Beware of Seller

By
Real Estate Agent with RE/MAX Big Bear Village

tony soprano

It is a well-known fact that it is a buyer's market. Due to high inventory and low prices, buyers can usually count on being in the driver's seat. But this is not always the case. There are many situations in which a seller will be difficult to work with or actually be in control of the transaction. If you are a buyer and run into any of the following scenarios, be warned that control may have shifted.

•1.       The home you are interested in is new to the market. If a home has only been listed for less than a month and it is priced well, the seller may not be inclined to consider anything that is not close to full price. In many instances, the seller will feel like they need to give their price enough time to see if it works. It can be very frustrating if the home is overpriced but a perfect fit for the buyer. As a buyer you never want to over pay but it can be very stressful waiting for a price reduction, all the while hoping somebody else doesn't come along willing to pay the high price.

•2.       The home has been on the market for a long time without any price reductions. This is a sure sign that the seller is convinced his property is priced right and he is willing to sit on it as long as it takes to get it sold. This is common in instances where the seller owns the property outright and is not burdened with monthly mortgage payments. In some cases, the seller is simply delusional and refuses to see what his home is really worth. These sellers are very difficult to deal with for both the buyer and the sellers Realtor.

•3.       Your first offer is met with either no counter or a very low counter. If you make a bid on a property and the seller refuses to even respond, chances are they are not ready to come down very much off the price. Of course, if your first offer was ridiculously low, the blame lies with you. I am talking about an offer that is not less than 15% off of the asking price. If you make an offer within 10% of the listing price and they don't respond or only come down a very small amount, you can be sure you are dealing with a seller prepared to drive a hard bargain. It is up to you whether you want to continue or start looking elsewhere.

•4.       Bank Owned listings are very difficult to lowball. You would think it would be the opposite, but it's not. In many cases, the banks price the properties to sell and because they are already priced low, they will not come down very much off the price. Even if an REO property is overpriced, the banks would rather just wait a month or two and then lower the price than take anything much below 5% of the asking price. I have had personal experience where I presented the same offer every month, for four months in a row, before the bank finally accepted it. Since Bank Owned properties are usually priced fairly well, you can get a great deal most of the time.

•5.       Keep in mind, if you manage to get into escrow in any of these situations, the seller will most likely be very uncooperative when it comes to making repairs. In almost every instance I have been involved in, the seller will not want to make any repairs or help out in any way. They usually feel like they are giving the property away and refuse to pay anything to get the home in better shape. This is not always the case, but it something as a buyer you need to be aware of.

One strategy I have seen be fairly successful in these situations is to make a good offer and then walk away if the seller is not willing to bend. In many cases I have had the listing agent call after a week or so to see if my buyers were still interested. Oftentimes, the seller will not get another offer right away and will start to second guess themselves and start to think that maybe they should have not been so hasty in rejecting the offer. In many cases, the first offer is the best offer and the longer a home remains on the market, the staler it becomes. The most important thing for a buyer looking for a good deal is to be able to walk away from something that does not benefit them. If you are too eager, you will play right into the seller's hands.

Originally published at www.mypropertysolution.com

Comments (14)

Broker Nick
South Florida Real Estate & Development, Inc. - Coconut Creek, FL
Broker Nick Relocation Broker Service

Israel - I guess I can make you an offer you can't refuse? Sorry, I just couldn't help myself.

May 03, 2011 11:07 AM
Israel Barden
RE/MAX Big Bear Village - Big Bear Lake, CA

Sounds good to me. Those are the kinds I try to write.

May 03, 2011 11:51 AM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

I had to suggest because you are too smart not to be on the Feature Board.  Besides, this seems a stellar take on important info for Consumers & Agents alike.

May 03, 2011 04:24 PM
Cheryl Brewer
Mike Bowman - Grapevine, TX
Selling Homes since 1997

Good information! Thanks for posting!!!

May 04, 2011 05:30 AM
Sandy Acevedo
951-290-8588 - Chino Hills, CA
RE/MAX Masters, Inland Empire Homes for Sale

Love your post and the photo. I especially like your strategy after #5. I have used that as well and have been successful. However, having a buyer willing to walk away and play the game is not so easy. You have to have a special buyer.

May 04, 2011 05:32 AM
Monica Foster
Monica Foster Team of eXp Realty - League City, TX
Broker, CRS, ABR, SRS, CHMS, CNE, CNHS

Hi Israel,

I'm dealing with #2 and #3 on a listing right now and the buyer's agent is convinced that I am not "advising" my client.  The buyer is clearly interested in the home, but the seller refuses to come off any lower than a certain amount.  While they don't own the home outright, the owe very little on it and continue to say "we don't have to sell", which begs the question, "then why are you wasting my time and marketing dollars?".  Thanks for sharing!

May 04, 2011 06:19 AM
Jack O'Neal
HomeSmart Elite Group - Gilbert, AZ

#2- The buyer needs to consider the market he may feel he is priced right, but as he waits the market goes down and he becomes log DOM.

#4- I think in our Arizona market bank-owned homes are high.

 

Great post

May 04, 2011 06:29 AM
Cory Barbee
San Diego, CA
Broker (760) 563-4022

Great great post... I love all of these techniques especially if you have the right buyer...makes real estate fun!

May 04, 2011 07:10 AM
Susan Brown
Fonville Morisey, a Long and Foster Company - Cary, NC
REALTOR - Cary NC Homes for Sale

#5 is a gamble but something buyers need to be willing to do especially if it's something fairly major--after all, it's not like buyer #2 won't also ask for it to be fixed, as well!

May 04, 2011 07:33 AM
Rosanne Fett
FHA home loan, VA home loan, zero down home loan - Dallas, TX
NMLS #205558 - Home Loan Expert, Jumbo Home Loan, USDA

Re: #3.  I work with an agent who consistently takes her buyers to homes considerably more expensive than what they are willing to pay in a monthly payment or that they will qualify for.  This last buyer was pre-approved at $135,000 (using down payment assistance) and they actually put in a lowball bid ($125,000) on a listing that was priced at $189,000.  The selling agent was really upset when the listing agent called her and read her the riot act.  This type of activity went on for several months until they finally did manage to get a contract accepted, but over and over I had to remind her that they could not qualify for more house each time they got a counter offer that was $10-30,000 above their pre-approval limit.

Needless to say, I'm about ready to fire this agent so I can focus on realtors who understand how to do their jobs effectively and stop wasting everyone else's time.

May 04, 2011 08:54 AM
Lorraine or Loretta Kratz
Crescent Moon Realty, Inc. & Land N Sea Auctions. - San Marcos, CA
Certified Negotiation Consultants

Sellers can be unpredictable at best. Enjoyed the comments and the post.

May 04, 2011 09:26 AM
Anonymous
Jeff Pearl

Israel, VERY well said and very realistic advice. Thanks for posting.

May 04, 2011 11:47 AM
#12
John Michailidis
Real Property Management of Sarasota & Manatee - Sarasota, FL
Real Property Management of Sarasota & M

I like your blog post and I like the pic too!

May 04, 2011 06:13 PM
Israel Barden
RE/MAX Big Bear Village - Big Bear Lake, CA

Wow. Thanks for all the great comments. This is the most comments I have ever received on an Activerain post.

May 05, 2011 06:33 AM