A while back, I published an article on my local real estate blog, SOUNDBITEBLOG, entitled "The Art of Offering Less." It ended up becoming a 3-part series catered towards a Buyers perspective and provided some practical guidance/advice on how to draft offers that were less than the listing price.
In the 1st article we identified the market dynamics that tend to encourage or breed low offers.
In the 2nd article, we shared various strategies for Buyers to achieve success with low offers.
In the 3rd and final part, we discussed the risks that are inherent with making low offers.
Just recently, I received an offer on one of my listings, a secluded Hood Canal view property near DeWatto Bay in Tahuya WA.
Prior to faxing over the offer, the Selling Agent gave me a heads-up that the offer was going to be less than the current listing price. Evidently, the Buyer's home, which had been on the market for nearly a year, had just recently gone under contract, but at a price that was significantly lower than their original asking price. Even after 3 price reductions, another larger home on the same street had just closed for $23,000 less. Since they had taken such a huge hit on their home, I guess they only felt it reasonable to expect other Sellers to be as equally accommodating.
The Selling Agent informed me that their offer was going to be approx. $30K below the Listing price, and wanted to know what I felt the Sellers response would be. I told her that I would present any and all offers, and that it was up to my Sellers to determine what kind of response was appropriate for them.
When the offer finally came in, the offer price was actually $35K below our Listing price, and also asked for the Sellers to contribute $11K towards closing costs, making the effective net offer nearly $46K below what my Sellers are asking.
Typically, when counseling my Sellers, I tell them that every offer should be considered as a serious offer, regardless of how low the offer price may be. Usually, I advise them, at the very least, to counter back at a price they feel comfortable with.
However, after discussing this offer at length, my Sellers felt that the disparity in price was just too substantial, and did not warrant their consideration.
It was one of those rare instances where I had to tell the Selling Agent, "Thanks, but no thanks!"
Once again, my previous point was reinforced: If you're going to submit an offer that is less than asking price, make sure it's enough to at least capture the Seller's interests and establish a starting point for negotiation. Also, realize that market dynamics do not apply equally across the board for all properties, even if they're in the same State, County, City, or even the same neighborhood.
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Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com, SOUNDBITEBLOG, and Crabbing in the Hood.