Home Buying in 75023>Question Details

Plano,  in Plano, TX

Why agents do not want you to make low ball offers?

Asked by Plano, Plano, TX Sat Feb 14, 2009

People have been asking me over and over "Why does my agent think this offer is to low, if I want to offer it, why cant I." Well sure, go ahead and offer way lower than asking even if the agent thinks its a bad idea. IF it is accepted and you purchase and there are other homes on the market in the area for the same asking price... you have just lowered your neighborhoods value. Meaning your home is now a comp and at 20-30, even 100k lower than everyone elses house... THAT is what will be used to compare everyone elses value. Thus, in the long run, you have hurt yourself more than help yourself.

Is everyone else getting these type of buyers too? Ones who don't care or don't understand why you shouldn't buy a house WELL under it's market price?

Help the community by answering this question:

Answers

51
Tom, I agree, that agents outside of the market shouldn't be answering "market specific" questions. This, however, wasn't one of them.

And you can laugh-off "Oklahoma", but you know that Texas is too large to be considered a local marketplace.

I don't have my questions sorted by area. I just view the latest Trulia Q&A, and respond to those questions that interest me. If I restricted my answers to only my local region, I would never have met the online presences that I now consider online friends... like JR, and rockinblu among others.

If I were solely interested in gaining "clients" from Trulia.. you're right. I would only be answering local questions. But that's not my purpose here. I enjoy the challenge, I enjoy sharing my knowledge and training with the public, and for the most part, they seem to be appreciative and pleasant.

I try not to get involved in troll-fights, and try to remain respectful and calm. (not always easy). It is, after all, a national forum. Again, thanks for the respect and calm response, it's much appreciated.
4 votes Thank Flag Link Tue Feb 17, 2009
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Tom, while I appreciate the "respect"... the question was: "Why agents do not want to make low ball offers".

Do you really think that Plano agents have different reasons as to why they don't want to make low ball offers, than New York Agents, or Chicago agents, or Des Moines agents? And if they do have different reasons... I'd posit that Plano agents must have different reasons than Austin agents, San Antonio or El Paso agents.

Texas is a big state, but you're claiming that any Texas agent should be the only agents who could reasonably answer this question. An agent in Shreveport Louisiana, or Norman, Oklahoma is closer to the Plano market than an agent in Amarillo or El Paso. Your logic is flawed.

This is as generic a question as they get, and can be answered by any agent nationwide, just as well as any Plano agent.

JR is correct (as she often is), that "she doesn't like lowball offers, for the same reason as any other agents..." regardless of their location.
4 votes Thank Flag Link Tue Feb 17, 2009
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Tom, there's absolutely nothing about this question, that requires a "local" answer. This is a general real estate question, and could/should be answered by an agent anywhere in the country.

But nice high horse.
4 votes Thank Flag Link Mon Feb 16, 2009
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Looks like a generic question to me too, Alan. That's how I took it. I think I don't like lowball for the same reasons any other agent doesn't like them.

I think Plano hit the nail on the head: whether it's a 75,000 offer on a 175,000 house, or a 500,000 offer on a 700,000 house, they are "trying too hard to buy in an area they can not afford. People need to be realistic with what and where they are buying. "
3 votes Thank Flag Link Tue Feb 17, 2009
Tom, I'm sorry... but $4 on a house that's listed at $150,000 (or .00002%) is not a lowball offer, that's a JOKE... and I agree, I wouldn't write that offer either, and would likely 'fire' any buyer who insisted I write it.

But if you read my original answer, which represents an 80% offer, which I "do" consider a lowball offer, we felt it was probably a waste of time, too. And it turned out to be an accepted offer.

Now, maybe the two of you can put away your "tape measures", and behave like professionals. huh?
3 votes Thank Flag Link Sun Feb 15, 2009
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
It is not the responsibility of the real estate professional to protect the market price in any general area. It is our responsibliity to assist the buyer and seller to reach a mutually acceptable price that both parties can live with.

Because an offer originated as a "low ball" or whatever, should not be a concern of ours. There isn't anyone holding a gun to the seller's head to force them to accept this offer. If it's unacceptable, the offer is rejected and it is over.

Is is fair for agents to view themselves as the protector of a real estate market. The market is what it is, and is created by willing buyers and sellers not agents with self imposed super powers.
3 votes Thank Flag Link Sat Feb 14, 2009
Lisa, keep the faith, and you might want to rethink the way you approach showing and submitting offers on overpriced listings. Instead of showing each property you could hire someone to go take 100-500 pictures (inside and outside) of the property, and show your clients the photos. Also, instead of filling out a purchase and sale agreement (P&S) for every offer, you could work with buyers to write LOIs to negotiate the terms of the sale, and fill out the P&S with the agreed upon terms.

Actually, many investors (myself included) prefer to operate this way--especially when investing in non-local markets.

Jeanie, I've also had similar experiences where sellers who rejected my comps and offer only to entertain them later.

Tom, you need to get beyond that "20%" figure. Some buyers are shopping for homes, and others are shopping for investments. The latter group--myself included--typically shop for homes that the prior group won't buy, and we're simply not going to offer to pay market value for those properties. Basically, there are 2 reasons why a property won't move: 1) ugly property, or 2) ugly price. We like to buy ugly properties with CDOM >= 90 days (or 120 days in my case). Those ugly properties typically will require acquisition, rehab, holding, and marketing costs which typically end up running around at least 20% of the market value of the subject property--hence the reason why we make our offers. We're in business to earn a profit just like you. The only way to price in your (or another agent's) commission, inspection/appraisal/legal fees, taxes, repairs, and other expenses is to lower that offer price.
2 votes Thank Flag Link Thu Feb 26, 2009
There's a lot of group think going on in this discussion. I agree with Bill and Don, and I'll address Tom's hypothetical questions as an investor (who invests in multiple markets [DFW is one of them]).

"I have an offer of 60% of list for this well kept home....do you want it?"
"let's say that the buyer wants to offer $4 on an immaculate home with a list price of $150,000 . . . then what?"

I'll address the previous 2 questions here. A simple answer is: yes, the seller's agent is obligated to present the offer in both cases, but the clients may opt to accept/reject each respective offer. Yet, both questions were posed with insufficient context to determine whether or not either offer is or is not reasonable. What if the value of EUR/USD had plummeted 3.75M% the week before that buyer made the $4 offer (in last week valued dollars) on that $150K property, and what if that buyer had purchased $4 worth of euros before that crash? Keep in mind that $4 would have grown to the euro equivalent of $150K (in last week valued dollars). The offer would be reasonable. What if the "well kept" or "immaculate" homes were built on top of a leaking toxic waste dump, and if the problem were only discovered recently via environmental tests ordered by the buyer? Depending upon the extent of the damage (and scope of the repairs), those offers might in fact be reasonable.

I once offered 60% of the list price (technically it was 65% of the market value--the house was listed at 5% above the market value) on a REO, and the listing agent defiantly rejected my offer without asking me why I made that offer. It turns out that property had lots of code violations, required lots of repairs beyond the code violations, had been on the market for a while, and most conventional lenders wouldn't lend on such a property. Ultimately, that property sat on the market for another 6 or so months, and that agent ended up accepting another offer around the same price as mine.

"where do you draw the line?"
"where do realtor ethics come into play?"

The best way to address those questions is to consider the surrounding context and the current market conditions. Also, I believe agents/brokers should operate as consultants do. As a fledgling consultant, I was taught to provide my clients with all of the information they need to make a decision, and then to LET the client MAKE that decision. If a client asks me for my opinion, then I'll share it sometimes; however, I'll never push my opinions on a client, because I only know what the client opts to share with me about the context of an issue, and the client is the one who will have to live with the results.

Now, I'm going to ask some related questions: Where was the indignation from sellers' agents for their sellers accepting offers far above the list price during the sellers' market (2003-2006)? Were the sellers concerned about driving up the comps and possibly gentrifying their neighborhoods, or did they simply take their money and go their own way? Should sellers' agents set a ceiling price that they'll accept in behalf of their clients? Where did the sellers' agents draw the line? How do you think sellers' agents responded to buyers' agents who questioned the ethics of driving up the comps? (I'll give you a hint on this one: most sellers' agents I know stated that this was one of the costs of doing business during a sellers' market.)

No offense, it's a buyers' market now . . . many--if not most--sellers had no problems exploiting their position (and options) during every sellers' market. So, I personally have no problems with playing the same game by their rules in this market. It's nothing personal; it's strictly business. Every industry operates in cycles. Prices escalated during the previous phase of the business cycle, and now they're falling. Guess what? This ALSO is one of the costs of doing business during a buyers' market.

Don't hate the player; hate the game.
2 votes Thank Flag Link Tue Feb 17, 2009
I have had the same experiences recently that you mentioned, and it is tough to make sales when the sellers and buyers are too far apart. But, if the buyers are wanting to see properties that may be priced too high, I don't see how I could avoid showing whatever they are requesting to see. In my most recent situation, the problem was that the sellers were still looking at comps that were out of date, too old, that were the last information provided to them. Although, the sellers did not get offended by the buyers offer, at this point we are still waiting for their expectation to adjust to the market. On another sale, I had a buyer that left and came back a month later and by that time the sellers had changed their minds and adjusted to what the comparables were showing, and we were able to make the sale. So, it is a case by case scenario, and
if the buyers are patient and can wait, they may be able to come to an acceptable price at a later date.
The market area has a limited number of properties, so it is usually more advantageous to show the buyers these homes if they have the time to wait for the sellers to adjust, and then come back a second time.
Hope this helps.
1 vote Thank Flag Link Wed Feb 25, 2009
". . . the areas where an offer was made well ABOVE list price are the areas that are in a heap of mess now."

Actually, that statement isn't entirely accurate, and neither is the inverse statement (areas which didn't see the year-after-year, double-digit appreciation are doing fine). For example, the property values in most parts of Northern Virginia (NoVa) soared--appreciating annually by double digits [like elsewhere along the east coast]). Some property values in parts of NoVa (ie parts of Herndon, Sterling, Ashburn, Woodbridge, etc) have dropped 20%-25%; whereas, the property values other parts of NoVa (ie Burke, some parts of Fairfax and Vienna, etc) haven't dropped much. Plus, according the the reports I read, the CDOM is lower in NoVa (92) than in DFW (100)--albeit not by much. Additionally, the property values in Greater Cleveland (GC) appreciated similarly to how the property values did in DFW, but some parts of GC are getting slammed with foreclosures--albeit for different reasons. Nevertheless, the point is that one can't generalize; different things happen in different markets for various reasons.

JR, that too is part of the game. :) Sometimes we'll win, and sometimes we'll lose.

I don't make lowball offers, but I do purchase properties for my business at wholesale prices--just like other businesses acquire their supplies at wholesale prices. Besides, I don't go for the immaculate properties; I leave them for the retail buyers to pursue. I go for the ugly ones, that have been on the market for at least 120 days, that most retail buyers will avoid. I know that some people here will think I'm playing semantics (with lowball and wholesale offers), but I see distinct differences. IMHO, lowball offers are low offers that are made without any rhyme or reason; whereas, wholesale offers are low offers that are made incorporating lots of factors (CMA, inspections, appraisals, surveys, market trending, repair costs, etc).

Another key difference between the 2 is that the market often will support the wholesale offer price. For example, the listing agent (in my previous comment) rejected my offer--only to accept a similar offer later. Stated another way, the market validated my offer (independently via the due diligence of another buyer and via the eventual sale).

By the way, Plano, I agree with you partly in spirit. I don't believe in trying to juice a seller; rather, I believe in structuring deals where everyone can win. Although my offers can be aggressive, they're also fair, and logical; plus, you could independently validate the analysis of each offer by running the numbers yourself. Furthermore, I also structure all of my deals, so that I can sell the properties to other buyers slightly below market value (to give them some instant equity in the property). I know a lot of other investors who operate similarly.

No matter how wealthy any of us get, we can't take it with us.
1 vote Thank Flag Link Tue Feb 17, 2009
I once offered 60% of the list price (technically it was 65% of the market value--the house was listed at 5% above the market value) on a REO, and the listing agent defiantly rejected my offer without asking me why I made that offer. It turns out that property had lots of code violations, required lots of repairs beyond the code violations, had been on the market for a while, and most conventional lenders wouldn't lend on such a property. Ultimately, that property sat on the market for another 6 or so months, and that agent ended up accepting another offer around the same price as mine.
~~~~~~~~~~~
That happens frequently, Dp. Sometimes one buyer knocks the seller down for the next guy. I have some lowball buyers who have knocked the price down for someone else a few times already. He has terrible timing.
1 vote Thank Flag Link Tue Feb 17, 2009
Sorry, I'm not a RE Pro, just a home owner.

But...I don't care that my lowball price lowers the market value of the house I'm buying. That will clear out after a while and free market forces will hopefully give me a great return.

The RE Agent cares that you just lowered the value of all the houses on the market, they operate off a percentage. The more it sells for the more they make.

FOLLOW THE MONEY.
1 vote Thank Flag Link Mon Feb 16, 2009
Tom, it's difficult to determine where you draw the line.... and the Code of Ethics is involved.

You have to determine if the buyer is serious, or just trying to "game the system". If the buyer is serious, it's up to you (the agent) to write the offer. Just because you feel that the offer doesn't have a shot, isn't a good reason to refuse to write the offer.

and if the buyer is just "playing", then you have to take a stand, and "fire" the buyer. If you're not going to fire the buyer, then you have to agree to write their offers, regardless of your opinion of the offer. If you're going to continue to represent the buyer, you have to agree to write the offers he wants.

... I don't know where you draw the line, but certainly .0002% is well below the line. An 80% offer might have a chance to be accepted... a 60% could possibly be accepted, even a 50% has a glimmer of hope.
1 vote Thank Flag Link Sun Feb 15, 2009
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
Agents don't like a buyer to make a low for a variety of reasons. For the most part, good agents recognize that the buyer(s) control today's market. They set value and ultimately, help this market continue to function.

If you're a buyer in this market and your background work indicates that a house is overpriced, make an offer you think is appropriate and fair. Two years ago, you would have analyzed SOLDS as a basis to establish your bid. Today you need to focus on ACTIVE listings. That's the "market", the competition, the homes other buyers will consider in the competitive set. A comparable home, in a comparable area, at a lower price will always sell first. Buyers are trying to find that house.

A buyer ultimately determines value; the Seller determines whether to make the deal at that price, or not. LOW BALL offers are valid offers. An agent should work them and get a fair market price for the Seller.

DS
1 vote Thank Flag Link Sat Feb 14, 2009
Since every market is slightly different, it is not reasonable to compare Florida with Texas. I have noticed that the states that voted for McCain did not have as much run-up on prices over the last few years, and so therefore did not have the catastrophic drop in prices. Yes, we in Dallas area have seen some erosion, but under 5% average (TAMU says 2%) and that equates to some areas being up (actually) while others are down maybe 8-10%. Bush's new neighborhood is way up.

For us, the definition of lowball would be different from a place that has seen 30% drop in values. J Lo commented on local buyers who have had properties slip through their fingers because they listened to Cali Realtors saying to offer half off. Ain't gonna happen here.

I agree with those who said we must do what the buyer wants, but we also have an obligation to advise clients that a p.o.'ed seller is not going to deal with them. Counters that are full price or full price plus a dollar are common responses to lowball offers. It isn't always about getting a deal. There are plenty of buyers here that still want location, location, location.

The good news for those 'deal' buyers is that most banks will at least look at asinine offers and sometimes actually agree. Ordinary homeowners with emotional ties to the property get offended by offers down in the gutter. Builders, banks and people in the business take a more pragmatic view.

Frankly, I don't care about "lowering values" of a neighborhood. My little transaction in a sea of thousands of sales isn't going to matter a tinker's dam, and the invisible hand of Adam Smith will smite me if I object.

But if I personally get the rep of handling idiots for buyers who always take a mile when offered an inch, no one will want to respond to me. We all know those Realtors that you roll your eyes when you see the caller ID or the name on the fax. So, my first order of business is always to find the expected value of the property. Someone wanting 30+% equity is probably not going to get it, and is wasting their time as well as mine and the seller's side. I try to advise them of the likely outcome of lowballing before just chopping down a tree.

Long term the market will find itself where it needs to be regardless of what I do or say. So, Plano, while I get buyers like that who want to tick off sellers without purpose, we have to recognize that willing buyers and willing sellers set prices and if the popular mindset (as seen on TV) is to bring down average prices, then that is going to happen -- you might as well get something for it.
Web Reference: http://www.SumnerRealty.com
1 vote Thank Flag Link Sat Feb 14, 2009
Purchasing at the nadir of the pricing in the neighborhood certainly does hurt the existing homes in the area, especially those that are currently on the market.

But I don't agree that they have hurt themselves more than they've helped themselves. They have just bought a home in the neighborhood at a lower price than many. Yes, it will be used as an ongoing comp, but since they purchased at the comp price, they haven't hurt themselves.

I don't hesitate to help buyers make lowball offers. It doesn't cost us anything to make the offer... and in today's market, we've found a number of sellers willing to accept.

I recently wrote an offer on a home priced at 449,000, which had been on the market a long, long time, without a price reduction. My client's maximum was $360,000. She asked if there was any point in writing that offer... I told her we had nothing to lose, the worst they could do is say "no". Would you believe, after a minimal negotiation, they said "yes" to our $360,000?

Did we hurt ourselves? I don't think so... I think we got a bargain.
1 vote Thank Flag Link Sat Feb 14, 2009
Alan May, Real Estate Pro in Evanston, IL
MVP'08
Contact
It is not a single low ball offer per se, but rather that a buyer interested in low balling is going to tend to be an expensive customer to service. More showings, more counters, less willingness to be realistic on price. A low baller tend to drag out the home buying process by focusing on price rather than whether the home is one worth loving. Even when a lowball offer succeeds, these buyers will pull out when the reality hits that it is not their first choice in a home.
0 votes Thank Flag Link Thu Sep 23, 2010
What is funny is the other side of this.. I just had to deal with a buyer (I think they were in North Carolina) who were purchasing a new construction home, but the appraisal came in $75k under asking price. The builder would not budge even though it was basically their fault. They sold of a ton of inventory at the end of last year to get it off the books at a much lower price then they are asking now. Same homes, same upgrades, etc. So the appraisers are looking at those prices and appraising it compared to the previous sales in December. So the "low ball" sales priced him right out of what he wants to get now.
0 votes Thank Flag Link Fri Mar 6, 2009
We are not only representing the buyer, we are here to educate also. I've had to cut a few prospects loose when deciding if they will be clients because of this. And this is fine my friends, you can choose to cut them loose if they are going to listen to late night infomercials rather than you as the professional. Why would a Realtor want to work with someone that obviously has no trust in a pro anyway?

I've had to school a few clients and get them off of the thinking that they are going to pick up a steal if they just keep looking and bidding low. Here are a few tips to buyers and their agents.

If a home is priced well below market, it either needs work and won't pass a lenders inspection, it's a short sale which will take 30 plus days to get a response on, and will likely have multiple offers, or you'll have to outbid others because the list price is obviously a starting point and not a target.

If a home is in immaculate condition and the comps justify the price, insulting the seller with an oddball bid will not work in your favor.

If a buyer wants a new home for $95,000 in most of DFW area with a light an bright kitchen, sorry. Usually a mistake of the first time buyer not knowing the values.

These are usually easy to overcome, but if they just won't listen, there is not much a Realtor can do but refer them out, which I've done a few times as well.

I'll have to differ with you on the "comparable" argument though, appraisers usually remove highest and lowest sales as well as foreclosures from their opinions. And if they have to, go older than 6 months or outside the neighborhood.
0 votes Thank Flag Link Fri Mar 6, 2009
You are working with the wrong Agent. I am old and started doing this back in the 80's in NY. I feel when you present an offer that is low, the worst a seller can say is no, and normally they come back with a counter. Now you have a starting point for negotiating. . There are a lot of agents that are over pricing homes just to get a listing, and when a reputable agent makes a fair offer based on comps, alot of agents don't want to look bad, and they are advising clients it is to low. They forget to let them know, if buyer is getting funded it is going to appraise for the loan amount or it will not go through. The appraisers are using a lot of the same information we as realtors use for CMA'S, If you are looking for a Realtor who lists to sell and gives 110% Customer service than call (972) 757-4527 or email bcapobianco1@yahoo.com
0 votes Thank Flag Link Fri Feb 27, 2009
Jeanie & Lisa,

Overpriced is one thing.....

But where do you draw the line when someone wants to offer 20% below value? And they do it over & over & over again.
I have heard of this much
0 votes Thank Flag Link Wed Feb 25, 2009
I've had the unfortunate experience of having to submit very low offers recently. One home was very obviously overpriced, and I prepared comparables to be submitted with the offer (I did this on all three unrelated offers). While the comps weren't balked at by the listing agent, it was very much so by the sellers. Of course, they "put so much work" in the home...and again, I don't care if you import Italian marble, it's still a three bedroom ranch and can only sell for so much. We haven't heard back at all.
The second offer on a 1 bedroom condo, which was also low, but again according to recent comps, again fell on deaf ears. I am waiting to see what will happen with the third.
MY question is WHY AREN'T AGENTS preparing their sellers for these low offers and telling them where the comps are at so they can be prepared for them! In all three cases, my buyers were willing to negotiate some, but due to "market conditions" do not want to overpay for their home and are very concerned when it comes to appraisals. I had one buyer come to me with comps that his lender's appraiser told him she would be using...what's a buyer's agent to do?
Any advice there? Do I stop showing homes that are simply overpriced due to recent comps?
0 votes Thank Flag Link Wed Feb 25, 2009
Some buyers want to make low offers because the sellers are priced way over the true market value and are not realistic, but the buyers like the house, and think if their offer is low, maybe they can meet somewhere in the middle where it is closer to the actual value of the home. Typically, some agents don't want to work with buyers that make offers much under the offering price because the agents don't like the long negotiating process that might be necessary if the sellers price is too high. Basicially, if a buyer offers too low, but does have a serious interest in the home, it creates a lot more effort for both agents to try to debate what the value is and sell the owners on why their price expectation is too high, before there is a real possibility of a sale occuring. So, it is extra work for the agents and a lot more time consuming.
0 votes Thank Flag Link Wed Feb 25, 2009
Plano you can’t hurt the price of the neighborhood with one home only. If there, are homes consistently selling for low price yes? The only reason I advice my clients do not put lowball offer is that most of the sellers getting offended. Real estate is emotional commodity and once they fell in love in this home and seller get offended by the offer, buyers will have a less chance to negotiate to the next stage. However low ball the REOs, there is not emotion involved there, just simple numbers.

Regards,


Viktor Taushanov
Realtor
William Davis Realty
214-697-6797 Cell

http://www.planorealty.blogspot.com
Viktor.RealtyBG@gmail.com
0 votes Thank Flag Link Tue Feb 17, 2009
Dp2, I agree with most of what you are saying but no one in here was referring to whole sale properties or seasoned investors. Obviously you have legit reasons for low balling. I am talking uneducated (in RE) retail buyers thinking they can get 50k off a 100k dollar perfectly good property. :)

BTW Northern VA has enough military and government to keep the market fairly stable. Decent amounts of moving in and out. IMHO

No, not all of what I say is relative in every market, but generally speaking it does. So I think.
0 votes Thank Flag Link Tue Feb 17, 2009
Dp2... the areas where an offer was made well ABOVE list price are the areas that are in a heap of mess now. Cost of doing business, sure. But now that those areas are worthless and in foreclosure, im sure the agents are kicking themselves now. Have had a ton of offices shut down in those areas and people out of the business all together.

Cost of being a capitalist nation. No one cares about anything but a quick buck. How about everyone stop trying to become over night millionaires and conduct business in the best interests of everyone and not themselves. BUT... I don't see that happening anytime soon. So until then, I just read Trulia and have a little giggle from time to time.
0 votes Thank Flag Link Tue Feb 17, 2009
We have people in Florida and Illinois answering questions about offers in this market.
One even said that they see 60% of list price offers get accepted. Of course, that doesn't happen here.
So, I guess we really have more than one question going on in here.

Plano doesn't want to submit low offers.... I don't blame her. But does it fall under some rule of realtor ethics that she MUST?

Oklahoma? That's just the biggest town in N. Texas. LOL

I see a TON of questions on here daily.... all from Texas because that is the way I have them sorted for my email notifications.
How do you have the time to answer questions outside of your market anyway?

I know those realtors who will submit 50 low ball offers for a client. I won't work with that caliber of agent.... My realtors treat their colleagues and me with respect.
And I don't think that Plano was talking about that one deal where the market is all screwed up and the houses all need work... no, not that low ball. I think she is talking about the 'bad agent' lowballer.

Ya'll have fun in here.
0 votes Thank Flag Link Tue Feb 17, 2009
Alan, I respectfully disagree....

Nice low horse...
0 votes Thank Flag Link Mon Feb 16, 2009
Well Joe.. No. I do not work off a % or commission and I still think it's a concern when buyers aren't serious, low ball offers( and by low ball I mean 30-40% plus), or are trying too hard to buy in an area they can not afford. People need to be realistic with what and where they are buying. Yes, any and all offers should be presented, but don't complain when an agent decides not to work with you because of absurd thinking.

But then again, if you are in FL or CA... yes, bring all absurd offers because apparently they work. Sucks those states prices got out of hand to begin with.
0 votes Thank Flag Link Mon Feb 16, 2009
Chris.... You nailed it!!!!

Just like I would never answer real estate questions in Utah!!
0 votes Thank Flag Link Sun Feb 15, 2009
I would never go outside my area and offer real estate advice. Our market is as different as night and day to other markets. Some of your markets shot up by 15% per year or more and have overexceeded what inflation or common sense dictates.

Our average appreciation was between 3-5% per year. Does anyone actually believe that a house that is priced reasonably could potentially lose the last decade plus of gains? I've never seen a house go for 50% of it's value. I have seen some homes go down by 20% because they were overpriced by 20% in the first place.

I'm not against writing low offers, but if they are unreasonable I can certainly tell the client that I'm not the agent for them. That is neither unethical or unreasonable.
0 votes Thank Flag Link Sun Feb 15, 2009
Alan.... you missed my point.

Where do you draw the line?
Where do realtor ethics come in to play?

I am only asking... I do not claim to know the answers.
0 votes Thank Flag Link Sun Feb 15, 2009
Don, I hear you.
But... let's say that the buyer wants to offer $4 on an immaculate home with a list price of $150,000.

Then what?

Do you see where I am going?
0 votes Thank Flag Link Sat Feb 14, 2009
David... My office is in Dallas.
I live in Plano.

You are just miffed because you haven't gotten any support in this TEXAS question.
0 votes Thank Flag Link Sat Feb 14, 2009
David, I am a loan officer... I take interest in this topic out of curiosity.
Notice, I asked Bill about the responsibility of the agent.....
And... I only presented my opinions along with a hypothetical.

If I were an agent and a buyer was presenting insulting(stooooopid) offers, I would drop them like a hot potato(e)

I am in the Great State of Texas where real estate has dropped a whopping 2%(my area is up).
I presented that earlier to provide a basis for why I believe what I believe.

I see realtors from, outside of Texas come in here and answer TEXAS questions all of the time... and most leave me scratching my head!!

Hi Chris... Do you own a riding crop?
0 votes Thank Flag Link Sat Feb 14, 2009
Bill, I don't think anyone was suggesting that we "price protect" our area. I don't think that's possible, or ethical. However, when we have houses being bought everyday for the list price, or slightly below, it isn't a great idea to write offers for 80% of list price (if list price is a reasonable price). If everyone in your market started listing their properties for what comparable properties sold for in the last 60 days then would offers of 60% of list price be reasonable? If so, I'm coming to your market to buy up all the cheap homes.

Real estate is very regional. We in Texas did not see the outrageous skyrocketing prices that you did where you are. I somehow doubt , when the average price increase per year in our area was 3%, that the last ten years of equity built into a home should be wiped out because values elsewhere are down.
0 votes Thank Flag Link Sat Feb 14, 2009
Interesting, Bill.
So, the agent should call the seller agent and say: "I have an offer of 60% of list for this well kept home....do you want it?"

What is the fiduciary responsibility here?

Me, personally, I would not represent that buyer. But I agree that an agent should not discourage any bid if they choose to represent the idiot.
0 votes Thank Flag Link Sat Feb 14, 2009
Another reason this often doesn't work in Texas. 100% financing originally or 103% and no equity. I think you have to show the buyer what they might have paid for the property. Subtract seller closing costs from your buyers offer and show them if the seller had $50,000 to bring to closing, they'd probably keep the house. Rare and very rare is it that a seller can bring big time cash to closing to help the buyer buy a home. Sure we're seeing some sellers bring good cash to closing in McKinney, Frisco and some of the surrounds, but perhaps its a more affordable amount....$1-$2-$5000.....not $50,000. Low balls make sense in some situations:

1. Overpriced homes.
2. There's some chance it will get taken (estate sale, foreclosure, = amt of equity in the home.)
3. We've also used low balls on properties that were overpriced and on the market forever.
Even when the price did not get to the lowball, the seller came down significantly to something more
workable.

I think you have an interesting point about comp values now, especially since one appraiser told me he MUST use a comp that has sold in the last month. So we see a $100sqft neighborhood with one foreclosure that goes for $70 and he wants to use that for a comp. Appraisal doesn't make and perhaps the home doesn't sell. Do that often and you could create a whole neighborhood of homes that don't sell and subsquently foreclose.

Maybe that is something we need to look at in the stimulus package.

Sometimes you just have to get 1-2 lowballs out of them, before they come to reality that lowballs are not a shotgun strategy, but a targeted one. If you are in the right neighborhood and you do a good education on them they'll get realistic after they miss one or two. Hang in there.

What price range are you in?
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Sat Feb 14, 2009
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
YES, I have had a client "shut out of an area" then realized real estate not purchased that way !
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Sat Feb 14, 2009
We See it All the time in Michigan
0 votes Thank Flag Link Sat Feb 14, 2009
I knew David had to be in FL or CA. Unfortunate market in those areas.... But those two states are worlds of their own when it comes to RE.
0 votes Thank Flag Link Sat Feb 14, 2009
Plano,
David is in Florida, which is a completely different market.
So what David might experience, isn't going to be true in Texas..... Were we have lost a whopping 2% of value.
If I were an agent and I had a buyer wanting to act like you have described.... I would tear up the buyer's agreement right there in front of them and wish them good luck.
No professional would work with that client.... But I know some real estate agents who would.
0 votes Thank Flag Link Sat Feb 14, 2009
I have found that the lowballs that I've submitted were not countered or went elsewhere.

I have buyers in the last year who submitted the following (keep in mind these are "all cash" second home buyers):
asking 625,000 offer 560,000 counter None (home subsequently taken off market)
asking 699,000 offer 575,000 back and forth to 600,000. "buyer" said they'd pay 600,000 if seller (builder) added a patio. Result: no sale (home subsequently sold 629,000)
asking 645,000 offer 575,000 back and forth to 600,000 "buyer" said they'd pay 600,000 if seller (another builder) switched out granite in kitchen. Result no sale (home subsequently sold 600,000)
asking 589,000 offer 460,000 accepted offer at 517,000. "buyer" backed out (home subsequently sold for 450,000)
asking 575,000 offer 520,000 counter None(home subsequently taken off market)
asking 389,000 offer 260,000 counter 345,000 "buyer" walked (home still unsold)
asking 640,000 offer 575,000 back and forth to 600,000 buyer walked (home subsequently sold 580.000)
Personally I think lowballs are a waste of time, The homes the subsequently sold for less than my buyers offered underwent further reductions, and sold near what the last asking price was. My conclusion is, sometimes a house will sell for a lot less, but not till the price is reduced). But what do I know? I just unlock doors. :)

That said. It is certainly a way to separate the "have to sell" from the "fishing for a high price".
0 votes Thank Flag Link Sat Feb 14, 2009
Chris! EXACTLY MY POINT. The complaint that I get is.. "I need a new Agent, mine isn't letting me buy a house" Well no, the 50k PLUS below asking is what is not letting you buy a house. Then there is the other end.. when the sellers agent brings that to the table, the sellers think its their agents fault for such low offers. So all in all, its the agents fault for everything... in their eyes!
0 votes Thank Flag Link Sat Feb 14, 2009
Plano,
You're right. If the house is listed at 200K and the comps support it then an offer of 115K is just killing a tree. Unfortunately what will happen is the buyer will tender a few offers, loosing out on some great houses and move on with other Realtors thinking it's the agent, not their offers. Not a productive use of their time, yours, the listing agents or the sellers.
Web Reference: http://www.ChrisTesch.com
0 votes Thank Flag Link Sat Feb 14, 2009
I think Tom got my point. David... Good Luck to ya! :)

I'm talking the house is listed at $200k.... and comps support that number but then coming in at $115k..Not only does that make most sellers mad but If that is accepted, then YES that will be used as another comp in the future. (I realize David will probably have something smart to say here, but I am in an industry where I work ALL OVER THE U.S.... so I see trends of every kind, in every city and state) Other people will see this and think they should offer this low on all the other $200k dollar homes in the area... creating a domino effect. I am not saying agents should not present any and all offers but more of buyers not understanding the logistics of it all.
0 votes Thank Flag Link Sat Feb 14, 2009
What was wrong with the house?
33% off? Must have been some desperate sellers.
0 votes Thank Flag Link Sat Feb 14, 2009
Depends on the definition of 'low-ball offer'.

List price = $150,000 and you offer $135,000 then that is a low ball offer.
Offer $100,000 and that is a waste of everyone's time.
0 votes Thank Flag Link Sat Feb 14, 2009
An agent will present all offers. A Buyers agent will try to get you the best possible price . The agent may advice you when it is a lowball offer that if the seller is too upset and feels insulted he may not make a counter offer.But the agent will obey your instructions.
I had one seller who was annoyed and actually increased the asking price as a counter.I had one seller who countered with a one dollar reduction from list price. In this market there are foreclosures where you can get a good deal but even the banks take weeks to agree to a price that is too low.
Web Reference: http://www.gitabantwal.com
0 votes Thank Flag Link Sat Feb 14, 2009
Everyone does want an excellent deal, and who can blame them? If you were out shopping today you would want the best price on whatever it is that you're buying as well. The key is to be realistic. Looking over the comparables and discussing trends and then formulating the best way to come in lower.

What I typically do is to explain to them that many times if we offer too low on a home the seller gets offended. Their comeback is typically going to be worse than it would be if a reasonable offer was tendered. I've seen sellers get offended and basically say "if you want my home then you're going to take MY terms" which doesn't help at all.
Web Reference: http://www.ChrisTesch.com
0 votes Thank Flag Link Sat Feb 14, 2009
1 2
Search Advice
Ask our community a question
Email me when…

Learn more

Home > Texas > Collin County > Plano > 75023 > Home Buying in 75023 > Question
Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer