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Are Cutthroat Home Buyers Causing Home Values To Decline More?

Reblogger Lisa Stafford

Real Estate Agent with Broken Arrow, Tulsa, McGraw Realtors

July 29, 2010 10:15 AM

Something to REALLY think about!

Question: Are Cutthroat Home Buyers Causing Home Values To Decline More?

While you're working with a buyer, when they write an offer, do you just let them write it where they want? Do you let your buyers write low offers just to get that desperate seller to give their home away? Are you writing multiple offers to see which sellers are desperate?

If you're the agent that plays the multiple low ball offer game with your buyers to get the best deal, did you know that deal just caused all the neighbors properties to decline in value?

Does your buyer care that he just set the first domino in motion of a large decline in neighborhood values where he/she just purchased their "investment" property? Does he/she realize when they try to flip and sell that home in six months, they to will lose money because of this domino affect?

Does buying a home at bargain prices really net you more money? When a buyer pays a bargain price on a home, the next seller in that neighborhood has to use that comparable when they sell their home.

The lower price the buyer gets, the lower price the seller has to sell for. And since they had to sell lower, the next home seller in that neighborhood will have to do the same thing. And the dominoes start to fall, and fall, and fall. How does this affect the value of the property you just bought?

Should we be educating our buyers on this domino affect? Do I even know what I'm talking about? What do you think? What about you home buyers? Are you cutting your own throat by pressuring a desperate home seller into selling below market value?

Lisa Udy

Platinum Real Estate Group

Please Help Carolyn Capalbo

Comments(8)

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Stacia Whatley

John L. Scott Silverdale - Silverdale, WA

StaciaSellsHomes Your Western WA Realtor®

Unfortunately, this is our market right now. Buyers are dictating the market. There is a huge inventory out there and buyers can be picky or even try to get a deal by lowballing because they know if they do it enough one might stick. I try to educate my buyers by pulling comps and letting them know what fair market value is, but if they want to put in an offer that is below that there is not much I can do about it. I agree with you that if you get a home for right at or less than market value then you are lowering the value of the rest of the neighborhood, but I can't have a buyer pay more for a home than it is worth. Even if I convinced them that is what they should do, it would never make it past the appraisal. It is, what it is....

Jul 29, 2010 05:05 PM

Krista Lombardi

Prudential Calfornia Realty - San Diego, CA

It's like "what came first, the chicken or the egg?" The short sales out there have encouraged lowball offers way too much. However, after the first couple of offers in which the buyers won't listen to you prior to writing an offer, they usually have a turnaround and realize that you are telling them the truth about how things work out.

Anyways, good luck on educating them. It is a process, that's for sure:)

Carolyn Kolba

Serving Mentor, and all of Lake County, Ohio - Mentor, OH

Keller Williams Realty- Mentor, Ohio

Lisa, this strikes me as kind of on the strange side. Perhaps back in the day when we were all agents of the seller, and when we wrote up an offer with the buyer, our job was to get the buyer up as high as we could.

I understand the point of the post... that low offers aren't good for the neighborhood... but... so ? That is not the buyer's concern. When we work as a buyer's agent... our concern is getting the best price possible... for our buyer.

Jul 29, 2010 05:06 PM

Irina Riley

American Dream Colorado - Woodland Park, CO

GRI, SFR, CNE, e-PRO, SRES

It's a very good point. It's also creates a lower BPO for REOs or short sales as well. It seems like we are not "out of the woods" yet.

Jul 29, 2010 05:07 PM

Cara Marcelle Mancuso

Golden Girls with SW Desert Homes - Tucson, AZ

Call a Marana neighbor, I'm THERE!

I have a lovely townhome in a small community and it's been for sale since I got married and moved into my husband's newly built home. I've consistently kept my sale price several thousand below any other comparable. So, recently, the next door neighbor died and the estate "sold" to the daughter, for a good $60K below value. Try as I might, no appraiser cares, and there went my value. HOA doesn't allow rental, so I'm stuck with a home I can't sell for the mortgage on it. Welcome to the current market!

Jul 29, 2010 05:09 PM

Jack Mossman - The Nines Team at Keller Williams in Lodi

The Nines Team at Keller Williams in Lodi - Lodi, CA

The Nines Team in Lodi

Lisa - I agree with Carolyn (#3) in prinicple. However, when that great price becomes the kingpin of declining comps, I'm not sure that great price has enduring value. On a much larger scale, that's exactly what happened in many markets, but in reverse .... higher prices than what were realistic for the market. It must in the final analysis be a meeting of the minds - the princpals' minds, not ours!

Jul 29, 2010 05:21 PM

Karen Bernetti

Southington, CT

Buyers and sellers alike (and sometimes even their agents) don't realize the long term effects of their actions. Sellers who don't do whatever they can to properly prepare their homes for sale and get the best price possible set the downward spiral into motion. Lowball offers are the logical next step.

@ Jack in # 6: I fully understand the harm that declining values can bring. But... if you are the buyer's agent... you have a fiduciary responsibility to get the best price for your buyer. I don't mean to sound harsh, here, but that is our job as a buyer's agent.

Jul 29, 2010 05:47 PM

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Lisa Stafford

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