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165 Comments on WHY I CAN'T TELL YOU WHAT TO OFFER!
Like a few other people suggested, I would do the comps and have a high, low, medium and explain what could happen with each option.
I have no problem suggesting price, contingencies, etc. I have never been burned with my philosophy of what my value is to my clients, so maybe I'm less risk adverse than some of you.
LAY IT ON THE LINE...OR LEAVE IT AT HOME!
Riccardo
My Place
Wow, so many responses, most of what I wanted to say has been said. But after some 18 years at this I have found some buyers will review your comps, some won't. Even if they do, they'll offer what Uncle Joe tells them to offer, comps "schmomps".
Everyone is different. With some buyers you can review the data and get them back to a realistic offer. Some people you can read, and know that nothing you do or say is going to change their minds. Unfortunately, sometimes you just have to let them make the Uncle Joe low ball offer and pick up the pieces to regroup.
I have no problem offering my opinion or advice when it comes to price and terms. Naturally, it has to be supported with market data, helping them review all of the inventory they've viewed etc.
My clients are usually experienced buyers-- I do give them my opinion-- and sometimes more strongly than others. But you are right-- it is their decision! Great post! Kathy
I agree -- we cannot tell any buyer what to offer. I go over the range of values... and then go over how closely the house in question comes close to meeting their criteria.. and then ask them on a scale of 1-10 how they would feel if they lost the house to another buyer.. this technique works well.
Paula, This is a good discussion with tons of opinions and ideas from successful agents. There is no shortage of opinions from a bunch of Realtors, me included...
When I was selling real estate, often the buyers would ask what I thought they should offer and I tried to help them rationalize their decision. Like all of you, I would go over various key factors that were public knowledge like DOM, the asking price compared to other comps on the market and recently sold properties, repairs needed, things they wanted to do to make the house better, etc. Ultimately, I told them that they had to figure their offer out for themselves because they had to live with their decision in the end.
I would help them figure out that their offer could include seller concessions for closing costs, furniture that they wanted in the home, things they wanted repaired, fences wanted, French doors wanted, appliances wanted. etc, etc. I helped one buyer pick out a whole kitchen set of appliances from Lowes that we added to the contract (model numbers/colors) and they got everything they asked for! Another buyer got 2 bedroom suits, a dining room suit, a living room suit and a hall full of books! These negotiations were fun but the price they wanted to pay was still theirs to make.
I liked telling them the story about when I bought my home that was being shown to several buyers and when my wife said that I could negotiate if I wanted but I would be DEAD if we didn't get the house that we both wanted. I knocked off $2000 and was on pins and needles for 24 hours and we got it!!
Finally, I think it is very important for the buyers to understand that $1000 off the purchase price is only going to save them around $4.75/month so in the grand scheme of things, a few thousand bucks is not a big deal. A hamburger a month!
This is definitely a sticky situation. Buyers always want us to tell them what to do especially if they have lost a property in the past because someone else offered more. The answer I always give them is this: How bad do you want the property? If this is your dream house, than offer the maximum amount you are comfortable with since you most likely will not have a second chance (in Las Vegas, you always offer your highest and best up front since you are 90% of the time dealing with multiple offer situations). If the buyer tells me this is not their absolute favorite, than I tell them to tell me how much they want the home and make them put it on a scale of 1-10. Once I determine their level of desire, I will decide how much I advise them to spend.
Buyers are looking to you for advice. It's the age old question arising when we are faced with making a decision that scares us and is not something that we do on a regular basis, "WHAT DO I DO NOW?!" An agent that I work with asks this question when working with a buyer in this circumstance - do you want the lowest price or do you just want this house? He's successfully won negotiations on competing offer situations every time and, in almost every case, just by the skin of his teeth. When he asks the list agent how much better his client's winning offer was, the list agent is usually relaying that the offers were ridiculously similar, but it was X that won the seller over.
I relate facts on why one loan is better for the borrower's situation over another. I relate facts on why one rate is a better buy than another. I relate facts on what their loan balance will be in X, Y, and Z years so that the borrower better understands the choices before them. If asked what I would do, I explain the facts behind why and it's always the loan and rate that is the best financial decision for the borrower.
The best thing you can do is provide them with the market values and go from there!
Mmn- I work my many buyers. I get this all the time. I agree with your most of your process. One thing I always ask my buyers is " Would you be upset if you lost this home based on your offer?". You generally get a read from their response. If they say no- they aren't really tied to the home emotionally. If they say pretty much anything else, they are getting emotionally involved (which is normal). You just need to LISTEN to the cues your buyer gives. Good blog post!
Great Blog. All we can do is show the buyer's comps and let them know what houses have sold for in that area. At the end of the day, the buyer will decide what price they are willing to pay if they really want that house.
Hi Paula, I enjoyed your post and reading some of the comments. I didn't specifically see anyone mention what I have encountered several times - the buyer/seller wanting to shift responsibility to someone other than themselves. For example, I had a buyer once who asked me what price to offer for a property that was relatively new on the market - I told the buyer that it should be close to asking price if he really wanted the home because the seller would not be emotionally ready to take much less. He offered full price, cash but did an appraisal and found the property wasn't worth what the sellers wanted (I think the appraisal was skewed but that is another topic). The deal fell apart and he blamed me for almost paying too much. I also had a seller once who was given a low offer, I showed him the comps that indicated his property was worth more so he decided to counter offer, when the buyer stalled (not due to the offer - just life got in the way) - the seller panicked and retracted the counter offer but he blamed me for almost losing the deal. These are just a couple of examples to prove my point. Most of my buyers and sellers trust me and my market research, they value my opinion and we work together very well but there are always the 20% or so who make us want to retire early! :-)
I talk through different scenerios with the buyers and sellers but I don't give exact amounts - it is their option and their decision. -Kasey
When a buyer asks what they should offer I ask them where pricewise they ideally would like to end up. It forces them to have a clear idea what would be acceptable to them. I show them the CMA so they know average values. Realtors should definitely guide buyers in price ranges so as not to tick off a seller with the opening bid.
I just lost a buyer this week due to this subject. I advised down to every detail except the exact amount they should offer. Your three points are how I feel too; it's not my money, I don't know what the Seller will accept, and the Listing Broker certainly shouldn't tell me. I'm comfortable offering a range based on comps, but not an exact figure.
Re-blogging this! Well-deserved feature. Thanks!
Paula~ This has been such an interesting discussion that I just had to check back in to see how it is going. What a wonderful debate you inspired. Clearly, we have a wonderful range of opinion and methodology. Congratulations on being so inspirational!
Great post. Often times, our client's want us to tell them what to do. Add to your list: If I tell you what to offer and your offer doesn't get accepted, then it's all my fault.
Now I do tell my clients what NOT to offer or rather let them know my experience on low ball offers, especially with my client's who need full assist. More often than not in my market, sellers aren't willing to accept lower than full price on an offer asking full assist. If they will, it won't be more than 5k max. I have to explain to buyers all the time that they are asking the seller to lower their price twice.
I have no problem describing various senarios and suggesting what a Buyer should offer. They still make the final decesion.
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