I am not a big fan of the lowball offer, but what if it gets accepted?

By
Real Estate Agent with Keller Williams Realty

Photo courtesy of svilen001I presently have 7 short sales listings in my listing inventory and I'm not a big fan of the person that comes in within one week of the home being on the market and writing an offer for 40-50% of the loan amount.

The fact is, when a buyer calls on one of these short sale properties, I refer them to another agent in my office as I don't like to work both ends of the transaction. I don't feel I can be fair to all parties involved with all the work that is involved in a short sale.

But, what happens when this buyer comes back with the agent I referred them to and puts that offer at 50% of the amount left on the loan? Is my buyer insulted or do they just say I'm going to lose this home anyway and they want to sign the offer and let the bank decide?

Now, from my point of view it is a great thing to have an offer on the property, because it now gets a negotiator assigned and we can start the ball rolling on this property and hopefully get a better offer on the property that is better for the bank and the community as a whole. Selling a property a 50% of the loan amount doesn't help comps in a neighborhood.

As time goes along you see that the auction date is now been announced and you still have 5 months before that date arrives, but the next day you get an e-mail saying they are accepting the buyer's offer. WHAT? That was a joke, are you really serious?

Now, my seller would be happy because they have no foreclosure on their record and their lawyer is making sure they don't get a 1099 at the end of the year and the buyer is happy they are getting a great deal, but I'm still sad for the community and the United States tax payer.

The community now will have another home that brings down the comps for the area and the bank will have a loss that they will take to the government for more of our money as part of the bailout. Sometimes, I have to wonder what the banks are thinking, but at the same time, I can't blame these people that put these offers in knowing that sometimes, they may just get them.



Todd Clark - broker
Kastings & Associates
Phone: (503)524-9494
Fax: (503)622-8739

Posted by


Todd Clark (broker w/ Ken's Home Team)
Keller Williams Realty
Todd@IFoundYourNewHome.com
Phone: (503)524-9494
Fax: (503)746-9573

 

 

 

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 I am a licensed Realtor who specializes in Washington County, Oregon and also work in both Clackamas and Multnomah Counties including the cities of Aloha, Beaverton, Canby, Clackamas, Gladstone, Gresham, Happy Valley, Hillsboro, Milwaukie, Oregon City, Sherwood and Tigard. All information contained in these posts are copyrighted and cannot be used without prior written approval authorization from the author me Todd Clark. If you are looking for an outstanding agent please give me a call I would love to help you with all your real estate needs.

 

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Topic:
Real Estate General Information
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Groups:
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ETHICS and the REALTOR
Diary of a Realtor
Almost Anything Goes
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Tags:
lowball offers
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Todd Clark
Keller Williams Realty - Beaverton, OR
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494

Christopher - I am just not one of those agents that can leave my emotions at home, that just isn't me. These are hard working families that are losing their homes and having their values dropped by these sales.

Emily - I'm guessing that if this guy who is buying this property is an investor, he could be paying a lot of taxes and those taxes are now coming back to him in the form of a bailout for the banks for having giving him that great deal.

Michael - I do know more and more people are looking at their homes and the value they have lost and just shaking their heads, thinking are we next?

Mike - We are lucky here in Oregon, we are required to keep it in the MLS as active even if the seller did sign until the bank accepts the offer.

Bruce - They did on this one, it was 50% of what I perceive as far market value and ½ of what the loan value happened have been.

Feb 16, 2009 01:11 AM #107
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Todd Clark
Keller Williams Realty - Beaverton, OR
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494

Marilyn - I certainly did, heck I was trying to buy investment properties and every week I wondered what was going on and why they prices were climbing so fast.

Lisa - Sounds like you need to switch to a computer generated offer writing system. This will auto populate your buyers information in to the paperwork and save you from writers cramp.

Susan - I've had the same thing happen here, that is partially why I was so surprised when they did.

Carl - I don't want them to continually to go up, but I don't want a neighbor to be punished by bad bank policy either. I've never tried to put a buyer in the home they can most afford, that isn't me, I want my buyers to live within their means. The only past clients I've had to do short sales for have been people who have been relocated or divorce.

Angelia - Believe me that would help!

Feb 16, 2009 01:14 AM #108
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Todd Clark
Keller Williams Realty - Beaverton, OR
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494

Bob - I enjoyed the pun, so thanks for that. (LOL) I have seen the same thing here where like this one, I am really surprised by what is accepted, but even my own home has gone down in value, because of two foreclosures on my street that never even went on the market for sale.

Morgan - I guess, I didn't think about it that way either and you are right, it would have been the same or worse result if it does go to foreclosure.

Vickie - Anything 15% below what the asking price I call lowball. (LOL)

Lise - I think they are going on the market just as fast as we can get them off the market if not faster lately.

Mary
- I don't think there is going to be a fast change, I'm looking at the stimulus package and don't see much home for the housing industry in there.

Feb 16, 2009 01:19 AM #109
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Todd Clark
Keller Williams Realty - Beaverton, OR
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Bill - I did mean 1099, that is what I get for driving and blogging! Shouldn't do it, but I still do and then I didn't proof it afterwards. I am part of the neighborhood, so I do care and I care about the families that are being displaced as well. I can't be a robot, that just isn't me.

Jeff - I think they are treating it like the old days of cold calling, it is a numbers game, keep writing until you get an accepted offer.

Joan - I will continue to do that, but I will still feel sorry for the neighbors that include me.

Russ - I don't think the seller is upset, he actually thinks it is a burden being lifted off his shoulders and from the comments maybe the neighborhood should also because they won't have an eyesore if the house goes all the way to foreclosure.

Lane - As long as the neighbors don't blame me for the comps being ruined, I guess I should count my blessings that I'm even getting an offer and am on my way to a successful close.

Feb 16, 2009 01:25 AM #110
Rainmaker
591,234
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Todd,

I didn't say you weren't concerned about the neighborhood. What I said was: "As real estate brokers we are not responsible to the neighborhood! When your fiduciary is with the home owner you do what is best for them!"

If you let concern for anyone other than your fiduciary, your client affect your advice to them you'd deserve what you'll get! I hope your E & O insurance is paid up.

Concern about future comp's only comes into play when the seller has several more properties in the area. Typically builders will do almost any thing, but lower the price to avoid public records of lower sale prices. It's a game knolegable buyer's agents use for new home buyers, builders can be dealt with if you understand, but it's irrelevant for single property sellers.

Troubled clients are never easy, but you can't compromise your ethics! If you can't protect the client, it's very honorable to turn down the listing!  Compromising your clients best interest to promote your interest is immoral and illegal.

I hope you have a driver, blogging and riding is a great use of time! Blogging and driving scares me!

Bill  

Feb 16, 2009 07:08 AM #111
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Todd Clark
Keller Williams Realty - Beaverton, OR
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494

William, I use voice recognition software, so just like talking on the phone. As for the neighborhood, I only said I was concerned, it didn't mean I didn't do what was right. I do what is best for my clients, but I just wish we could do more for the community as a whole with the current situation as it affects us all.

Todd Clark, Helping Families Home - www.IFoundYourNewHome.com

Feb 16, 2009 07:17 AM #112
Rainmaker
591,234
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Todd,

I don't debate people i don't respect! If I had any question about your service to your clients, I wouldn't be here.

"I just wish we could do more for the community as a whole with the current situation as it affects us all."  Amen!

I've never gotten voice recognition software to work well for me, I think it's that I speak Michiganian with a heave dose of far west added to it. I mumble to myself, I use to make notes to a pocket recorder. I use a web cam with my laptop to record notes and properties as I research neighborhoods. What program do you recommend, I like this idea.

Bill

 

Feb 16, 2009 07:44 AM #113
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Todd Clark
Keller Williams Realty - Beaverton, OR
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494

Bill,

Here is the post I wrote about it, I suggest you check it out. I knew someone with a heavy Romanian accent and she swore by this software.

http://activerain.com/blogsview/289253/How-to-write-blogs

 

Todd Clark, Helping Families Home - www.IFoundYourNewHome.com

Feb 16, 2009 08:23 AM #114
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Deb - I do wonder if the bank negotiators are given a coin to flip to see if they are going to accept or reject an offer. I guess the ones that take longer to get a response are the ones that care more and make it the best 3 out of 5 when the coin doesn't go the way they want it to.

Roland - I know that I really can't control it or should I want to, but it just saddens me that bank policy is what is driving this. People are discounting the homes because of the expected wait time on a short sale.

Susan - I learned not to feel uncomfortable presenting those a long time ago. I come in with the attitude that my client is right in this offer and I back them all the way, even if I don't. I REPRESENT THEM!

Troy - That is what the 1099 does, but if the lawyer has that written off by the bank as part of the contract the seller won't receive that. If the bank says they are going to send it, then my seller just won't sign at closing.

Feb 17, 2009 02:11 PM #115
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Shirley - Thanks, I think on the short sales, the sellers just don't care anymore. But, on a traditional none short sale listing, I'm right there with you on those dang things.

Christine - EXACTLY!

Ron - Well, in my area the comps and the sales price are actually pretty close, he bought at a good price and the exact home next door sold three weeks prior for our sales price which happens to be only $4,000 off the original sales price, but in areas like yours where prices just dropped like a rock, I could understand your point.

Zilkia - I know of one that I have listed right now, only three places to work in town and owe of them shut down. 1/3 the homes when on the market the same day and the prices started to drop fast!

Feb 17, 2009 02:12 PM #116
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William - It was supposed to be 1099, but depending on the bank, some are still sending out that stupid 1099 at the end of the year and some banks have even tried to get sellers to sign a paper saying that when they get back in a good financial situation they agree to pay back the difference.

George - YES THEY ARE!

Laura - That is exactly why they took the offer, they figured why not give someone else a chance since we don't have one anymore.

Jim or Janet - The problem is that bailout is bailing money out of my back pocket faster than I can put it in there. I proud to help these people out of tough situations and I can't argue with how business is going, but I just feel like I've become part of the problem... I know, I know... GET OVER IT!

Bryant - I know, but what the bank accepts really can be. They look at the comps and the comps on this one really were about 50% of market value and original purchase price.

Feb 17, 2009 10:56 PM #117
Rainmaker
180,583
Dawn Workman
Veracity Real Estate Group, LLC - Camas, WA
Camas Real Estate Expert, MBA, 480-540-8100

I think until the media stops telling everyone how you can buy houses for pennies on the dollar we are going to see more and more low ball offers.  I know I have had some accepted and though WOW, but I have also had some rude and just downright mean agents not react so favorably to low ball offers as well.

Feb 17, 2009 11:07 PM #118
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Keller Williams Realty - Beaverton, OR
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Randall - I'm sure there are some ½ price bids coming in, they just may not be being accepted yet.

Bruce or Mary - So true, but why couldn't we have someone offer full price (LOL)

Amy - They already have, we just haven't closed yet.

Bill - Maybe I should start putting these offers at 50% myself, what do I have to lose.

Shuki - I sure hope we get another offer in, that would make me feel a little bit better.

KZB Vintage Homes - I think they have their eyes on the bailout rather than helping buyer or seller.

Feb 18, 2009 11:51 AM #119
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Eileen - I know they offer it low hoping to get a bidding war going and then some fool buys the home as-is without an inspection.

Lynn - That seems like sound advice especially if you are getting back to the multi offer situations.

Natasa - I include a home warranty even on my short sale properties, but I get your point.

Claudette - I am also and they buyer should be getting that back any day now.

Robin - WOW, that makes complete sense...NOT!

Feb 18, 2009 10:02 PM #120
Rainmaker
591,234
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Todd,

You ask: "Maybe I should start putting these offers at 50% myself, what do I have to lose."

Unless that's the market, the answer is simple: time and credibility! From a buyers point of view the list price is just a suggestion, like E-bay's "buy it now" but you need a reason for a low ball offer! The seller or in a short sale, the bank has to win some thing, while the buyer has to win big time!

Bill

Feb 18, 2009 10:19 PM #121
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Keller Williams Realty - Beaverton, OR
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Cameron - The sad part is the loss mitigation departments don't seem to be getting that point that they would be better off accepting the offers presented instead of foreclosing on the property.

Pam - That is what I'm talking about, the glut of homes that are short sales and REOs are affecting overall prices no matter what is being said by appraisers. If someone has to sell, they need to lower their price to compete with these sales.

James - I know your pain, I've had one in since September 1st and they are still jerking the buyer and seller around.

Jennifer - I really think it maybe a win for the buyer and the Realtors. OK, maybe the seller also.

Dean - I think it should be our decision as to the impact to the tax payer, heck I am a tax payer and I voted these idiots in and I plan to vote them out!

Feb 19, 2009 09:09 AM #122
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Todd Clark
Keller Williams Realty - Beaverton, OR
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494

Billie - Go love your man and don't worry about reading past the headlines, that is all that is really important anyway.

Simon - You may want to read the contracts that some of these banks are sending to the closing table. They are writing in things like the seller agrees to pay back the deficiency sometime in the future at a point the bank chooses. Basically they are trying to get sellers to sign contracts at the closing table... So watch yourself and I would have them give the contract to a lawyer or they may get a big surprise in a few years.

Christianne - I didn't even think of that. The local schools here get most of their money from our property tax and if that goes down, so will the state budget and we all know who they want to cut first.

Ross - Seems this one wasn't, but on a whole you are correct.

Mike - I'm with you as an investor, but I still see my own property go down in value. I've watched my own home go down in value by $40,000 in the last two years because of short sales and foreclosures in the neighborhood. Each area is different here and some areas aren't hit as bad, but I'm not prepared to buy 4 or 5 more homes in my neighborhood.

Regina - It does seem weird that they act like that, you would think they would want to get rid of these problem loans and homes as quickly as possible.

Feb 19, 2009 06:20 PM #123
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Keller Williams Realty - Beaverton, OR
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Stephanie - In this area that this home is located it didn't take a bad as hit as other areas of Portland, but I do agree with what you said about what the bank will accept. But, this time they did accept an offer at 54% of today's value and half of the loan amount due. It is also not an FHA or VA loan, the bank couldn't sell this loan apparently.

Scott - By duties are to whom ever I have a signature from at the bottom of my contract. Be it the buyer or the seller, I will represent them to the fullest, I just saying!

Diane - I agree it certainly is a big mess right now! At least the president seems to be trying to do something, will it work is the big question.

Brian - That was what was so surprising on this one, the bank accepted the offer and actually pretty quickly, I was really really surprised at that more than the price accepted.

Dawn - I react the same to any offer on any of my listings... "Is this your highest and best offer?"

Feb 20, 2009 05:28 PM #124
Rainer
30,303
matt mathews
mathews Realty Group - Yucaipa, CA

Got to say that here in Socal-Inland Empire to be exact, 50% below loan amount is right where the market is!  My last Property had a 1st @ $450K and a 2nd @ $53K.  Offer got accepted at full appraised value = $274,900.  The sad thing is, another home just sold in same neighborhood for $259,900.  What would you consider a low ball offer on those two properties??   

Feb 23, 2009 06:39 PM #125
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Todd Clark
Keller Williams Realty - Beaverton, OR
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494

Matt - In your case I would say that an offer for $160,000 would have been what I consider a lowball offer. From talking to others about your situation in your area, I think the market just stalled and then the prices started to drop and then in just snowballed.

I am hoping we don't have a repeat of that here in the next 6 months to a year. Thanks for your question it is a valid one as each market is differnt.

 

 

Feb 23, 2009 06:48 PM #126
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