What Makes You Think the Seller Will Accept That Offer?

This morning I was reading Charita's well-written post, "All Reasonable Offers Will Be Considered," and it inspired me to write this post.  I have been thinking about this for quite some time, and I'd really love to hear what my fellow Rainers think.

M&M yellow guy I have a listing that I feel is appropriately priced, and it received an offer a few weeks ago.  When my sellers determined what their asking price would be, they based it on several things.  Mostly, it was due to the very well-researched CMA that I provided to them.  Based on what has been selling of similar size, age, area and amenities, plus the fact the the area home prices have been steadily increasing over the past several months, they came up with an appropriate asking price and it went to market.

Now, I would never waste precious MLS space on a statement about "reasonable offers."  That should be a given.    If you havent' read Charita's post yet, click on the link above.  I'll wait....

Maybe I am not understanding something.  When the offer came in, it was a full $16,000 under asking price, and the buyer's agent acted like he was doing my sellers a favor.  This is not a million dollar property, by the way.  We are talking about the under $270,000 range, so $16,000 is quite a chunk!

Being a professional, I presented my sellers with this gift.  They weren't happy, but they are professional people as well, so they countered back at full price.  

Boy, did the buyer's agent give me an earful about that.  In fact, he demanded to know what business they had doing such a thing (!).

So I told him that based on the comps and the sales in the area, they priced it at exactly what they were willing to sell it for.  I didn't get snarky or rude.  I didn't chastise him or insult him with the "reasonable offer" line.  I just underscored that the asking price was based on research and that was what they wanted to see.

Isn't this what all sellers should be doing?  Where is it written that the asking price should always be undercut?  What's more, if your buyers can only afford a home that is $16,000 less than this, why would you show them something they cannot afford?

Help me out here folks!  What are you seeing in your area?

Jennifer Prestwich, REALTOR®

Your Castle Real Estate

 
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31 Comments on What Makes You Think the Seller Will Accept That Offer?

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SEP
22
 Thank you for the great education. I learned so much from your post.
9:39pm • #12
SEP
23
2 Featured Posts Outside Blog

If your market stats support your Listed Price, I agree that you should counter at the full price with confidence.

I think it's true that in any market, up trending or down trending, BUYERS have that mindset that they want "a deal".  Somehow, ours is an industry where people feel stupid if they don't get some kind of "deal" instead of simply the right product at the market price.  It's a social stigma to admit that one has paid standard price.  We can't change that, but we can change the DEFINITION OF A "DEAL" to suit anything the buyers/sellers want.

Ask your seller what they can toss in or give up while asking for that full list price.  At the end of the deal, your seller wants that $ CASH $ to pay debts, invest in new business, or sleep in for kicks.  As long as they get that bottom line dollar amount, can they leave the pool furniture?   Can they leave the chandelier?  Can they accept an FHA loan and a lower down payment, if they're confident that bank is solvent?

GIVE the Buyer their "deal" (blow the horn, twirl the noisemaker), and GET your seller the money.
12:25am • #13
1 Featured Post

Jennifer I think the very last sentence says it all in a nutshell. "What's more, if your buyers can only afford a home that is $16,000 less than this, why would you show them something they cannot afford?"  I could not say that any better then that and I will not ever to try and add anything to that.

I do think the other agent was wrong in saying what he did, very unprofessional of him.
3:06am • #14
643,431 Points 111 Featured Posts Outside Blog Called Shot Master
Thanks for the mention Jennifer. I think you said it all when you asked why show buyers homes outside of their price range. Perhaps the agent just did what the buyers asked him to do, but based on his response, it sounds like the offer price was his idea and he didn't do his homework. Go figure.
4:45am • #15
346,933 Points 29 Featured Posts Outside Blog Called Shot Master

Good morning Jennifer - we're seeing exactly what you described. Buyers (and buyers' agents) are conditioned to expect 10-15% wiggle room in 'asking' price and consistently offer much less than list price. Result: Sellers price 10% higher than they want expecting to negotiate. And the cycle continues.
5:15am • #16
729,231 Points 15 Featured Posts Outside Blog Called Shot Master

Jennifer, I'm with you on this one. If the comps support the price your sellers should stand firm.
6:30am • #17
983,065 Points 106 Featured Posts Localism Sponsor Outside Blog

There are stupid people everywhere and they're easy to trip over on your way to closing because they don't know enough to get out the darn street. The answer to "we have over list price multiple cash offers" is NOT "do you think the seller will take less than list price," but you can't stop them from asking it anyway.
6:45am • #18
128,751 Points

Lat week at my open house I had a buyers agent ask if there's "flexibility" in the price. I said sure, you can go as high as you'd like.

We have VERY low inventory, there were about 20 people in the house at the time looking around, I priced it very competitely, and this asswipe agent asks if there's flexibility. Hadn't done his homework or looked around. Most homes are going for over asking price in my market and there's 40 groups plus at every open house. It's a crazy hot sellers market, and his clients wanted to come in under asking price. hahahahahah

Unless you need practice writing offers and are trying out a new printer or something, don't bother with a lowball right now. Not going to happen.
8:46am • #19
858,978 Points 174 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

I think buyers agents assume that they can get some sort of break on the price and often shop that idea to their clients.  If you are right on the comps, then you should hold out for that price.
10:56am • #20
1,123,660 Points 90 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Many buyer are encouraged by their buyers agents these days to lowball it. I had one this week who came in at 15% below list price and said she told her buyers it was standard to discount the price by 10-15% on the first try.
11:41am • #21
158,040 Points 2 Featured Posts Called Shot Master

Real estate is about negotiations. A buyer may place any offer they want. Unless you have something in writing from the seller that states that they will not accept anything under x dollars, then you have to present ALL offers to the seller. Also, we do not know the motivation of the seller, so maybe that offer 16k under price might be appealing to them.

I think the buyer's agent was upset that the seller was not willing to negotiate. I think you handled it well in stating that the sellers are going to wait it out for a full price offer. It's not like you are holding out because of emotional reasons or reactions to the buyer's offer.

Personally, I wouldn't have countered back if none of the terms didn't change.
12:08pm • #22
299,908 Points 7 Featured Posts Outside Blog Attended Rain Camp

It sounds to me like you have an experienced agent who is not aware of the consequences of coming in  low. On the other hand, they are fishing to see your sellers actual motivation, and there is nothing wrong with that. A strong cma can only guide the principals to a likely price, but it is not set in stone and only the buyer and seller can determine the sales price.
12:33pm • #23
547,229 Points 9 Featured Posts Outside Blog Called Shot Master

Jennifer

Since the inventory in our area is minuscule, most offers that come in on a home that is in good condition and price right are over asking and there are a slew of them.
7:25pm • #24
1,348,414 Points 41 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Jennifer - I've had many sellers who want to price their home with room to negotiate because they're concerned that buyers want to buy under asking.  I think pricing it fairly makes sense.
7:49pm • #25
SEP
24
243,126 Points 22 Featured Posts Outside Blog Called Shot Master
Let's just talk about the elephant in the room, you eluded to it. If the buyer cannot afford the listing price of the home, they should not be shown the property. The attitude of the buyers agent probably tells you that he thought it was overpriced amd he showed it to his unqualified buyer for that reason. Now, on the other hand, perfectly priced or not, the buyer end seller determine the market price. Rarely does a seller get their exact asking price unless it is a. Multiple offers or b. the seller is willing to wait for that buyer to come along and pay it. You have shown value as an agent by being able to justify yiur seller's price, just don't let that get in the way of negotiating with a buyer that asks for $2500 in closing costs. Great discussion!
6:20am • #26
2 Featured Posts

I think too it depends on the area you're in. I found a property I liked, but it was WAY overpriced for the area, and was much higher than all comps. My buyer's agent told me I'd be safe offering closer to the comps in the area, and the listing agent countered back at full list price. When my agent asked why they weren't willing to deal, since it was priced so much higher than the others, the listing agent said they were confident they could get full price.

Sure enough, it was on the market for a couple weeks (an eternity in Orange County right now), but they ended up selling it for OVER list price.

- Pauline
9:27am • #27
298,751 Points 48 Featured Posts Outside Blog Called Shot Master

Good morning everyone!

Renee- I have been on the buyer's side of this scenario as well, where they just "knew" they should offer less.  I try to educate as much as I can - whether I am working with buyer OR seller....

Randy- That's one of the reasons why AR is so valuable - to hear how things are going all over the US and Canada, to gain some perspective!  Thanks!

Melissa - Everyone wants to feel like the are getting a "deal", don't they?  No matter what the market looks like, "value" is in the eye of the beholder....

Janis- I hope you start to see full price offers again soon.  In my area, I have been seeing full price and over full price offers all summer.  And - the key! - they appraise.  

Roger- I don't mind negotiating, but I would prefer that it stay realistic!

Peggy-Thanks!  My sellers are pretty solid on their price. 

Chris Ann-  That is true.  When my buyers are determined to lowball, I let them know what the current market looks like, and that the sellers may just say no.  But you never know unless you ask!

Donna-  I can't wait for the buyers to start getting it.... There are several who do, thankfully!  I have nevere heard of this other agent before - he isn't prominent in this area.

 
9:59am • #28
298,751 Points 48 Featured Posts Outside Blog Called Shot Master

Mike-  Eegad!  It can make your head spin!  You are seeing some crazy differences, that's for sure.

Richard- Our inventory is extremely low as well.  This is pretty good news for sellers, and the buyers are mostly catching on, too.  

Nan- Wicked indeed!  haha!

Lucas- You're welcome! :)

Rich- Wow- I love this comment.  You are so right about that - everyone wants a "deal" ESPECIALLY when it comes to real estate.  (If I hear one more buyer say "let's beat them up on the price" I'll scream!)

Chuck- I understand searching for a home that's a bit above what they qualify for and "want to" spend.  Depending on the situation, the sellers may drop their price, but not when it is priced at market and has only been on the market for a few days!  Thanks for the support. :)

Charita- Thank YOU for the inspiration!  Yes, the other agent did seem to think that the usual homework we do didn't apply to him....

Wayne and Jean- >sigh<  That is just not good for any market.  I hope that it catches up and that "Overpricing" by 10% starts seeing full price offers.

Michael- Amen!

Elizabeth- "There are stupid people everywhere and they're easy to trip over on your way to closing because they don't know enough to get out the darn street."  HAHAHAHAHAHAAA!!!!!  Thank you!

Andrew- That's awesome!  LOVE your comment about "trying out the new printer"...:D
10:13am • #29
298,751 Points 48 Featured Posts Outside Blog Called Shot Master

Bryan- Thank you- my sellers and I are standing firm.

ERica- I guess the key phrase there is "first try".  Hopefully for those buyers that strategy won't backfire, because the sellers can always just flat out say "no".....

Satar- So true.  I would never not present an offer to my sellers, no matter how ridiculous I felt it was.  Funny thing about that - when I presented this to my sellers they asked me why I didn't just tell the buyer's agent "no"!  I explained that it is my job to present any and all offers, and they can accept, reject or counter.  I told them that many buyers will offer a low price to "test" the sellers, and that they should counter at the price they would be willing to accept. 

Sandy - "only the buyers and sellers can determine the sales price".  You got that right!

Evelyn- It's been that way around here as well.  Denver metro has seen an historic low in inventory since the spring!

Christine - I can see why sellers would want to do that, with buyers assuming they "should" offer less... 

 
10:21am • #30
SEP
25
176,075 Points 58 Featured Posts Outside Blog

(1). Well, $16,000.00 below list is very common, even in the 270,000.00 price range. The sellers might be kicking themselves later for not accepting that offer ( assuming everything else in the offer was solid ). (2). it's up to the buyers, not the buyers agent to decide how they want to handle the full price counter. The offer wasn't rejected, so if it was me, I would counter back ( maybe $10,000.00 below list this time, but I would also include comps explaining why I am offering that amount, and why I believe my offer is strong. ( How many more mortgage payments are the sellers going to make while they wait for a full price ofer? How much will they be spending on utilities why they are waiting on a full list offer? They still have to do a home inspection, so how much money are the sellers going to be spending if the house needs repairs? List price isust an estimate of what you interpreted from the comps. Their offer is wht the buyers agent interpreted the property was worth from the comps. Their is room for errors, and or adjustments from both sides. And the market fluxuates while property is on market, and so do interest rates. That offfer should be worked out to a ratified contract. These don't sound like your typical lowball offer buyers, they sound like serious buyers to me. How many other offers have they recieved?
4:28am • #31

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