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"Lowball Offers on the Rise"

That was the headline of the lead article of the real estate section of Sunday's New York Times; Lowball Offers on the Rise

Lowballing Buyers I remember discussing a similar article from MONEYmagazine about a year ago. That author reported that some buyers were basing their initial offers at 15% below asking price and making multiple offers in an effort to locate "motivated sellers". So what has changed? In her article, Lisa Prevost reports that today's buyers are now starting their negotiations at 20-25% below asking price...DUH! It's a BUYERS MARKET!

With almost ALL of New Jersey qualifying as a "declining market", as defined by Fannie-Mae, why wouldn't a "ready, willing & able" buyer LOWBALL? That was the question I posed to my sales force at our weekly sales meeting based on reading and discussing Ms. Prevost's article. Sure, in some specific price ranges (under 300K in Toms River, NJ) the buyer risks LOSING THE HOME THEY WANT, but if that is made abundantly clear by their agent, don't be afraid to write it up!

My brother-in-law is the father of three beautiful young girls; all under 6yrs of age. He has a mantra that he uses to excel at fatherhood, "Embrace the chaos!" In this "emerging market", the agent's who will succeed, not survive but prevail, will EMBRACE THE CHAOS! Contrary to the popular press and omni-present myths out there, there are PLENTY of BUYERS around. And, what's more, the recent mortgage reform regulations have pre-approved them for us!

As listing agents, we would be remiss in our obligation as SELLERS AGENTS not to inform and educate our clients as to the reality that it is a BUYERS MARKET here, today, now! The question is, "Do you want to move and get on with your life, or do you want to stay right where you are?" If the answer is, "Yes, I want to move", EMBRACE THE CHAOS! Chances are; what ever loss Sellers perceive they are taking will be 'washed out" on their purchasing side.

The article closes with the profile of a FSBO from Northern New Jersey who has her home on the market for $885,000. She states that she has received "offers in the low $800's and has told them to look elsewhere." She, obviously, DOES NOT WANT TO MOVE! Let her stay right where she is, in denial. For Sale By Owner

Today's buyers have an abundance of options and historically low interest rates. Their mantra is "NEXT"! We all have choices. I choose to listen to my brother-in-law!

Jim Flanagan, GRI, e-PRO

Posted by Jim Flanagan on 03/21/2008 01:44 PM

Comments (7)

buyers, market, lowball, offers, rise, toms, river, new, jersey

7 Comments on "Lowball Offers on the Rise"

Awesome post Jim, but doesn't this just make the sellers boost their homes 15% with the initial sale price expecting a low-ball offer, actually threatening to price the house too high? Happened to me twice last year. Both props became rentals. When perfectly good offers did come in, the sellers wanted to dicker and lost both. Arrggh.

03/21/2008 01:53 PM

by Keith Berne, Real Estate Broker, Realtor, GRI (RE/MAX Equity Group, Inc.)

Jim,

So many homeowners are in trouble right now. They ask one number, but as it sits on the market , they are turning them loose at amazing discounts. A low offer, yes, ridiculous, no!!!

03/21/2008 01:54 PM

by Linda Lipscomb RE/MAX Lexington Henderson County TN

Jim. Great information. It is indeed a buyers market. It would be better to sell at a discount rather than wait. With all of the house break-ins and all. Also, the house is going to look less atractive as the lawn goes to pot. I think an owner has to sit down with spouse or partner to figure out the absolutely bottom line they will take and take it or quit complaining. Thanks for your post. Royal..

03/21/2008 01:57 PM

by Royal Goodman @ GI Group, LLC (GI Group, LLC.)

Nice fresh blog about a subject I don't see much of.

03/21/2008 02:05 PM

by Neal Bloom-Realtor ® Assoc.-CRS-Weston FL (RE/MAX Premier Associates)

Love this Blog and completely agree. To Keith I would say that you have to determine if your sellers want to stay or sell when you are listing it. David Knox has some great videos about overpricing that I give directly to my seller's prior to listing their property.

03/21/2008 02:05 PM

by Julie Paez GRI, CHMS (Coldwell Banker Mulleady)

Keith,

Not if we "embrace the chaos" at the listing table and "show" our Listing Prospects the "market facts" which are determined by the BUYERS! IMHO, if they (Listing Prospects) refuse to accept the facts of life, our choices are limited. I read a post by Andrew Lenza where he detailed exactly how he handled this situation. When I find it, I'll send it to you.

Linda,

Your right, many homeowners are in trouble, and it's our obligation to HELP THEM! But it's a partnership not a burden...too many times Sellers set the price and hold us accountable because we ALLOW IT! I'll send you the same post from Andrew.

Thank you,

Jim

03/21/2008 02:06 PM

by Coldwell Banker Flanagan Realty

Jim,

Could you send me that post by Andrew Lenza as well?

Thanks

03/21/2008 02:07 PM

by Julie Paez GRI, CHMS (Coldwell Banker Mulleady)

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