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

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

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

Posted by Janet Guilbault California Mortgage Banker on 01/07/2009 12:53 PM

Comments (141)

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

JAN

2009

Thank you for the list....it's so true, not only in California, but here in Minnesota. We are seeing it everyday and it drives us crazy...prices are at incredibly low prices and you're right...the buyers want it even lower and throw in all the furniture and the lawn mower or no deal...the media has "empowered" them to think they do hold all the cards and working with more sellers than buyers, this market has become extremely challenging. Educating buyers is most important, and explaining the current market is a must. I do wish more realtors would do so, versus just being puppets to their clients and "low-balling" 30% below a price already 15% lower than what a seller paid for it. Thanks again for your blog...it's nice to know we're not alone out there.

I so agree with you! I am dealing with those buyers right now, that want the deal of the century - only to find out that they pissed off the sellers and the sellers are not willing to counter on ridiculous offers. The only way the buyer will understand is if they have something to sell themselves and see how it feels with a "low ball" offer handed to them.

Amen!!! I just had a buyer and during my buyer counseling appt I asked them "If you were to see a home that you love, at the right price would you buy it today?" The answer was yes, of course. Well I find them the house 200k under appraised price, (w/ some room to negotiate) they love the home... and what do you think they want to do..... everything you have mentioned on your list above. UGHHH... They drive me crazy

What about "The media has been telling me for a year that real estate is desperate and you should be able to make any deal?

Thanks for your post

Tony

Joe and Cindy: My inspiration for this blog is having plenty of pre-approved buyers who take forever to buy. The reason? They cannot feel satisfied until they have the ultimate bargain.

Then while shopping at Christmas, I realized why. There is nothing at all out there that most of us need to pay full price for! No wonder they think this way.

The way I see it we have 2 choices: play the game and price properties too high, or educate buyers to understand the art of making a successful and reasonable offer.

Somehow the buying real estate has been confused with buying a pair of pants.

Tony: The media is guilty as charged!!!! I should have pointed this out in my post, because that is an important point.

They are getting "lowball" training from all sides, aren't they?

Nelva: That experience you mention is when you know extreme bargain addiction has kicked in. It is no longer about the house. It is about bragging rights to stealing the house.

Show them this post. Seriously.

Johanna: When I was first trained in real estate one thing they drilled in our heads was not to insult the seller because you risk killing the negotiations completely...sellers get insulted.

Part of the problem is we are not used to negotiating in our culture since it is done only to buy cars, houses, and at yard sales. So we make these dumb mistakes when we go to buy a house.

That is why I feel it is a really important part of a Realtor's job to help buyers understand how to stay on track, and get the house instead of the bargain. If you can get both, fine. But don't sacrifice the house for the bargain.

That is stupid.

Well said! Buyers have been preconditioned to expect the deal of the century, and this mindset is being applied to all segments, even to those where it's inappropriate. Not sure that this idea is going to be disappearing anytime soon, though.

Great post Janet. It is truly disappointing and aggravating the direction our consumer society has headed. Buyer's are even low balling on bank owned properties here in Arizona. We try to tell them that the homes are already priced at about 50-60% of market value but they insist on going even lower. And then get bent out of shape when the bank rejects their offers. I don't know who is telling these people they can do this, but they're hearing it somewhere. Anyway, best of luck.

That sounds like the majority of the buyers I have been working. It is SOO frustrating. I have actually shown homes to one of my buyers in two other counties (besides the one they actually wanted to be located in). It was a long, tedious process, but eventually they did buy- So don't give up hope!

Li: Maybe it won't disappear, but as a real estate agent I would rather take a pro-active approach to save time, effort, and aggrevation (not to mention disappointment on the buyer's part)

Some buyers can only learn the hard way, I will grant you that. Some are looking to their professional to guide them into the right frame of mind.

Janet, excellent post! Very well stated and written. It has become almost a feeding frenzy again, only this time the frenzy is what you said, buyers trying to see just how far down the price will go, instead of realizing that in most cases, these houses are already incredible bargains!

Jerry: They hear it on the news. They see it when they shop. They talk about it with their friends. They watch commercials on TV about give away deals in the car business. It implants in their brain and transfers when they buy a house.

That is my theory anyway.

Jamie: Maybe buyers who were more reasonable might have taken less time to buy? Maybe that extra time could have been used to to another transaction?

I think trying to talk honestly and openly about pricing and negotiations in the beginning can save lots of time, and is a smart thing to do.

In a way, when we allow buyers to call the shots, we are letting them control the transaction. No wonder it is frustrating!

T & D: A reverse feeding frenzy !!!! I love it! If you are posting, please use this as your next headline. What a perfect picture of what is happening.

Buyers feeding on the desperation of sellers. You nailed it.

Janet,

This is very well written post. You have made a lot of good points that most current potential buyers can learn a lot from. Extreme bargain hunting had indeed become a national addiction but we need to stop it from spilling over to the real estate industry. We spent considerable time doing CMA's and determining the right price but for potential buyers to make an offer more than 20% lower than the asking price (especially when the house has just had the CMA and a price reduction) is like saying our work is worthless and telling the sellers that we want to rob you and you should let us get away with it. A 20% off or more on an article of clothing, piece of furniture or appliance is OK since the seller will make money on a smaller profit margin with a high turnover of the product. But, when we are talking of real estate, most sellers are only selling one piece at any given time and just giving one percentage off the market price, we are talking of a bigger dollar amount that comes off and they will not recoup any time soon. Bargaining is OK but let's stop the extreme bargaining philosophy to spread to the real estate industry by educating the buyers.

Gerry: You comment is also very well written and brings up some great points. It is a little bit insulting that even when buyers are given our professional advice, they still feel they are smarter about the "right" price for the property.

It is almost as if they ALSO need to get the bargain that even the Realtor thought was impossible.

You have also brought up the point that sellers taking less is different from a retailer taking less. You are so right about that.

Buying an appliance for your kitchen should not be compared with making an offer on a home. However, you would be laughed right our of Sears if you tried to offer 30% off the washer that was already priced at a closeout price.

It's really hard to get the trust of the consumer today after the horible news about the real estate market for the past 2 years.

They believe that they must get a good price because the value will continue to fall.

They believe that they can get a better rate next month. The newspaper said so.

They believe that they might lose their job if the economy worsens. The news said so this a.m.

It's hard. The best buyers out there today are folks who really want to buy a home. Not the folks trying to get a steal. The non-foreclosure non-short sale is still overpriced. Sellers do not have a realistic view of the market and many listing agents are not giving them the facts.

We just keep working.

Janet...with any offers, I just convey them, tell owner not to get excited and the ones that are business people take it all in stride. They don't flip out.. No is the answer and if any movement, here is what it is kinda thing. I explain the seller does not need to buy a kidney with these proceeds and there is no pressure...the buyer would rather have a super property owned by a weak struggling seller and really hit a home run with a low ball purchase. Its all the flip this house, how to steal real estate legally informational shows and books.

Sadly, it is a very true statement that you snooze you loose. With today's historically low interest rates it's a great time to buy! I regularly counsel buyers that it is a lifestyle decision. Does it work? Not as frequently as I'd like...

... I am working with a Buyer who couldnt stomach "only" offering 10% less than the asking price. He felt that he should be offering 20%-30% less just as a 'matter of principle' in this market - regardless of how much he (and I) felt the home was really worth.

His followup was that he couldnt go back to his family and say that he 'only offered 10% under listing price' because he was afraid they would "laugh at him" and he couldnt handle that !

... gotta love current buyers ...

Great post Janet !

I try to educate my buyers when they want to put in an offer by showing them the avg. list to sell price in the area. For example, one area may be selling at 97% of asking price on average (which factors in things like concessions) That way they usually don't want to do the crazy low-ball offers.

THIS IS GREAT!!! :) I'm so glad that I had the opportunity to read it. It is SOOO true!!!

I agree Janet. I have had had clients that have to make a killing - "I WANT A DEAL" they say. If its not a deal they don't want it. They feel they want a deal at all costs.

I'm in full agreement. Luckily I'm seeing areas of our market turning into a bit of a seller's market. Our inventory levels are down to less that 6 months in some places.

This is a really great and well written post. Buyers are completely out of control initially. However, a few years ago we were pulling our hair out over Sellers doing the same thing. It was their way or the highway. I'm ready for that balanced market we hear about, even if for only a short time!

It's sooo true, Janet. It's everywhere. I recently had an offer come in on a listing that was 40% under list price. The house was already priced well under the competition. Go figure. Congrats on your feature!

What a great post! You hit the nail on the head. It is okay to want a deal, but not a steal.

Great Post Janet. So true in this part of the world as well. I strongly feel that It is the duty of us the "Realtors" to educate the Buyers, show them some true numbers. We all know what Media is doing - making it Worse!!Recently the Canadian Real Estate Association issued a statement that prices have declined by 10% nationally. Now this 10% decline got highlighted by Media, where as they pretty much ignored the fact in the statement that most of the decline has occurred in the Western Provinces of B.C and Alberta etc. where the price appreciation in the past few years was abnormally high in the range of 20-30%.

But the big question is - are the buyers willing to listen?? Let's continue to do our job of educating those Deal Seakers!!

Janet,

Good post, you bring up a lot of very good points.

But overcoming fear is very tough to do.

The number one fear of buyers is that they don't want to pay too much for a property, and considering the market, the price that they pay for a home today, will probably be more than they would have paid in 6 or 12 months.

Janet - You hit the nail on the head with each and every point you drove home in your post. Exactly!

Sheldon also added an important idea in that often times it is pressure from the parents that force the buyers to "never make a full price offer". That is some very strong pressure.

One of the things I do with my buyers is to have my paperwork partly filled out before we sit down to write the offer. Most of the time one can research and pretty well know what mortgages are due on the property under consideration. I tell my buyers that in order to be the best we can be as negotiators, we need to understand the other side's position as well as we possibly can. Once we get to that critical moment when the buyers insist on a lowball offer, I tell them "Let's take a look at why the sellers probably cannot say yes to what you are proposing even if they wanted to, and why you will probably lose this house."I then develop before their eyes a Seller's Net Sheet and that usually shows the sellers will need to take $XXXXX number of dollars to the closing table to GIVE their property to them. When you tell the buyers that most American families have very little or no savings in the bank, they do tend to believe it, because that is also the position they are in.

Does it always work? No, but it sure helps a whole lot more than it hurts by spending the extra time to educate the buyers.

Thank you so much for this post. Now we just need to make sure buyers understand this!

Excellent assessment of the current market. It is also important to note - as in the comments- the role that the media is playing in convincing people that if they are not stealing they are over-paying! All you can do is educate the buyer and prepare the seller. This will pass and people will be talking about the great deals they got in 2008 & 2009.

I think too many people think they are just so much smarter than every one else. I also have to tone down sellers to remember they have very little pricing power right now.

Although I wish everyone was not suffering the same frustrations that I am, it is also nice to hear that I am not alone. I am working with buyers right now that found the perfect house but offered way to little and lost it. Now all they want is that house and nothing else that I show them seems to satisfy them.

I just got back from an appt. Bank Owned Property once listed for $229,000 by the sellers. Now that is banked owned it is $139,900. Worth about $190-$200K with some improvements. Guess what? It still isn't cheap enough. This home is about 2000 sq ft. If the buyer loses out enough they'll get it. Since this is an investor buyer she will just move on, but with a buyer that will occupy a property will get tired of writing offers.

Yep!! Buyers Market-Just listen to the news

Janet... what a fantastic post! And so true. I've never re-blooged a post before, but I'm going to learn how so I can reblog yours for the buyers in my area. Thanks for being so insightful.

I like your writing style - I think you hit it head on! There are many point sof view and there are alot of homes on the market who do have "desperate" sellers. Unfortunately there are more distressed homes or homeowners out there than sellers who only "would like to sell". The forclosed homes and relacation moves are killing the resale value in neighborhoods who have many very well kept and beautiful homes.

Janet- A great post and so true. It doesn't matter if it is California or it is here in Maine. Every buyer feels that by presenting a low ball offer the seller will accept or at least negotiate when in most cases they will not even negotiate because of the ridiculous offer. The media has played a LARGE role in this market.

Rick

Well priced homes are actually generating multiple offers. My buyer was willing to offer over list price because she saw the value and wanted the house. Thankful her desire to steal a house was quelled by her love of the home

Janet, that was very amusing! Thank you for sharing sucha great post with everyone! I hope you have a great day!

How timely and oh so accurate. Further to the bad behavior of Buyers and them having gotten their buying confidence primarily through some form of media. Buyers also interpret that as "Real Estate Agent Desperation", and tend to think that all Realtors are starving and would do pretty much anything to consummate a sale. Not so - Just because our market place is changing, doesn't means we should compromise our integrity.

Part of my initial counseling interview covers this - after discussing the market I as Are you willing to pay a fair price for a house? Are you willing to pay full price if the comps justify it? If they're only interested in something at 40% less than current list price, I suggest we're probably not a good match.

Right on, Janet. The media has created a mindset in these buyers and they don't think twice about low balling.

This is so true.

My last client said his brother and dad told me it was CUSTOMARY to offer 15% off asking price. I had already provided comps showing the asking price was at the lower end of the comps. Go figure; dad and brother have more knowledge than we do. That offer did not even get a counter. WONDER why? But the pressure from family is high so the game goes on.

I keep thinking if these buyers get enough rejection, they will wise up. I have had buyers from other areas say to me "We took a beating so we don't have any sympathy for these sellers." but those buyers were not low balling too bad. We purchased a $240k for $225k.

Janet, the way to see if a low ball offer will work is to submit it. Unfortunately many sellers ARE NOT desperate and will not let you steal their house. It all depends on the seller's motivation to sell.

I am putting in a lowball offer on a short sale this week because the bank RAISED the price on the property 15%.

The market will still set the price for most properties. Good deals will still see multiple offers to raise to market vaule.

Good Luck in 09'.

I've seen the same things as Faye. "We lost a lot on the sales end, so we'll make it up on the buying end."

Janet, Good post. It was well written and it generated great comments. Thank you and thanks to everyone who commented. It was well worth reading.

Its a hard thing pricing right now because even if you price a property 10% below everything else, buyers still might come in another 10% low based off the principles you spoke about. It's a tricky situation, I've heard the arguement that we should price high because the offers will come in low anyways. Being educated and knowing how to price correctly is a real artform and expertise right now in the New York City market.

what a wonderful post. you are so right

thanks

Janet - I received just this type of offer today... The buyer is just fishing to see what the seller will accept - I see a counter offer in their future.

We see this in our resort community every day. We have a name for representing these buyers in our office: "The Low Ball Tour." It means we are going to be writing a lot of insulting offers around town. Great post.

I am not really in the market, but that is the general consensus from everyone I know who is. They have been told to think that they can get the house for WAY less than listed for. I know some that have scored big from low ball offers as well. If I liked a house I would put in a "fair offer". Great post!

Well at least you guys have buyers that are writing offers! How about those who want to wait until the rates go down to 3%.

Janet - Bargain hunters were everywhere 3 years ago too; trying to make offers so that they would have some cushion when it "hit the fan".

I bought two houses that the agent(s) made the comment: "Had I known that they would sell it fot that, I would have bought it!"

It's "worth" whatever anyone is willing to sell it for :)

Thanks for all the time and effort on this post. I am linking to it on http://www.sugarpinerealty.blogspot.com (crediting you, of course) and promoting it as a January "must read" for my colleagues at Sugar Pine Realty in Sonora, CA. Thanks again. Mike C

Janet -

Great post and I realize that it is directed at buyers looking for a personal home. I think I would probably drive you crazy as a buyer. I am in investor and I purchase between 25 and 35 houses a month in Memphis, TN. I hold quite a number of properties in my personal and family portfolio and all the agents that work with me love the volume - BUT they hate the process. I buy CHEAP - and offer well below what is considered rock bottom, but I am a professional investor and always want a better deal.

I sympathize with you that my mentality as a business man running his business is starting to spill into the mainstream home buyers who think that every beautiful property on the market is up for firesale. Best of luck with your business and I hope 2009 is a great year.

I wish every buyer would read this post. Well said. In fact, you put it much better than I could have. I have many of these conversations early on with buyers, and in today's market, I'm not sure they are even hearing me, no matter how firm I am, and I can be pretty firm and persuasive. That said, the market (ie. one seller) will re-adjust a buyer's thoughts in a second if they are totally off base.

Just like the market will wear down a seller who is over-priced, the market will work in reverse when a buyer doesn't obtain success.

I try to ascertain with every buyer early on: How "badly" do they want to buy, as their motivation is always the key. I try to stay away from tire-kickers and low-ballers.

Janet - I got so excited about re-blogging this wonderful post of yours, I forgot to post my comment!

I think you are not only very aptly describing many of today's buyers, but also homeowners/investors who are holding off on refinancing because they "think interest rates will go lower".

Its backlash from years ago. Better make an offer above asking price. There are three other offers in today already. I wasn't in the RE business or a buyer back in those days. Let the buyers miss out on a couple of properties and see where we go from there.

Janet: I would like to apologize for sending my buyers to Walnut Creek. I couldn't take it anymore.

You are so right. What is up with some of these buyers?!? Amy, I love the "Low Ball Tour" name. It's classic.

Janet, Great and right on point! The pendulum has swung. Let's not forget how these buyers were tormented by the now "poor sellers" not so long ago! It will swing back in a short time. Once these buyers start loosing offers on properties that they really wanted because someone told them not to "over pay", things will begin to change. In the meantime, hopefully the inventory will recede to a more normal range. I am so happy that the good news is that we have buyers who are making offers!

Rosemary Scalera

Century21 McLennan & Co.

Bradford, MA

Janet - I just may have to re-blog this on my other blog. Very, very well put. Thanks for writing what every agent out there is thinking!

Yet another post yearning for the good old days. Where does the consumer get the idea that the housing market is in the tank? Not just the media. The NAR has said that nearly half of all homes sold are distressed sales.

That's not a small variable. That's huge. When will Realtors learn that there is NO SUCH THING AS A LOW-BALL OFFER and get with the program of understanding true valuation and the immutable laws of supply and demand economics.

Agents are severely hurting their business and undermining their credibility without embracing and exhibiting solid knowledge of the laws of supply and demand and how the overally pricing structure is impacted by regression.

Please stop the whining and roll up the sleeves and understand that anyone who has a clue about business needs to know what impacts price and value. It seems many in the housing sector do not.

No, of course all Sellers aren't desperate. But it doesn't matter. If you don't need to sell then this isn't a market to "test the waters". And agents who continue to pile on more inventory...well we all know the definition of doing the same thing over and over again and expecting a different result.

I have been using a quote often these days by John D. Rockefeller who said the "time to buy is when blood is running through the steets". Right now it's a bright maroon color and from just about all accounts it's going to be that way for some time.

Low ball offer? Hardly.

Janet, what a terrific blog...you took the time to put in print what everybody else in thinking...in every state....some of us more than others...thanks so much!

Janet, your post should be required reading for buyers before they start making insulting offers.

I must respectfully disagree with Barry Cunningham. I do not believe anyone here is ignoring the laws of supply and demand. We live by those laws every day when we are pricing homes. There will always be buyers that make low offers regardless of the laws of supply and demand and market conditions but now it seems that far too many buyers think they can ignore the laws and mak absurd offers. Most sellers have been made aware of what their house is worth in this market and the listing price reflects that value. Most buyers are reasonable as well but the point everyone is trying to make is that we are running into more and more unreasonable buyers.

It happens in every down market. It is a snowball out of control. At some point the snowball will hit the bottom of the hill and stop. That is the point where consumer confidence makes the slightest turn. It always happens so fast that no one knows it occurs until it is too late....and it ALWAYS happens at a time when it is not predicted.

Wow what a list. We have become accustomed to retailers jacking the price 70% and then sticking a coupon on the item for 50% off and we fall for it every time.

That is why gas has went from a $1.50 to $2.00 in eight years and we think we're getting a bargain. We have all but forgotten about the great ripoff this past summer.

We are becoming a third world country where you bargain for everything and nothing we sell is worth anything.

Loved this blog!! We have a saying in our office-low ball offers and then there is no ball offers!! Many of our asset manager will not even counter no ball offers. Although I did get a kick out of one of AMs who countered above the mls price on a lowball offer. Took the closing costs being asked for and added it on the price. The agent was fit to be tied and wanted to know how the AM could do that. BECAUSE THEY CAN is the answer. I told her I do not make up the the mind of the asset manager. Sometimes those low ball offers can backfire.

@ Joan,

i understand that it's hard to really accept. But the rub lies in your comment.

You wrote..."been made aware of what their house is worth in this market and the listing price reflects that value"...then I have just one question and therein lies a BIG part of the problem.

If you as a professional, can provide the Seller with a comprehensively substantiated and realistic valuation taking into account all of the factors in play, and then you price the home above the threshold of what the market will bear, then you are NOT following the laws of supply and demand. It's that simple.

If on the other hand it's your seller who will not accept that which you determine to be an accurate value then it is your seller that is being wholly unreasonable. In that case, why is it that more agents do not exercise their discretion to simply refuse the listing instead of piling on more dead inventory and then subsequently complaining about the mythical low ball offer when in fact it is not priced correctly to begin with.

Value is not what a Seller needs, or what an agent thinks, it is and always will be what the market will bear. Didn't see anyone complaining on the upswing.

Buyers are doing a lot more investigating than they probably have in years past. We're all cautious about the economy and our finances, plus there's a plethora of information and opinions regarding the housing bubble burst. It was a HUGE bubble here in San Diego, and a lot of people are upside down on mortgages. Instead of charging full speed ahead into house buying (which was "guaranteed to appreciate"), we're being overly cautious.

I've heard many people say something along the lines of "Yes it's under market value, but we're only at 2000/2001/2002 market prices. Prices will continue to drop into 2009/2010/2011 according to so-and-so".

I just heard this one the other day and it is so true... Buyers aren't looking for deals they are looking for steals!!!

@Barry

I may not be explaining my point properly. I certainly did not mean to imply that all houses on the market are priced correctly and only the buyers are unreasonable. I have walked away from listings because the seller's price would be a waste of my time and marketing dollars. What I was referring to is the situation when the house IS priced correctly for the current market conditions and is sold for the approximate asking price but you have an individual buyer that wants to make an offer that we know will not be accepted.

I have had to walk away from buyers because they are not really buyers. They think the real estate market is like a Las Vegas casino and they want to roll the dice to see if they can win big. Realtors spend a lot of time and money showing houses to clients that are not willing to listen to our advice. The sale price will always be determined by the market but the market is not totally made up of a small percentage of "gamblers".

Hi Janet,

Super post. I cannot agree more. The buyers are being very weird and want super duper discounts for properties that are even now actually worth the asking price. Buyers often get caught up in the art of the deal as opposed to remembering how much enjoyment and appreciation (be it small anymore) will come with time. The ultimate question is do you want to buy a house and make a home or do you want to screw someone because that is the trend? The only problem with the latter is that what goes around comes around. I always caution my sellers to leave money on the table and buyers to be reasonable. Have we no regard for what comes around goes around anymore? I would never advocate paying too much, but putting the screws to someone because you think you can will never benefit you.

Thanks

Kelly

Sometimes I feel like I am ONLY a devil's advocate around here...

Have we lost touch with ourselves? What if you and I were not Realtors? What if we were the Buyers that are driving us crazy?

I'm sorry, but given the factors already mentioned - the constant media about real estate desperation and the sagging, to say the least, industry, I think any buyer would be CRAZY to offer anything close to full asking price! If a buyer contacted me and considered offering 10% lower than asking price, I'd think he or she just walked out of a CAVE!

Come on people! Why don't WE get with it? THIS IS THE WAY IT IS! The mentality of getting an extreme bargain is here to stay for awhile, so why don't we learn how to masterfully work with it?

As Listing Agents we need to tell our Sellers point blank that no matter what price we list at, we will get much lower offers and we have to master the art of negotiation. Someone who really WANTS the house will buy it at a fair price. It just means MORE WORK.

As Buyers Agents, we need to explain everything and then let them lowball. Hey, a low offer is an OFFER. In some of our markets with NOBODY even trying to make offers, these crazy low offers would be welcome!

As a matter of fact, I'm going to think about this and create a new blog post tomorrow!

Stay tuned! :) :)

Janet - And #11 is: 'Uncle Albert told me I should never offer full price and it is usually good to start about $50,000 under asking price. Uncle Albert is a real estate expert because he has owned two houses.' Everybody has an Uncle Albert.... We REALTORS also need to run histories for our clients. Sometimes the sellers have already lowered the price to rock bottom. A buyer needs to have all of the facts before making an offer not just assume they can make more of a killing.

Great list.

Had a buyer (who did not get their dream home) ask me who was the crazy buyer who paid them their asking price. I responded, the one who is moving in today.

It has been the same in many areas here. However in some price ranges and areas we actually have bidding wars and when we tell this to our buyers they are usually shocked. ~Rita

Hi from Ontario, Canada

I'm afraid it isn't just the media to blame but also many agents who like to advertise foreclosures (or Power of Sales as they are called here) as being a steal of a deal. When people ask me about power of sales, I tell them that they get the home in "as is" condition, they negotiate with a lending institution so there is no emotional attachment, therefore not usually easy negotiations. The banks here have to be able to prove that they have tried to get market value over a fair period of listing time.

We are finding right now in our market that there are 2 types of buyers. Those who are sitting on the fence and waiting for prices to fall further, and those who will put in an offer but much lower than list price. I tell sellers now not to be insulted if they get a low ball offer. Every offer needs to be treated like gold. The buyer wants the most house for his money and the seller wants the most money for his house. I think as long as we have a buyer's market they are in the driver seat.

All we can do is provide the comparisons and educate the buyer. After 20 years in the business, I refuse to work with people anymore who aren't serious.

Happy New Year

Janet, I feel for the seller who doesn't have to sell. In this market it seems as though they would be better off waiting. With so many foreclosures and short sales, the attitude is one of getting a good deal at rock bottom prices. It is sign of the times and not likely to change for awhile.

Here in Manhattan New York City at last we are seeing some prices and sale decrease compare to 6 months ago. And there are many many buyers on the market but very few will pull the trigger.

The ones that do decide to make an offer, often make offers 40% less than the WELL PRICED property. It is very discouraging to the seller to see this type of offer. Right now i believe the sellers will need to readjust their mindset at least in New York city market to meet the buyers perhaps half way...

Low ball buyers are everywhere! Even in the big apple! :-)

Think you might have hit most of the points -- there are no buyers out there who seem to think they should pay what is being asked for.

Some sellers are desperate, some aren't. The bigger issue is that we need to disconnect value from "list price". The two are not always related.

JAN

2009

Janet, I will be placing my personal home on the market this spring. I have another home that we have been renovating and now ready to move in. I expect several will place low ball offers. I will not reduce my price very much. I think alot more than other buyers feel everyone is desperate. Your buyers need to find a home they can afford. If your in my neighbor hood so you save an additional 25k because your a winner. Lets visit that buyer next year when they cannot afford the property tax because they are in the wrong neighborhood.

Excellent POST!! I too am experiencing this. I have a buyer that has made 12 offers, all were rejected. I have counseled him, shown him tax value docs, CMAs and a variety of other documents to help him make an informed offer. He doesn't care what the house looks like, where it is or anything else, it is all about his getting it $30 -$40,000 off the asking price. Give me a break...oh by the way, his house is on the market and he won't even consider lowering his asking price even after 3 months and not even one showing. He is one of the people who insisted listing at HIS price and believes his house is worth every penny and anyone would be BLESSED to have it. I am fed up at suggesting he look at different houses in the range he is approved for, he doesn't want to. He believes if he continues to make offers, some dumb seller will have to give it up and then in a couple of years he will be able to sell it to a dumb buyer and make huge $$$ on it.

Janet, You make great points but we do all want to feel we've gotten a bargain. I try hard to educate my buyers that both sides should 'win' in any real estate transaction and I don't think many of my clients are of the "kill or be killed" mentality. I think we can legitimately blame the media for much of the bad attitudes about our profession, but we need to take responsibility as well. We, the REALTORS, need to run away from adversarial situations with buyers and sellers. We often have the opportunity to set the tone and I think we can eliminate some of the negative negotiating.

Good luck to you in 2009.

Hi Janet:

I'm sure that we all want to use one of those bats (from your photo) during negotiations!

ToulaRosebrock.com - DianeTurton.net

Why wouldn't I make a low ball offer? This is a very one sided view. As a real estate investor, it is my job to get the lowest price possible. In Orlando, we are probably about 30% of sales.

Without us the lowballs, you would not be making any commission.

All the owner can say is no. They may want to move now and a low ball offer allows them to leave now, not some unknown time in the future.

Embrace low ball offers, at least your seller knows that someone is looking. Some properties are not even being seen in todays market.

If you need a low ball offer on one of your properties, I will be glad to make one. Contact me at www.ibuyhomes.com

To Barry: I am still reading through (and amazed at) all of the comments, but wanted to respond to your comment before I lost my train of thought.

Barry: You have strongly stated that Realtors should not take listings and dump overpriced inventory on the market. Overpriced being defined as seller who ignores Realtor's advice, and wants to list higher...Realtor takes the listing anyway.

Okay. Isn't that just the flip side of making that low ball offer that the Realtor has told the buyer is "too low"?

In other words, why should sellers not overprice listings if buyers can underprice their offers? When in both cases they are going against what Realtor has advised?

Eileen: Again, trying to respond to some specific comments before losing my thought.

You bring up some very valid points, I look forward to reading your post inspired by all of these great comments.

I am not whining about the current state of affairs. It is what it is.

In fact, I agree with what you have written. We in the industry must accept the new market mentality, and advise our clients of the best way to achieve their goals. We must roll with the punches, and learn how to deal with a mindset that will probably dominate 2009.

Helping both sides (buyers and sellers) understand it as a business transaction, and not an emotional reaction is probably one of the best things all of us can contribute to our industry this year.

It is our job to give perspective because we are in the trenches, and can see things they cannot.

Todd: The mindset of someone who is buying a house for an investment is a different story. When it is purely a business decision, naturally you are looking for something different than a place to call home, and much of this post is not applicable.

You don't need to defend your right to place a low ball offer. But please do understand this. Someone who is a serial lowballer will usually take much more time and effort. You will be making many more offers in most cases to get your bargain house.

The Realtor helping you will be making much less money per transaction because of the greater time investment required to bring it to fruition. Please let me know if you disagree.

Toula: Well, I confess, it has occured to me that some of my clients occasionaly need some sense knocked into their heads. LOL

Marian: I think you are right, we as agents do set the tone. Perhaps we can prevent adversarial situations before they even begin. I cannot remember a time when the mental state on both sides (buyer and seller) has been so far apart.

Shonnie: I saw clients like yours often when I was in the car business. They wanted to get a full retail price for their beat up trade in, But naturally on the new car, they wanted to make certain they got a steal, were not happy if there was even a penny of profit for the dealer. It is one reason why dealers resort to hiding profit.

Frank: You are in the business so you have a more enlightened view of low ball offers. I think sellers who have watched the prices plummet $200,000 still wonder what buyers are thinking when they make a low ball offer. You are correct to state that a desperation mentality could lead a buyer to buy the wrong house.

Lane: Disconnect value from list price? I would love for you to explain this statement in more depth. Do you mean that list price can be nothing more than an educated guess? How is value determined?

B & C: I agree with you...every buyer wants that discount. But some will lose their house as a result. It is a delicate situation.

Eileen: You do make an excellent point about sellers. They will need to adjust (with the help of their agent) to this new mindset. I wonder when buyers making the 40% off offers will get real? Or is it the thrill of the chase? Kinda like going to a garage sale hoping to find a diamond ring for $10?

Gena: Thank you for commenting. You are so close to me that your perspective is something I pay close attention to. I would agree that times are not good for sellers, and that foreclosures in California have placed real sellers at a big disadvantage. I do not see this changing until we can finally get rid of the bank owned inventory.

Jenny: Wow. Thank you for telling us how it is in your market. I guess no place is immune, because you situation with foreclosures sounds just like ours here in California. Interesting perspective on the 2 types of buyers. I applaud you for choosing not to work with those that are serial lowballers. Understanding how to edit clients who are not worth your time is a tough thing for those of us in the busines to grasp.

Your post is right on the money. I recently visited with a long time client / investor who informed me that he wanted to start looking at REO properties in our area (Silicon Valley, Ca.) and quoted a ridiculously low price that he wanted to pay for them "but only in the good areas". which automatically blew his plan to lowball out of the water because such a creature does not exist in our market. He then informed me that he knew things would get worse before they get better. Being very comfortable with our relationship I very pointedly asked him if he was looking for a deal or a steal. To his credit, he looked me in the eye and said "steal". I replied that he would then be competing with the rest of the civilized world and that he should call me when he feels we have reached the bottom. This is a person that is not hurting for money by any stretch and the amount he would theoretically save according to his plan is virtually nothing yet he displays the exact mentality and mindset you describe.

Dave: I know what you mean. It is the thrill of the hunt. I believe it is just a re-hash of all those people who rushed in to buy real estate at any price, just hoping to sell and make $100k in 6 months.

Same speculator, different market.

Make sure he is pre-qualified. Banks are not friendly to this type of guy. He owned 6 properties, ended up underwater on 4 of them, and let them go back to the bank as a result.

Now he is back out, bottom fishing.

Great post. We are finding that buyers are putting offers that are so low balled the seller would be either become a short sale or would be literally giving the home away. And many buyers forget that the seller may still OWE money on the home.

I had buyers like this also. There were already several offers on a property priced in the low $300K range, one was full price per the agent. They wanted me to lowball by $100K! I told them that it wasn't worth our time(MY time) because if they already had at least a full price offer, why would a seller want theirs just because they were offering all cash? I had sent them about 50 listings that were in their area and price range, and they wanted me to write offers on every one of them, sight unseen, just to get one to stick....OH, it was two days before Thanksgiving.

Needless to say, I chose not to work with them.

Janet ... just yesterday I went to preview a house for a client and the seller was on her way out the door. Within 2 minutes she told me that she HAD to sell her house, she had just gone through a divorce (yep, I got every detail about that also!) and she got a really bad deal, she had no money and was desperate. I kept trying to stop her from telling me all of this but I just couldn't stop her!

Nicely written but in our area I can think of several examples of offers put in at the beginning of 2008 that sellers wish they would have taken now.

Granted... Homes in our market today are very well priced to begin with and low balling them may be ridiculous... but some prices are still very well worthy of low balling in our market.

Keep in mind the market I am in and what we've already seen...

I'm one of these bargain-hunters. I consider myself open-minded to new ideas, even those from Realtors. I will ignore your condescending tone toward buyers, and tell you why I am not impressed with your logic.

Let's assume I'm a client of yours, I take your bad advice, and my goal becomes: "landing the best house in the best location at a price I can afford"

Let's say I get the best house, in the best location, at a price I can afford. Let's say it is $225,000, since I'm poor white trash. Now let's say that housing prices continue to slide toward 2.5x median household incomes, due to stagnant income growth, rising mortgage rates, whatever. Let's say that 5 years from now I lose my job and MUST sell. Let's say the house is worth $185,000 now. I would be totally screwed.

So, to clarify, it has NOTHING to do with the feeling, or the rush, of "getting a deal". It has to do with the belief that housing should mirror incomes, and pricing in what many believe to be the inevitable depreciation of homes in many metro areas.

Colonel Orson Swindle

By the way,

When the unemployment rate in my area doubled from YE07 to YE08, was that the doing of the doom-and-gloom media?

The median income here went down in 2008. GDP declined, too. Are those the media's fault?

Median prices are 7 times median incomes. I hear that the historical norm is about 3. Is that the media's fault?

What about when prices went up 45% in a few years? Did y'all blame the price increase on the media?

We lost approximately $17 trillion out of global equity markets from 2007 to 2008, which is a pants-crapping figure. Blame it on the media, I guess?

Couldn't be that prices are too high.. no.

Colonel Orson Swindle

I love this post! I've featured it on Banks.com today. Thank you for writing it! :) kathy

Low ball deals only work if you know what you are doing. A quick close and a clean contract void of to many special stipulations can work. Another thing, no one wants to overpay while prices are continuing to fall.

Swindle: Why are you bargain shopping for a house if you believe that prices will fall so dramatically? I don't understand your logic either. One would think your desire for real estate would have something to do with your belief real estate would go up, not down.

Isn't that normally way you invest?

Swindle:About your second comment.... Are you actually blaming all of those things on the fact real estate prices were (are) too high?

Kathy T: Thank you, so flattered. This one seems to have struck a nerve, huh?

Paul: Our market here in San Francisco was also very inflated and has suffered that same sort of depreciation. Low ball can only be lowball in relation to a price today, not months ago, and as you know hindsight is always 20-20.

When I get a low appraisal, I will usually attempt to get the seller to lower the price rather that risk that house will go down further. In other words, it might seem like a low price now, but it will seem like a great price 4 months from now.

Pippa: However, information is power. It isn't your fault if she provided TOO MUCH information!

Jim: Your point is similar to Swindle's....you believe the offer should match what you THINK the property will be worth down the road? That lowball offers are justified because of falling prices?

Should people make higher offers because houses are going up?

Hi,

I have to say this is an excellent post and I forwarded it to the team manager at my real estate office to share with all of the real estate agents.

Pricing has certainly become the hottest topic lately among buyers hasn't it? I think as a buyers agent it would be best to discuss the buyers motives right up front and to do a CMA on every home they wish to see especially if they intent to low ball the offer and insult sellers in the process. I know we are here to see this trend stick around for a while so we as agents have to face the cards that has been dealt. I would highly recommend showing your buyers your CMA and mentioning the amount of time you took to arrive at that price. Remind them as a buyers agent that you represent their best interests at heart and want them to succeed in buying a home. If we feel a client is too unreasonable we do have an option to "FIRE" the Buyer from our client list. We do choose who we want to work with and do not discriminate and follow the Realtor code of ethics. Sometimes it makes business sense to let certain clients go but when you get a "Flood" of buyers who want to act this way then EDUCATING EACH of them will be a very important goal in the begining. If we are representing the seller in our best interests then we need to discuss it right up front what to expect when we get a "Low-Ball Offer" and try not to let emotions get in the way of any business transaction. Buying and Selling a home is an emotional process and it is normal that emotions get caught up in it. Working with a professional Realtor eliminates those emotions as we know what you can expect in the process. This will be a very long discussion back and forth as I noticed some comments here from other people besides Realtors. It is important to evaluate all of these comments and make business decisions accordingly. We all decide how we want to run things. I think EDUCATING will be the KEY to 2009. Thank-you and may we all have a great 2009 as we work through the trenches in our real estate businesses.

Thank-You,

Tom Davis

Delaware Realtor

PS - THANKS AGAIN FOR THIS A ++++ POST !! EVERYONE NEEDS TO READ THIS !!

Tom: And thank you so much for your thoughts on this post. I do believe that more than ever, people need Realtors to be their advocate. In a world where figuring out the right price for anything is a challenge, just knowing someone is on your side with your interest at heart makes a big difference.

I am wondering if emotions can ever be taken out of a real estate transaction. I think maybe not when you are dealing with your own house.

I do agree that helping sellers understand how to handle this mentality of today's buyers is probably the most important job out there in our industry right now.

Janet, I will write another post on value and price and why they have little to do with each other... just for you! Drop in for a look later tonight.

Here is the link

Janet,

No, normally I invest in things that do not have negotiable prices.

As far as my drive to become a homeowner is concerned, no, it does not color my opinions as to whether or not housing values will go down.

Regarding the media, you mentioned in an earlier comment that the media was, to a degree, responsible for the lowballing, implying that falling house prices were more fantasy and mob mentality than reality. My post was a reminder that the things that are happening to the economy are very real, and not some sadistic form of theatre.

For the record, I am not a serial lowballer, I typically only consider 25%+ lowballs an option when the home has been on the market for over 1 year.

Col Swindle

JAN

2009

Not that I agree or disagree.

however Historically... people who buy in this type of market profit significantly and provide themselves and possibly for their familes with shrewd business tactics similar to those you mention above. The fear implied by loss of retirement money will make them want to be able to secure themselves should this economic fiasco repeat itself in a few decades. I am sure that they in San Francisco and in every metropolitan hub on earths surface do not feel too bad a decade after the purchase when their homes have significant value again. Darwin tactics.

That is if the value of the dollars value doesn't evaporate by then...

Swindle: Okay, thank you for explaining your logic. This post actually had nothing to do with the media being to blame for the current state of our economy. In fact, I do not believe I have ever written a post like that.

Without plowing back through the many comments here, please just let me say I was probably responding to one of my readers, who said I had forgotten to mention how the media had contributed to the mental mindset of buyers. I probably agreed.

However this in no way means I believe that the media is the cause. I named the cause in my post: the sorry state of the economy combined with the desperation of retailers.

Ironic, because in a way we bloggers are the "media". We are the media that is in the trenches.

Falling prices and a failing economy are not a fantasy. But it is a fantasy (and yes, maybe even mob mentality) to believe that you can buy any house by lowballing and the false assumption that the seller is desperate.

After 20 years of owning a car company, I am very used to dealing with a lowball, seller is scum mentality. It exists as a permenant fixutre in the car business, good economy or bad. You simply learn to deal with it (which I did...and it was a very good lesson) and move on.

I think real estate agents should do the same, which is why I felt the need to explain WHY buyers developed this attitude.

Buyers have had this mentality for a while and I expect that will continue for some time. Many seem to be trying to offer a price they think a property will be worth 6 months from now. We can do our best to educate our clients by showing comparable sales, seller's net sheet etc., but I've found the "best" way to educate them is to let them make their low offers and lose a few houses. It's alot easier for them to learn with a true dose of realty. When they hit that point, they start listening and become reasonable. I present the information, give them my expert opinion and if they choose to ignore it they learn the hard way, but the do learn!

Janet - some of these same buyers will even go so far as to try and "steal" their loans or "stick" it to their Realtors by insisting that these hard working professionals work for nothing. I was kind of shocked the first few times I learned that my clients had asked their Realtor to cut their commission in order to "sweeten" their offers. But when those same individuals start asking me to work for nothing, that's when I invite them to shop around for a lender who is in the business of giving away loans.

I pride myself on the fact that PacFin and I are very competitive with what we have to offer in the way of services and products. We have a very good reputation in the community and I feel confident in saying that my clients choose to work with me and PacFin because they understand the value of ethical business practices and standards as well as personal and professional customer service.

The last year has definitely brought out more of this type of behavior in many buyers and it does get a little frustrating at times. Whenever I hear that my clients are acting and/or behaving like the buyers you describe, I consider it one of my duties to just try and educate my clients about the current market conditions as much as I can. Some of them will learn and some won't - that's human nature.

Thanks for the great list! OH and you might mention that 4.5% isn't low enough for their interest rate either! GRRRRRR! Fortunately, clients who appreciate the value of working with professionals who don't waste their time and help find them solid value DO exist!

JAN

2009

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

2009

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 :-)

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.

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.

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?

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.

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.

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

2009

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.

FEB

2009

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!!!

MAY

2009

Janet, great post and so very true.

MAY

2009

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.

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

2009

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".

APR

2010

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

APR

2010

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.

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....

JUN

2010

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?

JUL

Excellent article. I reblogged it. Thanks.

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Janet Guilbault California Mortgage Banker

Walnut Creek, CA

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RPM Mortgage

Address: 3201 Danville Blvd, Suite 195, Alamo, CA, 94507

Office Phone: (925) 552-3867

Cell Phone: (925) 212-6347

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