then all we can do is present it.  However their isn't a conspiracy going on between agents and sellers to keep prices high.

January 24, 2012 07:31 AM #11
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Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

Bliz-unfortunately we usually hear about those stories when we are called to sell a home.  Then we discover they didn't use an agent and now realize the mistake.

January 24, 2012 07:34 AM #12
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Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

Scott-thanks for adding all of the other critieria that help make a good offfer.  I've written in the past that "highest" is not always the "best" offer.

January 24, 2012 07:36 AM #13
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Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

Robin-thank you for your comment.  Deals these days take a lot more to get a deal to closing and buyers who are working with their own agent are hopefully getting good advise on writing a competitive offer.

January 24, 2012 07:40 AM #14
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Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

Kay-I've fortunately had relatively minor appraisal issues with my listings but plenty of agents have and it is the final stop to getting a deal to close.

January 24, 2012 07:41 AM #15
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Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

Christine-you are in the same situation we are with list to close ratio.  I often receive offers well below list price at the same time I get one that is at list or close to it.  I wonder how many low offers the buyers make before they understand it won't buy them a new home.

January 24, 2012 07:43 AM #16
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Cindy Jones

Pentagon, Fort Belvoir & Quantico Real Estate News
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