In our last episode, Bill and Betty Buyer were sitting down with their trusty Agent, Realtor Ron, to draft an offer on their dream home. They had spent the past 3 weekends touring dozens of potential properties, when they finally found just the perfect place!
When it came time to discuss the offer price, Bill proudly asserted, “We’re going to offer them $50K below the Listing price, and ask them to pay closing costs too!”
Pulling his jaw off the floor, Realtor Ron looked down on the MLS data-sheet for the subject property.
“Their home has only been on the market for less than two weeks,” Realtor Ron stated.
Pulling up statistics for several comparable properties in the same neighborhood that had sold in the past month, Realtor Ron showed the Buyers how the property was actually priced very aggressively, below many of the most recent sales. In addition, a quick check on the County Website revealed that the home was priced just below the property tax assessed valuation as well.
“But it’s a ‘Buyer’s Market,” responded Betty Buyer, “Aren’t all Sellers desperate?”
Will Realtor Ron write up the low offer? Or Will Bill and Betty Buyer realize the err of their ways? To discover the outcome to this dilemma, tune in to SOUNDBITEBLOG.
For Part One of this Series, go HERE.
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Rich Jacobson is a licensed real estate professional providing 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.
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Providing knowledgeable empowerment and relentless representation for my clients throughout Western Puget Sound WA.
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Experienced Buyers Agents review the comps with their buyers way, way before getting to the writing the offer stage.
The time to review comps is when initially touring properties for sale.
Rich, as primarily a listing agent, when I get an offer that is REALLY LOW on a lowest price condo on the market, I cringe. I know the buyer agent, she is good, yet she let the buyer write it 30% below asking price. My first thought is the buyer is in control.
Another offer came in that night, it was better. I called the agent on offer # 1 and told her to give her buyer and opportunity to come up as the 2nd offer knew about the 1st one.
So they did but still not enough. So my seller negotiated with the second and we got it.
When I called #1 offer to tell her, she finally became honest, " Missy, your condo was priced great, he was just looking for a deperate seller and will run me ragged until he finds one.
Rich, A seller of mine said he heard from one of his family members that the place to start with an offer is 35% under list. Never mind what the comps say, or the condition of the house, just offer 35% under list!
Lenn: This will have to be one of those rare times when I will respectively disagree with you. Running comps on each and every listing prior to showing is simply a lot of unnecessary work. Our intimate knowledge of our respective markets should suffice through the 'touring' process. Once my Buyers have settled on a home that meets their needs & desires, that's when it makes the most sense to run quick comps to verify market value for them.
Missy: I will cover the 'risks' involved in writing low offers. Your comment is a perfect example of the risks.
Barb: Exactly my point!
I'm working with the same buyers... even though they feel (and recognize) that the property is priced reasonably... they don't want to pay a "reasonable" price. They want the bargain of the century, so we're coming in 25% under list... each and every time.
I've tried to explain, "not every seller is desperate". And, of course, I can't "apologize" for the offer as I present it... I have to represent the offer in earnest, and offer up comps to support it.
There's a changing of the guard and the business of real estate, and hyper-local knowledge is going to be one of the most important benefits of being what to me is the strongest sides of real estate...a Buyer's Agent. Exactly the reason I refer to my team, as I have only lived in NC for 2 years and Buyers need an agent more knowedgeable about the area. I sure do know by know who I would, and would NOT, refer clients to! The cream rises to the top, now more than ever.
Great Post! Some buyer's are just impossible to reason with. I had one that actually decided to wait till the market "hit bottom" because none of their many offers were accepted. Does anyone really know when or what that will be?
BTW, I've never thought of Letter Of Buyer Introduction. Fantastic Idea!
Rich,
You just had to bring in Monty Hall. I used to hate that show but had relatives who always watched it.
I love the method of storytelling you used to deliver your information. It's a sad fact that buyers today are looking for a steal.
Rich
This seems to be a norm lately. All sellers are not in a position that they are desperate. I used to think that buyers could realize when a home was priced very well, but times and media dictate somethings different at times.
Boy, you sure know how to create suspense! Good story telling and good information!
Rich,
Mortgage pre-approval is one key element. The other one that stands out is the Buyer Introduction letter. Haven't seen that before, but it'll put a nice human touch to the offer.
LOL at your scenario. We have the media to thank for so many buyers thinking they can "steal" everything on the market.
I agree with Lisa (above) - many buyers are naively influenced by the breathless and often inaccurate media reportage...
I agree that the media has resolved this to be a buyers market and lets low ball! Truthfully in some price ranges it is NOT a buyers market I am finding. I have 2nd time buyers (the market IS changing) and their criteria is fairly specific and truthfully it is a sellers market in what they are looking for. So they have been educated by myself and my business partner of this as well. The home they are looking for is a "sellers" market as their is NO inventory in their criteria of specifics. It has been quite an interesting week and I am very excited that we seem to be turning a corner as well here in Mason County. I do my best to educate a buyer on their offer and what they are doing and what FAIR MARKET VALUE and inventory and conditions show... it is not just a matter of pulling comps- there is a lot more involved. I won't pull comps before hand because I agree Rich - I know the market here - I see it and live it every day. When we get to the nitty gritty I pull comps and educate my buyers from that point. they need to see it in writing what hte market is doing for THEIR specific type of properties.
Cool I like the concept of your series - and the sound bit blog......now to Canadianize it....:-)
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