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10 Reasons Real Estate Buyers Want to Low Ball, Steal the House, and Stick It to the Seller

By
Mortgage and Lending with Platinum Home Mortgage Company NMLS #238304

What is the biggest misconception in the mind of the guy about to make an offer on a house? 

  1. This seller must be absolutely desperate to sell this house.
  2. I will ignore the asking price, because all houses are priced with plenty of negotiating room.
  3. Sellers expect low ball offers in this market.
  4. Any seller would be lucky to have me buy their house.
  5. It can't be a good buy unless I am able to steal the house.
  6. If this offer doesn't go through, I'll just keep on low balling until I get another house.
  7. I am a brilliant negotiator.
  8. If the seller won't take this offer, I will walk away for a few weeks and let them stew until they do.
  9. No one else would want this house, anyway.
  10. No one pays full price in this market unless they are stupid.

The sorry state of our economy and the desperation of the retail world have combined to brainwash our clients about buying real estate. Somewhere along the way, "stealing the house" and "winning the negotiations"  became more important than landing the best house in the best location at a price you can afford.

Extreme bargain hunting has become a national addiction, and it is spilling over into the real estate industry.

When EVERYTHING we buy from automobiles to clothes is marked down 50% or more, has a coupon attached for a further discount, and comes along with freebies on the side, is it any wonder buyers of real estate have developed an attitude of EXTREME superiority, believing sellers are mere beggars?

Can you see how they have been conditioned to believe that as a buyer, they can call all the shots, no matter how ridiculous?

Many think those beggar sellers must be thinking this:. "Please, buy my house. I am desperate, you know, and expecting your ridiculous offer".

And you know what they say,  beggars can't be choosers.  And so the stuggle to convince buyers that a house, ANY house, is priced "right" continues.

Here's a news flash: beggars may not be able to be choosers, but losers can sure be snoozers.

Buyers should ask themselves this: Am I willing to risk losing the house I love because I am addicted to scoring an extreme bargain?

Isn't getting the BEST HOUSE in your LOCATION OF CHOICE at a hugely deflated price enough of a high? 

Or has extreme bargain shopping become like a drug addiction? You will sacrifice your long term well-being and logical thinking for that 10 minute high of feeling ever so smart because you "stole" the house?

Before you smile just thinking about how to make the seller squirm, remember this:

There is just that one piece of real estate in the whole world. That is what makes a house different from buying a car or a sweater.

Remember these things too: You cannot return it. You can sell it, but the cost of doing so will probably be far more than any savings from your extreme bargain.

Then get your priorities straight. It is about getting the house. Not getting the extreme bargain you can brag about at your next party. That feeling of superiority will last what? For a few days?

Getting the right house can give you a lifetime of pleasure and satisfaction. Even if you pay full price, you will look back and be amazed at the EXTREME BARGAIN these economic times served you up on a silver platter.

Want to know another secret? Sellers are not nearly as desperate as you think.

 

Written by Janet Guilbault, Mortgage Lending Expert Based Out of the San Francisco Bay Area

 

 

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Anonymous
Mikey

Nor. Cal. is behind So. Cal. so you are seeing what we saw in 2007 now.

The reason you are getting lots of lowballs because it is a sign that the buyers know that it is a mistake to buy now but their emotions are getting the best of them. The proper way to react on many listings is to work A LITTLE with them on price to overcome their reservations and the seller moves on quickly. But sellers generally won't, they are gambling another better offer is around the corner. This is definitely a "bird in hand" market. If you have someone interested, make it work and move on.

Jan 10, 2009 03:05 PM
#123
Kathryn Hoffman
Century 21 Affiliated - Naperville, IL
The RIGHT Move for You!

I recently negotiated an offer on a home with a very young, first time home buyer, engaged couple. We became enmeshed in a dual offer! It became fun(in a way) to use sales skills, instead of just writing up an offer(filling out the form). I educated, I figured out their P&I with my amortizing calculator what their payment would be at 100% downt to 85% of the list price. We settled on a respectable "highest and Best" offer.  Guess what?  We lost in the dual.  Now understand, I had prepped them from the moment we walked into the home that the house was now, after 102 DOM that it was now priced to sell and that they would not be overpaying by offering full price.  I also knew that there was another potential offer coming up (although NOT written yet)  I think I was most proud of my question," Are you buying a HOME to live in or a DEAL?"

This finally got them ot offer a repectable offer.

But we did "lose" in the dual. Of course now, she is crying buckets of tears and wants to offer the sun, the moon and the stars. The sellers (a trust) is not interested--the trust attorney made the decision on the offer and he could care less about how much my buyer loves the re-done kitchen)

I am soory I did not "win" but I also know that I did all that I could think of do educate my buyers in this negotiation.

 

Maybe next time.......................

 

Stay warm all you Northerners :-)

 

Jan 11, 2009 11:26 PM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Kathryn: I know it is gut wrenching to watch a buyer lose a house....I have been there! Luckily, you had done everything right, and can fall back on that.

However, situations like the one you describe are what buyers need to understand. Perhaps when you are in this situation next time, you can relate this story to your potential buyers. It is very powerful, and is not simply "advice" coming from the Realtor.

Jan 12, 2009 03:25 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Hi Mikey: Wow. I haven't heard from you in a long time.

I think you make a valid point....buyers have a fear, perhaps subconscious, that the price will be less 6 months from now. Several other people made the point that lowball offers were realistic offers because the price of the house could (will?) drop and be less later on.

Okay, fair enough. BUT....

When you want to buy a BMW convertible in March, do you offer the dealer what the car would sell for on a rainy day in December? (Not a good example for those of you in LA)

When you want Valentine's candy, do you offer Target the price it will be on Feb. 15th? (75% off)

When you are booking a beach house rental for the 4th of July, do you want them to give you the January price? If you do, then someone else is going to get the beach house, and you are going to be lighting firecrackers in your backyard.

Pricing is connected to timing. Even in the worst market, this will continue to be true.

 

Jan 12, 2009 03:34 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Loanetter: Actually, the point you bring up is what inspired this post. What mortgage broker doesn't have 15 files on their desk with 10 of them waiting to do anything until they get that 4.5%? Once they do, then they wait to get the ultimate bargain. Kind of a problem with 30 day locks?

 

Jan 12, 2009 03:36 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Donne: The very first thing I learned while in the car business was this:

Only a lousy salesperson cuts his commission. If you don't believe in your value, how can you expect them to?

And when someone does cut the commission, instead of being thankful, they usually think you were just over charging.

Jan 12, 2009 03:39 AM
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Jenny: I would agree that letting the chips fall where they may is one way of teaching buyers that lowballs don't work.

But I honestly believe there are very few true lowballers out there. I think most people just need to see the light and understand how to go about making offers.

That is where the Realtor can make a huge difference.

Let's be honest, most of us would rather NOT learn things the hard way.

Jan 12, 2009 03:42 AM
Suzanne Gallegos
Equity Real Estate - Advantage - Salt Lake City, UT
Realtor - Salt Lake City, Utah Homes

I recently sold a home that had received multiple LOOOOWWWW ball offers from two different parties. When the house went under contract for close to the current asking price they were on the phone asking if the house was "really" under contract. They were sure it was the house for them and they wanted it so badly. Hello?????

Jan 12, 2009 03:21 PM
Anonymous
MIchael Sosnowski

I heard a guy on Squawk Box a few months ago say this.....most people in real estate speculation should not be there, they have no experience.  You buy a house for three reasons - in this priority: 1) It is a house you love and it meets your personal living needs, 2) You can afford it and 3) it is a good value.  People have become lost thinking that there house is a savings mechanism rather than "shelter" that bring them enjoyment for many years.

Jan 16, 2009 08:06 AM
#131
Anonymous
YES!

THANK YOU THANK YOU THANK YOU.  I HAVE MY NOTES FOR TOMORROW'S MEETING.

I AM A SELLER THAT JUST WENT THROUGH A 3 MONTH WAIT FOR BANK APPROVAL ON A SHORT SALE.  THE WHOLE TIME WAITING I HAVE BEEN HIT BY THE AGENT AND BUYER COUNTLESS TIME ABOUT PRICE.  EVEN MY AGENT CALLED ME A FEW NIGHTS AGO WITH A LOWER PRICE.  I TOLD HIM NO WAY.  A DEAL IS A DEAL.   AND HE CAME BACK AND SAID WELL THIS IS A DEAL BREAKER.  IF YOU DONT AGREE BY NOON TOMORROW, I AM CUTTING THE BUYERS LOOSE! 

I DECIDED THAT NIGHT THAT I WOULD SAVE HIM THE TROUBLE AND EMAILED THE BUYER THAT THE HOUSE IS OFF THE MARKET AND I CALLED MY BANK AND CANCELLED THE TRANSACTION.  THE NEXT MORNING I CALLED MY AGENT AND ASKED HIM NOT TO CONTACT ME AGAIN.

NOT ONE DAY PASSED BEFORE THE BUYER AND THEIR AGENT BOTH CONTACTED ME TO PLEAD THAT I MEET WITH THEM TO RESOLVE THE PROBLEM  I AGREED TO HEAR THEM OUT TOMORROW.

THE REAL KICKER IS THAT THE BUYER AND THEIR AGENT ARE PALS AND THE AGENT OWNS THE HOUSE NEXT DOOR!  CONSIDERING THAT, AND THE FACT THAT THE BUYERS OFFER IS 400K ON A THE HOUSE APPRAISED AT 705K 700K AND 745K IN 2007, IT REALLY LEAVES A BAD BAD TASTE WHEN FOLKS LOSE SIGHT OF THE BIG PICTURE!!!

 

Feb 15, 2009 10:11 AM
#132
Marian Goetzinger
Pine Knoll Shores Realty 252-422-9000 - Pine Knoll Shores, NC
Crystal Coast Real Estate NC

Janet, great post and so very true.

May 14, 2009 06:14 AM
Anonymous
An Insulted Potential Buyer

I respectfully disagree with most of you.

I am looking to buy a home.  And, I have an amazing realtor.  I have also spent hours doing research on comparables and other items.  Finally, I have been a homeowner in the past.  I have come to one conclusion after reading this post: most of you realtors appear to me to be unethical and greedy (which coming from a lawyer says something).

Let me state my case.  We are looking at homes in the mid to high 300s.  However, these homes are in an area that is not currently selling.  Comparable homes in the past few months have been selling around $300 even.  Now, reading your posts you would say how dare I come in with a low ball offer of 15-20% and insult you as the realtor in addition to the sellers.  According to this post you are encouraging buyers to overpay so as not to be "insulted".  This is a business . . . it is not personal.  By trying to encourage your clients to overpay even though the market does not agree with you (which you all clearly seem to be trying to do in the above conversation), I can only draw too conclusions: 1) you are being greedy in that you want a higher commission (and in theory there is nothing wrong with that) but 2) this strikes me as being clearly unethical.  Shouldn't your client that makes a low-ball offer based on study, logic and reason be respected over your pocketbook and relationship with other realtors?  It's a business people . . . it should not be personal.  If some one rejects my offer, then good for them, I can move on.

Look, I am sure you have dealt with true situations where you all are right, and I understand that being a real estate agent is a tough job.  But this stereotype you all are espousing seems unfair.  The economy tanked because people were getting mortgages that could not afford (not blaming the realtors).  However, it seems that you all are encouraging people to overpay for homes, thereby making people potentially get in homes that they cannot afford.  Sounds like this is exactly why our economy tanked in the first place.  Looks like you all agree with Mr. Gekko.

Just a different opinion.  I know you all will disagree and it is ok as this is your livelihood and it means a lot to you.

 

 

May 21, 2009 08:45 AM
#134
Janet Guilbault
Platinum Home Mortgage Company - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

I am sorry this post insulted you! There is nothing wrong with making a low offer. I am thrilled to hear you say you have a great Realtor, and wish you the best of luck in getting the offer accepted. Believe me when I say there are many people who do not do their research, and think offering 50% less than asking price is ok.

I disagree that Realtors want their buyers to make higher offers just so the commission will be higher. I know it is tempting to think that.

Just like it is tempting for me to believe that lawywers, who bill hourly, take much longer to finish a case....because that is what benefits them financially.

PS: Please rethink this statement. It is so off base: it seems that you all are encouraging people to overpay for homes, thereby making people potentially get in homes that they cannot afford. 

How does a Realtor "make" a person get into a home they cannot afford? Sounds to me like you DO blame Realtors for the tanking of the economy, although you claim you do not.

 

 

May 21, 2009 10:40 AM
Anonymous
Rosemary Scalera, Century21 McLennan & Co.

To the "insulted Lawyer"........I am a 21 year Realtor who does not make any of my buyers pay more for a house than they want because I educate them about the market and help them make their own decision.  You definitely have negative feelings about real estate agents and claiming we are greedy.  Well I have also heard the same for lawyers!!  It IS business, not personal.  Market value is "what a willing seller is willing to sell for and what a willing buyer is willing to pay".  Sounds like YOU are making it "personal".  I have a feeling it is more of a "control issue" with you.  Good luck with finding a "willing seller".

May 22, 2009 12:45 AM
#136
An Marshall
Berkshire Hathaway - St. Augustine - Saint Augustine, FL
Your St Augustine Real Estate Consultant

enjoyed this perspective and what a lot of comments, too!

Apr 21, 2010 12:15 AM
M. Suzi Woods (Gravenstuk)
NOW Sharing the life and spice of the GC one day at a time - Grand Canyon, AZ
Suzi Woods, Prior Independent REBroker in MS

Janet, you posted this in January 2009. I found it via a reblog. It would be fun to see each commenter comment again as to whether anything has changed regarding perceived value . Not only is this a timeless and timely post, it is very insightful as well. The comments are fun as well.

Apr 24, 2010 11:47 AM
Vickie McCartney
Maverick Realty - Owensboro, KY
Broker, Real Estate Agent Owensboro KY

Hi Janet~  I know it can be frustrating, but buyers as well as sellers are entitled to do it their way.  Yes, it can be more work for us, but such is life.  The media as well as others influence buyers and seller to do ceratin things and think certain ways. I feel it is up to me, as their agent, to provide them with the facts and statistics, but ultimately it is their call.  Sometimes they win and sometimes they don't.  As long as they understand that and that their perspective may be out of line and they amy lose the house.... 

Apr 24, 2010 12:46 PM
Anonymous
Anand B

How do you get around this?  Seriously every buyer I come across is more of a jackass than the last.  They want zero-money down with seller financing with a price less than what you owe.  All for the outrageously stupid reasons that you pointed out (it's true, I've asked them why they are such asses and their responses are exactly the points you mentioned).  BUYERS TODAY ARE 100% DELUSIONAL, and I'm inclined to think they need medication.

HOWEVER, real buyers aren't showing up.  It's only these unreasonable buyers with offers you either laugh or yell at.  Where can "real buyers" be reached - if they exist at all?

Jun 12, 2010 06:50 AM
#140
Bob Willis
Berkshire Hathaway HomeServices California Properties - Orange, CA
Orange County & L.A. County Real Estate Agent

Excellent article.  I reblogged it.  Thanks.

Jul 25, 2011 02:11 PM
Anonymous
Joshua Greene

True that. These buyers these days are pretty dumb. There properties that have reasons to be low balled but not all of them. Sometimes properties are actually priced at the right price of value and need not be low balled at all regardless of condition because owner and agent priced the property bearing that in mind. Duh. You are absolutely right about the buyers these days being absolutely delusional and yes they need medication.

Apr 03, 2016 03:28 AM
#142
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