First Time Buyers Beware: "That's Only On Television"

I too have dealt with this in my area.  I do my best to educate the buyers in the local process.  It is difficult and many don't want to hear how it is different from the TV Shows.  Sorry guys, but it is!  I have been known to ask a buyer how they would feel with a low ball offer.

 

Fran, the person that made that comment on your other blog is not dealing in reality.  It is so important to price a house right, and it is equally important to make an offer that shows that you are serious about purchasing the property.  Ask to much and no one will look at the house, or offer to little and they will not even want to talk to you again.  To sellers and buyers it isn't business, it is personal.

Fran,

I've always enjoyed (I guess secretly) reading your blogs and learning from them.  I'm just now "breaking out" and getting into the rain...  You always have such great and useful information to share.  A lot that really hits home directly and tends to reinforce everything else I keep hearing and learning.  Maybe it's because we work for the same company, maybe it's because we're in the same area, maybe it's just because we're both Realtors?!  I think it's all good and I applaud your exposure. 

As for the low-balling and the trend that follows.  I wish I had the magic answer!  I've been showing houses to some good friends that are relocating and every house that interests them I hear the husband say, "it's a nice house, but I wouldn't offer them any more than $XXX,XXX."  Which is always at least $20,000-30,000 less than the asking price.  And everytime, I cringe and just bite my tongue.  Of course, I'm going to present any offer that any buyer wants to make, but we must also try to educate our buyers too.  After showing them houses, I try to reitterate the fact to them the similarities in the value of the homes they've seen in the price ranges and the areas.  I also run comparables for them on the house they want to make an offer on, so that they do know the comps and the history of that particular home as well.  If they do decide to make the low offer, we just have to do the best we can to educate them on the market the conditions and how the seller reacts.  In presenting the offers, we have to try to communicate the best we can with the cooping agents and a little prayer never hurts in any situation either.

And I just can't keep my mouth shut with your anonymous commentor either.....  Isn't that just the typical uneducated response?!  I hate it when it comes down to the commissions like that!  Unfortunately, there are agents out there that are only looking out for themselves and their bottom line; but that doesn't mean we're all like that!  It's like you said, they need to work with their Realtor.  We are working for their best interest and we're there to take the emotion out of the process, it really has nothing to do with the commissions!  (Somebody needs to break that down for them and show them how little the difference that low-ball offer is going to make to your paycheck...) But if nothing can be worked out and the offer is refused point blank, ain't nobody happy!  It just doesn't make good sense.  And for that matter, I don't know if I came across clear either, but nonetheless, I'm on your side!

Great post.  Very good advise for first time home buyers.  Thanks.

I often wonder how many "liberties" they take when they make these shows.  I have seen shows where they have used a local, well-known agent.  Funny thing is; when I pulled the mls on the featured home - the "featured" agent was not involved with the transaction at all.  NOT EVEN the company was with was involved in the transaction! 

Hi Fran,

I was born and raised in your part of the country...attended Park Hill High before moving with my family to the Great Northwest. It's nice to talk to someone from "home". I think your post is on target and very well written. The negative response you received is probably shared by a lot of people...but I want to share a positive "commission" experience.

Recently I had a seller ask me to break down the commission for him and tell how much I would actually earn. So I did. He was astounded and tried to offer me more money (it was a really difficult transaction). So not everyone has this negative money-hungry opinion of us. Some of my coworkers thought I did the wrong thing in disclosing splits and getting down to what I was actually getting paid. When dealing with a seller, I think it's their right to know...if they ask.

Thanks for this post! It really does put some things in perspective for someone who sells homes...and is about to be in the market for my first home too!

Hi Fran, enjoyed the post.  I am currently working with a buyer that uses a guy that does a lot of fix-up work for investors (foreclosures, etc.) and he is telling her to give a low-ball offer because that is what investors do.  Funny thing happened.  The home she liked went under contract before we got our offer together and her reaction was "I don't care, I want that house so find out what they are paying and I will go higher."  I told her she wasn't acting like an investor because they would just go to the next deal.  Buying a home for a personal residence is not investment property but try explaining that to buyers these days.

I guess if it's on television, it's automatically TRUE, right? Wrong!! Yes, educating our clients is the key to making sure that both sellers and buyers get what they want/need out of a transaction.

Fran:  I've heard of people low balling $75K below a market list price, and the sellers coutnering back at full price to hear "Okay."  My rule of thumb is this:  ALWAYS COUNTER, NEVER REJECT.

Fran:

You state (in part) "I'm an advocate for negotiating a good deal, but my experience has been that this type of low-balling offends the sellers.  I've even had a couple of sellers even refuse to make a counter offer because they were insulted."

Perhaps the "low balling" offends the sellers, but keep in mind the current market. Perhaps you should take the position that any initial offer is a good offer. Buyers may just be trying to see how "desperate" (for lack of a better term) your sellers are to sell. Or, they may have been conditioned to start that low. Rather than be "insulted" and refuse to make a counter offer, take a different approach. In situations like this, and especailly in today's market, you don't want to shut out a potential sale. Why not counter with "My counteroffer to your offer is my asking price." By doing that, what you're saying is, "I'm willing to negotiate, but you need to come up a bit more in your offer in order for me to consider selling to you." Sure, some buyers will walk. But you might be surprised and see a potential buyer actually make a higher offer, and perhaps with some tough negotiations come to a "meeting of the minds." And then you can say you really earned your commission!

Fran - I wasn't surprised to see your "anonymous" comment.  I am often defending agents to the general public.  Many uninformed people think agents have it easy; stick a sign in the yard and sit back to wait for the order.  If only they knew the time and energy and finances you guys have to put into your listings.

Fran:  These "reality" shows really don't depict real estate realistically at all.  There was only one show that looked like it truly showed real estate as it was, from the Realtors perspective.  It was a show that featured Sotheby agents selling homes to pain the butt, can't make up their mind, clients.  Sound familiar?  Sometime there was no conclusion by the end of the show.