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Not All Sellers Are Motivated

Earlier today I presented an offer for one of my buyers on a condo just outside of our planned community.

After pulling the comparable sales in that complex and a couple of neighboring properties of the same construction we determined the asking price was higher than what it should appraise for. My clients really liked this one. It had some upgrades and 2 parking stalls that were at the same level as the condo. So after researching the numbers my clients settled on a price to offer the seller.

I submitted their offer to the listings agent. Our offer was lower than the asking price by about $12,000, but higher than any of the recent closings. Quite generous being that the prices in that complex have seen price decreases over the last six months. Other than price, our offer was clean. No concessions, no special provisions and a full pre-approval with docs with a primary local lender and well known loan officer.

I get a call back from the listing agent within a half hour of presenting the offer. Their client wants to counter offer us back up to within $5000 or asking price. The problem is we are already pushing the price and do not believe there is any hope for getting the appraisal. I asked, if it doesn't appraise will your client lower the price? The response was no, they want their number and nothing less.

With several similar units for sale, their property over priced and on the market more than 3 months; they are definitely playing a dangerous game. The prices have softened in their complex and they did not seem to get the message. If my buyers purchase another unit they will have missed an opportunity to sell this property at a strong price.

I will mention a side piece of information. This property was purchased several years ago for cash, has no mortgage and has gone up more than 250% since then. It may not be relevant for the conversation of what the home is worth, but I do find it interesting when considering their demands.

Posted by Randy L. Prothero - Hawaii REALTOR® on 12/19/2007 12:33 AM

Comments (35)

real estate, real estate agent, realtor, real estate buyers, real estate sellers, hawaii

Originally posted at: Hawaii Randy's Real Estate Opinions: Not All Sellers Are Motivated

This post has been included in Hawaii Information Honolulu County, HI Information

35 Comments on Not All Sellers Are Motivated

DEC

2007

Randy... IDIOTS, IDIOTS, IDIOTS.... AND GREEDY.... I could see if they weren't going to walk away with much, after paying the realtor. You already had me at 2 idiots when they said no, if it under appraised. I am sorry, what would they want, the best of 10 appraisals? And what happens if they still were all $10,000 less or more... NO???? So I give them 2 idiots...

But now, as I right this and after you tell me that they have made 250%??? They get 10 IDIOTS and 4 1/2 GREEDY S from me..... lol And I will end with, SAD, SAD, and a shame, because the buyer loved the place. Why not come down $5,000 and agree that if it didn't even appraise for that, that they would sell. I am dumbfounded.

Hey Randy... should we possibly put part of the blame on the realtor for not explaining all of this to the clients? I mean, I know we don't know 100% what the conversation has been.... I am not even a realtor and I think I could be very convincing if I put it all on paper for them. Again, SAD and it's A SHAME.

Jeff - I am sure the agent went over the comps. I know the agent and he is pretty good. This is what can happen with an over priced listing. This one may be around for awhile.

Randy, I keep preaching this (appraisal appraisal appraisal) and thankfully we're seeing less and less of the situation you've described.

What happens next? You still have the buyers and they will purchase. The sellers home will still be on the market.

Who wins? Your buyers.

Randy,

Unfortunately there is not motivation to sell. How will they sell the property if a bank will not appraise it for what they think it's worth. They must be back in 2004...I wish times were still like that but in reality unless someone that pays cash is willing to take that price with no appraisal...that deal will most likely not happen. We can't control the market if it is impossible to sell at a price that is unreachable.

Randy. Good for you.

This is a real case for buyer's agency. Fortunately, with historical data, agents who can analyze data for their buyers and give them good advice make a valuable contribution to a stable market.

If a buyer WANTS to pay over market for a piece of property that may satisfy their special needs, so be it. But, today, with good market analysis from their agents, buyers can make wise decisions.

Over the years, I've seen too many buyers who overpaid. Then when they wanted to sell and move up, couldn't. Having buyers trapped in a house for which they overpaid doesn't help anyone.

This is so typical of what is wrong with my market in MD and Northern VA. Sellers fixate on a price to give them a desired net proceeds with no consideration of the market. They price real estate like theirs was the only one in the area for sale.

What I always want to see is the same property on the market 6 months later when prices are even lower, and they will be.

Randy, you're right about your last paragraph not having anything to do with the value of the home, but it has everything to do with the mindset of sellers such as these. I find it incredible that in our market we still run into sellers like this one. They don't care about the sales, the appraisal or anything but that "magical number" they have their hearts set on. Why list the home for sale if you really don't want to sell it? It would save everyone involved a truckload of time as well as get the absorption rate in check if they would take it off the market.

I see this as a greed situation. If you pay the price they want you will be setting the new standard...I would go for another unit in the complex if comparable even if he upgrades are less.

Randy, Sounds like your buyers just need to go back at their "highest and best" and let the sellers chew on it for a few days. There are certainly unrealistic sellers out there BUT their agent should have addressed this issue prior to listing the property.

Randy,

At least your Buyers have more options, they will move on while this Seller just sits on the market. It amazes me that some have resisted the change in the market.

Sounds like no motivation whatsoever. It's not costing them much so they will probably hold out until they get what they want (if they even can) or get frustrated. Perhaps it is also a ploy to eak out a few more dollars. I would think the buyers owuld say - this is it, take it or leave it - then move on.

Jeff

Randy- What I see is 2 things...one someone might just want that extra parking space, have cash and pay it. The other is that the listing will stay on the Market! I have had, and have, one of these Sellers. I even tried to cancel the listing, and they stated they were in no hurry so they extended the listing for a year....oh my......:(

Randy, reality is sellers understanding what a "true" generous offer is. If they don't accept it, nothing will happen. All you can do is show them the facts. If they ignore the facts, what are you going to do?

Well, I guess it's time to move on to a property that's actually worth the asking price. Good for you, for not wasting anymore time with that one.

DEC

2007

Bottom line...we both know it will not appraise. Mine is in the same area....and we just ordered the appraisal....I'm not worried...but then again ...ours is priced accordingly. What is wrong with these sellers....and their agents ....geez.

If you are representing your Buyers as a Buyers Rep, then you need to protect your Buyer(s). If the Seller is not going to be realistic, then it is their problem and they will have to lower the price- or just keep the property. At least you will be able to sleep at night knowing you looked out for your Clients best interest.

However, hopefully, the Sellers Agent is being realistic with his Seller Client. Maybe the Seller's Agent needs to dump the listing?

Jeff, I had one like ths a while back. I was presenting in person and the sellers got huffy.

"No problem," I said to the agent (in front of his clients). "Here are the comps that I found, and if you could please share with me the comps you guys used when you priced this, I will bring them to my clients and see what we can do."

I pulled out a detailed market analysis with a side-by-side comparison of their unit compared to the recent sales, giving them full dollar credit for their improvements. Then I left.

Of course, the listing agent had not done this and the sellers came down.

Kris - We put in an offer on another property for a $20,000 less and it got accepted within the hour. We will be opening escrow today or tomorrow as soon as we receive back all the signed documents.

Neal - They just don't get it. If they are jot careful they will be looking at selling for even less than we offered.

Lenn - Having me represent them in the purchase definitely protected them from over paying for the property. If they tried it on their own or with an inexperience agent the bank most likely would have stopped it.

Maggie - I agree completely

Gary - We did and got it yesterday.

Bryant - I doubt I would have taken the listing.

Suzanne - I am not amazed, I have seen it several times. I have turned down similar listings and will continue to do so.

Jeff - We moved on and the one we got will make it even harder for them to get there number.

Kathy - Maybe I see it differently then some. I would rather spend the time finding a good client, than waste it on a property I can not sell.

Gary - All we could do is move on.

Lisa- Now if they change their mind, it is too late, we just got accepted on another property.

Sally - The one my buyers just got should also appraise.

Rick - All true. I am sure the seller's agent is not too happy.

Patricia - That is a great way to handle it. I had a buyer's agent on the other side try that one day. The problem was he did not do a good set of comps. I sold it that same day to a much higher offer. My response back was that either mistaken or the folks bringing the other offers were. LOL

DEC

2007

Randy, Into all lives a litle rain falls. Not all sellers are motivated. Not all buyers are motivated. And, today I had a tenant call me out to show a unit -- he wasn't motivated either. Didn't need a place until March, but I couldn't get that out of him on the phone for love or money! Come to think about it, not all agents are motivated either. Jerry

Jerry - Good point, besides the clients many agents don't appear to be motivated. I guess that happens when many do this part time as a hobby and not full time as a career.

Randy, Guess we will be cleaning out a lot of realtors who don't make the cut during this buyers market. The problem is that a lot of them will be young realtors with a lot of potential. Come to think of it, our numbers in Hawaii are still growing. Don't know what to make about that? Jerry

Jerry - We still have a pretty strong market. Probably over half of those joining will never have a transaction.

Actually Randy, this is a good market. Our agents are really clicking! That said, I am still looking for a weaning in the number of realtors on Oahu. Jerry

That is probably one of the most difficult situations that you have when you sell real estate. Greed becomes a very important factor...great post.

Randy,

These sellers evidently were in no hurry to sell. Yet, there are sellers who do need to move on, but are adamant about the price and then proceed to blame everyone, but themselves, under the sun for not selling.

DEC

2007

Jerry - I am sure most of us who do this professionally feel there are too many agents out there.

Vincent - Greed is a factor for some.

Esko - I have met a few of them also.

DEC

2007

Randy - perhaps the fact that the seller paid cash is contributing to his lack of understanding of the mortgage process. When representing a buyer I always add to the contract that this offer is contingent upon receiving an appraisal at or above the purchase price. Most buyers aren't willing to pay above that, even when they like the house. Listing agents need to be explaining both the market and the process to their sellers, and not just being an order-taker.

Sharon - Either way they will most likely not be selling their property anytime soon.

I go over the market value of the properties carefully with my listing clients. I am amazed sometimes when I see properties priced real high. This one wasn't in orbit, but it was still above what any reasonable appraisal will bring.

DEC

2007

i've referred to these properties in the past as the inactive active listing.

the listing agent might as well include in the property information, "cash buyers only"

Jay - They might as well since the appraisal is not going to come in.

DEC

2007

Of course all sellers are not motivated!?@#$

Most sellers who say that or have it inserted in the property remarks just hope that will bring more people to look at the property, hoping someone will bite, and they won't have to negotiate much.

Someone who is motivated to sell better have the home priced right, ready to negotiate, and ready to make the move.

Joseph - very true, what they say may not always match their intentions.

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