The idea that because you have X number of dollars, that your favorite home is worth X number of dollars just does not work.

I have been on both sides of this wrong headed approach to deciding the value of a home. That is I have had buyers insisting on making an offer that I know will go nowhere because it ignores the value of the home, and I have represented sellers who are receiving offers that are not even worth putting on paper.

Most of us try very hard to show clients property in their price range.  I work at making sure buyers have seen enough property that is on the market along with some recently closed properties to give them an idea of what a property is worth.  I also typically put together a spreadsheet in an effort to establish a value range for a property.  That is all done before an offer is made.

Sometimes best efforts do not work.  Clients take the money they have and assume that it will cover the property they want.

I have seen two cases recently where people have made the assumption that just because a property is on market, the owner must be willing to lose tens of thousands of dollars just so the buyer can get their favorite property to fit their budget.

Now if you are in situation where the buyer is desperate to sell, then maybe you will be lucky and make that work.  More likely if your agent tells you that they want to do a verbal offer, you have a pretty good clue that the agent expects the offer to be rejected and is not worth doing the paperwork.

If a property is in foreclosure, and you want to make a really low offer, more power to you and good luck. 

However, if you and your agent have figured out that my client has a small mortgage on a property and is in no rush to sell, then why make an offer on a property at 40% off of the tax value and way below the asking price?

Sometimes tax value means nothing, but in this particular case I had worked hard to get my client to price their property right.  It was well below tax value, but it certainly was not 40% below tax value.

When you get one of these lowball offers, I am perfectly happy for my clients to present their best price as a take or leave it option.

In this particular case, the buyer wanted some specific features that I know are not available in our area at the price that was offered.  I know they could not buy a lot, build, and come anywhere near the price that they offered.

Actually I figure the buyer looked at some foreclosure prices that were in a particular subdivision a few miles away and added some dollars for the location of my client's home.

The problem with this kind of math is that all those foreclosures are long gone and under contract.  To buy a home in that subdivision where the foreclosures are would now cost more than the buyer offered for my client's house. Then there is still the location and feature differential.

In the end we all know there are plenty of properties around that are over-priced.  They do not sell and most of them do not get offers.

Why people have decided to low ball reasonably priced homes is beyond me?  It just ticks off the seller.

My advice to buyers is to pay attention to the local market and stick within your budget.  Do not assume that everyone who has their home on the market has to sell their property like it is a foreclosure. If you want to buy a property, you have to find someone willing to take your offer.

If you are shopping for unique features or locations and find a property that fits, it is likely the seller realizes he has those features and other properties do not.  There is value to those features.  The seller paid for them and likely wants some compensation for them.

In the end a property is only worth what the seller is willing to take and a buyer is willing to pay.  That changes over time, but unless the property has been on the market a long time and the seller is desperate, a low ball offer that just happens to match your budget might not be your best way to get your dream property.

As I like to say "Sparkling waters have value."