I got a call yesterday from a potential buyer for one of my listings. He told me he would like me to present an all cash offer of $350,000 for a property I just listed at $429,000. With a little prodding I was able to find out that he hadn’t seen the home and didn’t know the neighborhood. I tried to explain a bit about the price and comps and his response was “it is a terrible real estate market and that’s all I need to know”. REALLY?
Needless to say, my client’s counter to this buyer was not accepted.
This is just one example of how not to be successful in our current Lake Norman housing market. While it is quite common for investors and low-ballers to make these kind of offers when a new listing comes on the market, I have to wonder what these buyers are thinking? Or, are they thinking at all? Even banks get disgusted with these types of buyers. Here is a great example:
A Lake Norman waterfront foreclosure was listed a few months ago for $399,000. I had an interested buyer so I spoke with the listing agent. At that time, the bank had already received and turned down several very low offers from investors and it was clear that both the listing agent and the bank were frustrated with these buyers. My buyer decided to wait. Over a period of several months the price was lowered twice. Finally, they lowered it to $329,000. My buyer quickly made an offer of $305,000 and it was accepted just before multiple offers were coming in. Clearly, if my buyer had made an offer of $305,000 when it was originally listed it would not have been as well received.
I had a buyer a while back who wanted to make an offer of $800,000 on a home listed at $1,189,000 because he heard the sellers might be desperate to sell. I knew the comparable sales would not justify anything even close to this price but my buyer felt that if “your throw out enough of these offers eventually one will stick”. But seriously, if the seller was that desperate wouldn’t they have lowered the price to get multiple offers? This kind of thinking is truly irrational. This property just closed for $1,100,000.
I have sold and continue to sell some incredible bargains on Lake Norman but I try to counsel and educate my buyers:
- Timing is everything. Develop a relationship with the listing agent, especially of foreclosures and shortsales, so that you will know when the sellers are ready to work with a lower offer.
- Do your homework! I always do a complete market analysis and research the history of any property for my buyers before they make an offer. We will know how long it has actually been on the market, how many price reductions, what their loan amount is and if there are any signs of distress like a notice of default, a divorce, etc.
There was a recent article in the Los Angeles Times “Low-ball Offers Decline in Some Housing Markets” April 22, 2012 which stated “For home buyers who still think they have a chance of hitting it lucky with a low-ball offer, they’re finding in many markets that their offers are more often being rejected or countered closer to the original asking price.” In my opinion this is an accurate description of our current Lake Norman real estate market. Be smart!
OTHER ARTICLES of INTEREST