The magic number is $100,000......

By Lu Kalaj

Real Estate Sales Representative with Vision Realty Centers

January 19, 2008 01:07 PM

What is going on? I received 2 offers this week on 2 different homes. Where the homes are both priced right.

The one home is listed at $335,000, and an offer came in at $235,000. This is $100,000 less the listed price. I could not believe it. The area sales are comping between $250K and $350K. I just cant understand what agents are teaching buyers. So, my motivated seller, counter-offered at $265,000, which I thought was admirable. When all the motivated buyer did was came in at $250,000. Even at the counter-offer, the seller would still have to come to the table with an additional $35,000 after all the closing costs. I am so heartbroken for my seller.

The 2nd home is listed at $300,000 and an offer came in at $260,000. This house was originally priced at $360,000 just 6 months ago. I'm at an awe.

Our buyer agents need to show their clients homes that they can afford, and stop insulting the sellers with such low offers. There are plenty of motivated sellers withouth having to help lessen the value of homes.

So, tell me, why is $100,000 the magic number these days?

Lu Kalaj

The Michigan Group

248-214-3319

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Mario Rea

Talmer Bank - Macomb, MI

VA Loans.FHA Loans. New Construction.Conventiona

It's because some sellers are taking those low offers. I'm a loan officer in Shelby Twp, MI about 40 minutes East of you, and I see it all the time. The most disturbing part about all of this is, that the houses are still hard to get value for.

Jan 19, 2008 01:23 PM

Jim Albano

Prudential Damiano Realty - Little Falls, NJ

Team - Jean-Marie Vantuno / Realtors North Jersey Real Estate

I think a lot of it has to do with what people are hearing on TV and reading in the paper.

Jan 19, 2008 01:23 PM

Sonja Babic

Sonja Babic/PRIME Realty NC, LLC - New Bern, NC

New Bern NC, PRIME Realty NC, LLC

I am afraid that its not buyers agent as much as its media, buyers think all of the sellers are desperate and that they can do what ever they want. We still have few months to deal with this. Happy selling Lu.

Jan 19, 2008 01:26 PM

Simon Conway

Orlando Area Real Estate Services - Orlando, FL

A home is worth what someone is prepared to pay for it. On the first home, you had a buyer and seller just $15,000 apart. I'd of pointed that out. I'd of calculated how many months mortgage and other payments would have eaten that away and I'd of let them know that in Michigan, they could very easily spend way over that $15,000 before they get another offer.

The second one doesn't sound like an insult at all. An opening offer $40,000 off asking in your market? That is a deal waiting to happen.

Jan 19, 2008 01:31 PM

Sandra Carlisle (Ayers)

Berkshire Hathaway California Properties - Newport Beach, CA

Real Estate Marketing & Sales

The value of a home is what the buyer is willing to pay and the seller is willing to sell at. The comps are just a guide. If the home has been on the market for 6 months, with no offers until now, the market is SCREAMING it's opinion of the value at this time. Same for the other home.

It's not you, and no matter what a buyer's agent says to a buyer, only the buyer will decide how much they are willing to pay. You should be happy, especially from what I've heard about the market in Michigan from two different couples who relocated out here, to have an offer at all. Much less one on two different listings.

If you're sellers don't play, those buyers will buy another home from a seller who needs to sell more than they do and that home will be your new comp. You think $100,000 is bad???

You don't control the market.

Jan 19, 2008 01:32 PM

Larry Bettag

Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL

Vice-President of National Production

Problem is that there are so many "fishers". There are so many people that want to fish for that low and desperate deal. There's nothing wrong with it, but it is a pain in the ____ nonetheless.

Jan 19, 2008 01:35 PM

Mohamed Mekhimar - Accredited Buyers Rep , E-Pro - Richmond Virginia Real Estate

RE/MAX Commonwealth - Richmond, VA

I working with buyer right now and they like a $265000, and my buyers want to put an offer for $170000! Buyers knows that they can get good deals and agents helps them!

Jan 19, 2008 01:52 PM

Ron Parise

LocateHomes.com - Cape Coral, FL

As a buyers agent I wonder why your seller priced their home $100000 over market. Obviously they dont really want to sell it. Id say you were lucky to get any showings at all, much less an offer.

Jan 19, 2008 03:07 PM

Latonia Parks

Top Bragg Realty, Fayetteville NC, Home of the 82d ABN DIV - Fayetteville, NC

Certified Military Relocation Expert

I find it insulting as well but the bottom line seems to be seller desperation. If the seller's have to bring money to the table to get out of the house, they are in a difficult situation. I look forward to the other comments.

Jan 20, 2008 12:29 AM

Broker Nick

South Florida Real Estate & Development, Inc. - Coconut Creek, FL

Broker Nick Relocation Broker Service

Only the have to sell sellers are going to take those kind of offers. But in reality buyers are testing the market as well. Counteroffer in a timely manner, and explain to the seller this is what we have to do and not to take it personal. I am a listing agent, and that is what I have to do constantly. It is a battle.

Jan 20, 2008 01:13 AM

Simon Conway

Orlando Area Real Estate Services - Orlando, FL

As I said before, the market is what it is. Our jobs as buyers and sellers agents is to get the very best possible deal for them. The emotion has to be removed and replaced by business decisions.

Jan 20, 2008 01:36 AM

John MacArthur

Century 21 Redwood - Washington, DC

Licensed Maryland/DC Realtor, Metro DC Homes

Lu - There was a comment above from a lender that mentioned they are having a hard time getting the low ball homes appraised. If that is the case, your sellers need to face the cold hard facts regarding their price. If they lower it $50,000, it will still be $50,000 above the market.

No one is insulting you. Buyers agents are doing their job. They are showing buyers the homes that the buyers want to see.

It is not about you. It is not about your sellers. It is about the market value and apparently neither you or your sellers are in touch with that fact.

Jan 20, 2008 05:22 AM

Hugh Krone

Weichert Referral Associates - Hamburg, NJ

Realtor, Sussex County NJ

In Nj we have dual agency so you can be on either side, you don't have to be a listing agent or a buying agent. BUT in my county there is over an 18 month supply of homes on the market and quite honestly I would take one qualified serious buyer over three new listings in a heartbeat. But even from the buyers agent side it gets depressing when you call someone your working with and tell them you found what there looking for, you explain why it is such a good buy at this price and they still want to offer 40% less. Its just the reality of the market right now.

Jan 20, 2008 07:23 AM

Matthew Rosov

Amerisave Mortgage Corporation - Laurel, MD

Certified Mortgage Planning Specialist

This is truly a buyer's market. Some of these offers are coming from investors. They are attempting to get the biggest bang for their buck.

One problem with accepting a rather low offer is you're setting a precedent for the next home owner in your neighborhood looking to sell their home. Likewise, if your neighbor sells for such a reduced value then when it comes to your turn to do the same thing, you will be judged by what that neighbor has done.

Jan 20, 2008 11:33 PM

D B

Quakertown, PA

e-PRO, Realtor - Bucks County PA - 610-952-3578

Well! What a story. I see this happening as well. It is a buyers market, and the Media tells us all it is Doom and Gloom. The buyers do this because they can. It is up to the seller to decide what to do. I also had one that was listed at 269,900 through a year of marketing, reduced to 229,900. The offer was 195K we settled on 200K, but 30K under any other house that has sold in there. Amazing!

Don

Jan 21, 2008 12:05 AM

John MacArthur

Century 21 Redwood - Washington, DC

Licensed Maryland/DC Realtor, Metro DC Homes

Lu - I am glad you are thinking out-loud. The answer to your question is YES, you should have feelings about doing your job. The part that seems to be eluding you is that having passion for completing the job only works if you remove the premise that you are emotionally tied to the outcome. You are not.

You probably need a great deal of passion for the art of real estate. The art of real estate is assisting your client so that they experience the best deal possible. You are not called on the make them happy. It is not about feelings. When you confuse passion for the job with allowing your feelings from preventing you from seeing a true picture of the market, you are wasting the passion you have.

Passion about the activity may cloud your ability to see what is best for your client. Fighting for the feel good outcome often results in failure.

Jan 21, 2008 12:52 AM

Anonymous

Real Estate Review

The low prices are a product of this housing market, and there's no changing it. Home prices have not bottomed out yet, and they won't bottom out for several years to come. Then the recovery will be long and slow. Last year, home prices fell 12%, and they're projected to fall by the same amount for each of the next two years.

If you are an agent and you don't educate your SELLER, then don't complain about the low offers. Many properties across the country are worth less than 1990's values. Sales prices well below tax appraisal and/or mortgage value is common. Most listing prices are severely inflated, but sellers are uneducated and have an overinflated perception of their homes' values. Offers are being accepted for hundreds of thousands less than listing price, because realtors are agreeing to list the properties at inflated prices simply to "buy the listing" and to please the buyer. That just means that homes will sit on the market for many months to many years without showings or offers.

In this market, don't ask realtors for advice. They're out for themselves. Do your own research, be reasonable, understand that losses will happen in this market, and be reasonable. Listing property for inflated prices really just hurts the seller. Since the market is continuously falling, the longer a property sits on the market the more the seller will lose.

Feb 22, 2008 02:47 AM

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