Verbal Real Estate Offers and the Myth of Fire Sale Prices
Our office received a verbal offer from an area real estate agent this past week. The offer was undeniably a low-ball (not surprising, given what I know about the real estate licensee who brought it). Some would say the offer was insultingly low, while others might lecture "it's a buyer's right to try to get the best possible price they can".
As the old saying goes, "fish gotta swim, birds gotta fly". And some would-be real estate buyers gotta take that long shot and propose an offer so low that 99.9 per cent of sellers would tell them where to put that offer.
First, I'll toss out a few words about verbal offers. In real estate classes, we are taught that unless an offer for real property is in writing, on forms approved by the state, it's not valid or enforceable. We still see verbal offers once in awhile, mostly from non-licensees, but occasionally we receive a verbal offer from a real estate agent or broker who should know better. I have encountered a few real estate agents in rural communities and sparsely-populated areas (including Bayfield, Ashland and Douglas counties in Wisconsin) who brought a verbal offer to our company. Curiously, I have never received a verbal real estate offer from an agent or broker in the Minneapolis & Saint Paul Minnesota metropolitan area.
I look at verbal offers from a "standards of practice" point of view. The real estate agent who regularly deals in submitting verbal offers impresses me as being chronically unable to play by the rules. A verbal offer doesn't look smart or shrewd or savvy. Instead, it sends the message that the agent who can't be bothered to get a written offer is lazy and the party making the offer may be insincere or undependable.
Of course, not all low-ball offers are verbal. But there seems to be a surprising correlation between the verbal offers we've received and the very low price proposed by the buyer who submits a verbal offer.
We see both unrealistic buyers and sellers in today's real estate market. I view it as a sign of an improving market when there is a balance between sellers who expect to sell an overpriced home and buyers who expect to get something for nothing. That equilibrium is a sign that the market is returning to some degree of normalcy. And it reaffirms my belief that neither seller overpricing nor unrealistically low offers from buyers can be considered a recipe for success in real estate.
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