It's happening a lot these days. Regular homebuyers hear about how much inventory is available, and believe they can make a lowball offer on a foreclosure and get a steal. Well there are great deals out there, but if you are looking for a moderately-priced property in move-in condition, in many markets you will have some competition, and if you focus too much on the list price, you may lose out on a great home.
Last week I had been out for an afternoon with new clients, looking at homes zoned for a nationally-recognized A+ school in Cooper City, FL (30-40 minutes north of Miami). Everything we had seen so far was priced from $239,000 to $299,000, and ranged from 1500 to 1900 square feet. So when we pulled up to a 2,000 square foot home listed at $209,900, I prepared my buyers for the worst: "this price is the lowest by far in the area for the size, so it may be a total dump."
What a pleasant surprise it was when I opened the door and didn't find the roof caving in. The place was in decent shape! Oh and you could see the lake, from the large windows in the living room. Wow. I knew immediately that this was a great value. Sure, it could use a kitchen update, and most people would want to paint over the blue and green pastel walls, but otherwise it looked good.
While we were there, another couple showed up - parents of a young man who had looked at the house earlier in the day. Uh oh - sending the parents/spouse/handyman drinking buddy is a sure sign of interest. When we left I told the buyers that if they were interested in the place, they should make their offer today, above list price. They told me, "No, we would never offer more than asking price..." We had a few others places to see, so I let it go.
Fast forward to a few days later, and the buyers now have a first choice, and tell me the house on the lake is their second choice. They ask me to see if it has gotten any offers. Okay... Well I spoke with the listing agent, who told me they received 41 offers in just four days on the market!! Whew - I expected it would have a few, but 41 is crazy. It was also under contract. The listing agent could not tell me for how much, but I am certain it was more than the asking price.
So we stuck with the buyers' first choice, and now have another great home under contract. If they had a few days earlier really wanted the house on the lake though, I would have asked them to disregard the asking price for a minute and think about what it was worth to them. Great school, great view, room for a pool, relatively minor work to be done... Would they still have considered it a good value at $212,000, or $215,000? Yes, I'm sure they would have. But if they had made an offer at below asking price, just because "that's what you do with foreclosures," they would never had stood a chance.
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