You are probably assuming all buyers are submitting what we call “low ball 
offers”. Well, not in all cases. However, I have received offers from buyers on my listings recently at $65,000 less than list price, and $54,000 less than list price. A month ago I received one at $114,500 less than the asking price. You’d think that these offers wouldn’t be accepted by the sellers; and, you are correct they weren’t accepted. However, in 99% of the cases mentioned above, all parties did eventually come to an agreement on a final sales price. Both the buyers’ agents and myself worked on these transactions quite a bit and all sides did come to an agreement.
First of all, buyers I think for the most part are assuming that “all” sellers are either anxious or desperate to sell. That wasn’t the case in the examples shown above. Buyers seem to ignore what the asking price is, come in and think they can just “steal ” the house. Those same buyers don’t perhaps understand that the houses are already listed at bargain prices and are good investments for the neighborhoods at their current asking prices. Many of the homes for sale have already been discounted 5,10, or 15% lower than the market and what other homes are listed at or have sold for and have had multiple price reductions.
When I am representing the seller, as a seller’s agent, my advice to the seller has always been (and still is in this market), don’t be offended when a low offer comes in and I always recommend a counter-offer. I recently read a really good example. When you get gas and come to a 4-way stop that has gas stations on every corner, which gas station will you buy from? Of course, the one that has the cheapest gas is where you will go. I understand buyers are looking for bargains and I can’t blame them. However, buyers shouldn’t assume that all sellers are desperate and the home they are making an offer on could already be a great value at its current asking price.
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June 28, 2008 at 12:04 pm
Ken
good post, but one criticism. many sellers or agents complaining or even just talking about “low ball offers” use the dollar amount below asking. that kind of number is somewhat useless, as it is without context.
i wish everyone would agree that percentage is a much better way to illustrate a point with.
on a 750,000 house, your 65000 example is not even 10%. now, if that was a 250,000 listing price, that would be something.
but without knowing the originial and current listing price, i don’t know how “lowball” those offers were.
as a buyer who chose to rent (in lake o) for a year rather than buy, i wouldn’t offer more than 80% to start the bidding in this market.
personally, i think between 50% and 75% to be lowball, with the obvious caveat that every house, buyer, and seller are different.
June 28, 2008 at 5:22 pm
Anonymous
Betty,
Your blog has really blossomed. Nice job! I like to check in on it every so often and I am consistently impressed.
Dianne Gregoire
June 30, 2008 at 11:11 am
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