Have you, as agents, ever hesitated on your client's initial offer? Say a buyer wants to start by negotiating

Asked by Curious Buyer, 94122 Wed Feb 27, 2008

10 to 15% off the list price but the agent is not encouraging of taking this position. Or, the agent suggests negotiating for less based on the agent's knowledge of the market, development, etc. Is this something an agent will do to set the buyer's expectation or is this agent simply not agressive enough?

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Melanie Narducci’s answer
Melanie Nard…, , San Francisco, CA
Wed Feb 27, 2008
You've got some thorough and thoughtful answers here, which I can't agree with more. I would simply add that crafting an offer is not all about the price; for example, if you come in with all cash and looking to close in 2 weeks, that could be an offer the seller couldn't refuse, even if it was 20% below their asking price!

In South Beach, if you're negotiating with a developer I've noticed they are less open to negotiating on price, but press them on *incentives* such as paying hoa's -- go for 2+ years -- paid parking for a couple of years, if it's leased, appliance upgrades, heck, maybe an all inclusive paid trip to Mexico (I know one developer who has a fantastic place in Cabo), or a pair of Season passes to the Giants. On the flip side of that, if it's the last unit in a building the developer may be open to a price cut and moving on to their next project (again seller *motivation*).

I'd suggest having a heart to heart conversation with your agent so that you have a clear and detailed picture of your agent's analysis of this specific property and the overall current market -- this education/information is all upside for you moving forward -- but in the end, "Elvis is the Man!" and you as the client are in charge. Good luck -- let us know how it goes!
3 votes
Alan May, Agent, Evanston, IL
Wed Feb 27, 2008
I will always make the offer that my client wants to make.... of course, it's also my duty to manage the expectations of my client, and explain the "probability" of that offer actually working.. whether I believe that we're going to anger the seller, or if i truly expect the get a counter...

but if my client wants to make the offer... 10%, 20% honestly even 50% lower than the list price... I will make the offer... but they're going to get my opinion of it's viability.
4 votes
Don Tepper, Agent, Burke, VA
Wed Feb 27, 2008
Elvis has the perfect answer. You advise your clients...provide the best advice possible...then, as an agent, you do what your client wants.

Two other observations: First, I wouldn't consider 10% under the list price to be a "lowball," unless the list price was already substantially under the comps. Consider: Most sellers expect some negotiating to occur. Even in today's market (read some of the other posts on Trulia) many sellers will leave a cushion to negotiate with. So, you offer 10% under list, they counter at 3% under list, and you agree at 5% under list. There you are. Consider, also, that in many markets, the average home sale is 4%-8% under list. So--unless the house is a clear bargain at list price--I wouldn't consider 10% off to be "lowballing."

Second point: I come from an investor background, where offers of 20%-30% under market aren't unusual. And investors don't hesitate at all with those figures. But the difference is that the investor mindset is: "The numbers have to work for me. I know most of my offers will be rejected. But I'm pretty confident that if my numbers are good and an offer is accepted, I'll make money." The mindset of many Realtors is: "I really want my client's offer to be accepted. And I'm not going to get paid unless the offer is accepted. So, I want the deal to work, so everyone will be happy." And there's nothing wrong with that; most Realtors really do have their client's interests as their top priority. But, sometimes, the client's real top priority...what would be in their best interest...is to get the property at 15% off list, or else move on to another property. Some agents have difficulty appreciating this.

Hope that helps.
3 votes
Jed Lane, Agent, Petaluma, CA
Wed Feb 27, 2008
We are agents for you. We advise and then carry out your direction. Like Elvis said you want our opinion and we have a duty to share it with you. I tell all my clients the same thing "offer what you're comfortable with, either comfortable that you payed that price to get it or you're comfortable not getting it and you took the shot you wanted. Then when a good agent presents the offer it is their job to keep the conversation going. Present the offer with the expectation that it is just what the seller is looking for and keep the conversation alive.
What should never happen is the agent telling you that it is a waste of time and they won't present the offer. If that happens or you detect they feel they are wasting their time fire them and get a good agent.
Web Reference:  http://www.jedlane.com
2 votes
Fri Feb 29, 2008
They might just not want to waste time on a low probability offer.
Web Reference:  http://www.gregorygarver.com
1 vote
Marilyn Gibs…, Agent, Saint Charles, MO
Wed Feb 27, 2008
Often a lowball offer will anger a seller to the point that they do not want to sell to you. If your agent feels that the property is priced appropriately, he/she may be trying to avoid alienating the seller. Go over all of the numbers with your agent of comparable sold properties, as well as current competing properties. Even in this slow market, I am seeing multiple offers on some of the aggressively priced listings. This scenario causes "bidding wars" which ultimately drive the price up. Trust your agent.
Web Reference:  http://www.BestSellerSTL.com
1 vote
Mack McCoy, Agent, Seattle, WA
Thu Jul 11, 2013
Maybe this agent has improved in the five years since the question was originally asked . . .
0 votes
Shawn K, Agent, Bel Air, MD
Thu Jul 11, 2013
As a professional it is our job to advise and move forward. These are the kind of things that can be discussed during those initial client meetings. Ultimately, like many have already said, it is the buyers decision. If someone chooses not to submit an offer on behalf of their client than the agent is not fulfilling his/ her duty.
0 votes
Damon Bottic…, Agent, Las Vegas, NV
Thu Jul 11, 2013
I always try to understand my client's objectives and offer my opinion based on my experience and market knowledge to help my client achieve their goals. Therefore, offer strategy will change based on the needs of the buyer. The final decision is always with the client and once an offer is made, I don't hesitate for moment.

On rare occasion, if a buyer's expectations are too far from "reality" and they continuously ignore my advice, I have had to explain that I will not continue representing them.
0 votes
3641 W 5180 S…, Agent, Salt Lake City, UT
Fri Feb 29, 2008
It is your responsibility to INTERVIEW your BUYER's AGENTS.
Find someone who matches your CRITERIA.
You can't turn a CAT into a DOG and you can't turn a DOG into a CAT.
IF you have a more aggressive attitude--awesome--I am like you--and I do what my client asks of me no matter what. But if they are a passive little kitty cat, I don't try to make them into a DOG.
You the BUYER have your agent there to WORK for YOU.
0 votes
Tman, , 30642
Thu Feb 28, 2008
Excellent post Don,

>>>>> But, sometimes, the client's real top priority...what would be in their best interest...is to get the property at 15% off list, or else move on to another property. Some agents have difficulty appreciating this. ......

... Very well said.! ....

0 votes
Jed Lane, Agent, Petaluma, CA
Thu Feb 28, 2008
I'd like to ad a frustration that exists in San Francisco's market. I've seen it many times and had numerous conversations with other agents in the market. If a house is priced over the market then it will sit until the price is lowered below market and then it sells for over asking.
Case in point I priced a home at $749,000 no offers, lost the listing new price $699,000 sold for $735,000. The issue is that agents do not write below asking in most cases.
Curious Buyer may be pointing that out and Mary Fenton mentioned it also when she said it might offend the seller. I believe this is coming from agents advising clients to not write below asking.
I missed the market price by $14,000 in that situation and the selling agent had seen the property while it was my lisitng.
We've had an exuberant market that is gone. Do we still have to list below market to?
Web Reference:  http://www.jedlane.com
0 votes
Mary Fenton, , San Francisco, CA
Wed Feb 27, 2008
This is a good question, and for the first time in a long time more relevent here in San Francisco as many properties are selling under asking price. This definitely has to be assessed on a case by case basis. Some factors that we use when deciding what to offer are:

1) recently sold comparables in the neighborhood
2) active listings in the neighborhood...is it priced correctly, are there other homes that might alleviate competition
3) how long has it been on the market
4) how much activity has there been on the house; how well attended are the opens, are they showing it frequently, how many disclosure packages have they given out?
5) what is the seller's situation
6) have they received any offers; if so did they counter

Sometimes a low offer makes sense, but you want to make sure it is in the ballpark. Coming in too low may offend the seller into not responding or responding with a ridiculously high counter. In the end, you are in the driver's seat; I am only here to help navigate. If you choose to make a low offer against my advice, I will help you submit it. This would be one scenario where I would be happy to be wrong!
0 votes
Elizabeth Bu…, Agent, Englewood, CO
Wed Feb 27, 2008
No I do the offer that my buyer wants to put in within reason. The deal I did we negotiated for 2 weeks to get the deal done. The sellers agent kept saying this is not going to work but guess what it did.
0 votes
Dot Chance, Agent, Burbank, CA
Wed Feb 27, 2008
Each and every situation is different. It is our job as agents to help our clients make informed decisions. I have had cases where my buyer has lowballed an offer and they lost out. I have had others where we received counter offers. I do try not to make an embarrassing offer, but it does happen.

Ultimately, it is my client's decision what offer we put on the table. There are factors that are more conducive to offers 10-15% below the listing price. How long has the property been on the market? What are the most recent comps in the area? What condition is the property in?

Your agent may be trying to prevent you from being disappointed. It doesn't necessarily mean that he/she isn't agreesive, perhaps just experienced...but, the decision should be yours.

You would be surprised how many people in this market are looking for the Taj Mahal for the price of a trailer in the desert!
Web Reference:  http://www.DotChance.com
0 votes
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