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Low ball offer...
We just listed our place on the market less than 2 weeks ago. Since listing we have had a ton of activity - our open house had a lot of people and we've had showings basically everyday. We really want to sell because we want to buy a bigger place in a new development and currently have an offer accepted on the place we want. They will break ground next month and we have until June to sell our current place so we aren't in a huge rush however it would be nice to not have to worry about it.
We got an offer that was a major low ball a few days ago and countered. They countered back and came up a bit but they still need to come up about 15k to get where they should be.
We have had so much interest in the property and everyone coming through thinks we are priced very well (we priced competitively from the get go because we do want to sell). Feedback has been very positive as well but no other offers yet.
I'm just not sure really how to handle the low ball offer scenario because we do want to sell so we can get our dream place but we haven't been on the market very long so it would be stupid to accept a lower price than we need too when we still have tons of showings scheduled for the next week.
We just tonight countered back tonight but don't really want to go lower than this. Our realtor thought we should say it was our best and final but DH wanted to not say that and let them hopefully counter back (to at least close the gap a little more) and then maybe just go down 1000 more and say that's our final.
Does this seem like an ok way to handle the situation? We aren't sure why they are low balling when we are already priced very fairly (and we have a lot of upgrades and extras that other units in the neighborhood at our price point don't have). We know they are qualified for more than the list price so it's not that they are low balling because it's out of their range. Do people just not look at comps and does everyone just automatically try to offer a certain percentage lower than list price? We are thinking we maybe should have priced a little higher (in line with the other current listings) so that we could have had more wiggle room and maybe people would have been happier feeling like they bargained us down more....
It's so stressful and I guess I just want to know what others have done with low balls or if you submitted a low ball offer what was your reasoning?
Either way I'm trying not to worry - we had showings everyday this week, 2 today, 1 tomorrow and an open house on Sunday plus showings for next week scheduled already but I also am going nuts trying to deal with getting the house clean and the baby and dog out everyday at random times for showings and I just want to sell and not deal with it!
Re: Low ball offer...
They countered back and came up a bit but they still need to come up about 15k to get where they should be.
When you say this do you mean that for you to break even they need to come up this much? Or you are not wanting to except an offer unless it is at least $15K more then what they offered?
When we put our offer on the house that we are looking at buying we put our offer in at $40K less then they were asking.Our reasons had a lot to do with the houses that have sold around ours, and what we could afford. They ended up excepting our offer for $30K less than the asking price.(we did buy from an elder lady that wanted us to have the house so we can have the kind of relationship her and her DH had in that house and "raise any little ones"! so maybe she gave us a break, who knows!)
We don't want to accept less than that because that would already be at the lower end of comps and we have upgrades the comps don't. Our realtor also doesn't think we should go below that because she is confident we can get that price or above no problem if these people don't work out, we just have to wait for the right offer (like I said, not too worried yet as we just came on the market and have had a very good amount of traffic) I'm just trying to figure out why they would be offering so low - is it normal practice now to go in way lower than comps? Like do people just decide they want 10% or whatever off list price regardless of if it's priced well already? We are thinking maybe people just want to barter now and we should have listed a little higher so we could have come down more...
I just don't know if we are wasting our time dealing with them since we aren't willing to come down much more than we already have. We are happy to have an offer right away but were taken aback by how low it was and aren't really understanding why - if they are truly interested wouldn't they bid more appropriately especially since we just came on the market?
My DH had a coworker that wasn't seriously looking beyond wanting to find a deal. He low-balled every offer he made. He wasn't emotional about finding "the one" as he already owned a condo he liked and didn't mind staying in for longer. His attitude was he had nothing to lose by offering, and he felt he would find someone willing to accept the low offer eventually. I think he ultimately gave up trying and stayed put, but I am sure he insulted some homeowners along the way though he saw it as business.
Also, I read some article recently that was advising to always offer 20% below asking, as the market is still declining in most areas. It was a blanket statement that wouldn't apply to every situation, but you know someone read that and now is only offering 20% below asking on every house despite comps, etc.
ETA: In your situation, I'd wait to see if anything else comes along. I just mentioned the above to give possible explanations for the low-ball offer, but who knows what the buyer is thinking.
I know it's stressful, but try not to worry about the low-ball offers. It sounds like you know the market, are a realistic seller, and know what is a fair price for your home. You have lots of activity and there's no need to give your house away to a low-ball offer. There's no way to know what the buyer is thinking, but these days buyers know that they have the upper hand. Some of them like to try to abuse that power. And don't second-guess your price. The reason you are getting all of this activity is because it is priced right. If you over-priced you'd likely have less interest.
On the plus side, dragging out this offer for a while may be in your best interest. If someone else comes along and wants it, they may offer more because they've heard that you already have an offer on the table.
If you have until June, I would wait. If you don't get another (better) offer in two weeks you might want to lower your price. Spring market will be busier and if you have a great house it will probably sell. In our market anything that is nice and well priced goes fast.
We haven't low balled anyone, though I think one seller thought we did (we offered 10K under asking with 3% towards closing). The comp they were using had a much nicer kitchen and a full finished basement. Another house we really wanted we offered 10K over asking since there were other offers.
I also agree with pp about being able to say that there has been an offer already.
What is your definition of a lowball offer relative to your asking price?
You can't comp yourself against others that are are for sale. You need to comp yourself against what similar properties have sold for. Certain upgrades, while nive to have, add very little to the value of a home.
I think you have to try to not get too emotional when you are trying to sell a home and understand that nobody will put the same value on your home that you will.
You have to work the numbers and see what is realistic. If the offer doesn't leave you under water then I would consider it, even if it's low. Especially if you're in a market that is still declining.
Adding to say that I have been there.
When we were selling our home, our buyers walked because we came to a $15K deadlock.
Their original offer was around 8% below our asking and then they came up to around 3% below, BUT it was a week after we just dropped our price $25K.
We were reeling from the price drop and then offended that they had the "nerve" to offer an additional $50K below our original list price.
In hindsight. $15K is really not a lot when it comes to a home that was priced in our range.
The next offer that came in 3 months later and $85K less than the one we failed to accept. We took it. Like you, we already had another home in the works and it got down to accepting whatever we could accept without having to bring money to the table. We were lucky.
I still watch my old market and homes that were my comps (list price) are still sitting and have dropped as far as $100K below their original list.
If you're in no rush, don't budge.
BUT it's quite possible that even if you think the house is worth more, perhaps it's not to the potential buyers. It's nothing you should take personally but FMV is whatever a buyer is actually willing to pay. Also as for comps, those give buyers a neighborhood of where to aim but certainly aren't too specific. A couple streets in one direction or another, or 6 more months in a down market can certainly affect the perceived worth of your home.
Also I don't know what your local market looks like, but some are saying this robo-signing deal the states have finally reached with the banks could actually further depress the housing market, since the banks have been dragging their feet in the interim as far as completing additional foreclosures. Many are suggesting that the lull in foreclosures is about to end and that once again, there is going to be an injection of foreclosed properties on the market, pushing prices further down. I'm not sure what difference a couple months will make (or even if this will truly happen), but keep in mind that the market could continue to go down for awhile.
How long are homes in your area typcially on the market before they sell? How much below asking are most selling for? Is your realtor comparing your price to actual "sold" properties or those on the market? Do you really have $15K worth of upgrades over the other homes (keeping in mind that many upgrades do not come close to bringing back dollar for dollar in this market)?
Most importantly, if you cannot sell by June, what will you do? If, at that time, you do not have another offer in your desired price range, will you regret not taking this offer?
It is a gamble. Sure, you might find another offer, but you might not. The first 2 weeks of listing are going to be your most active--showings typically drop off significantly after that.
One question asked that you didn't answer--are you having to bring $15k to the table with this offer or just wanting at least $15k more for what you think is fair?
My Valentine Bookends (2~13~13, 2~15~09)
Our realtor is using sold prices. We live on a street with all new condos in Los Angeles. There is not very much inventory on the market since most people (us included) only moved here a couple years ago so aren't selling (but the developer units are sold out so we aren't competing with that). Our big upgrade is that we have a 3rd parking spot (basically all the other untis have 1 tandem space which is very annoying). The extra parking spaces were 10,000 initially but they can't be purchased anymore so people can only get it if they buy a unit with the parking already included. Plus we have other upgraded features (new hardwoods, upgraded kitchen and bathrooms, etc.)
We wont need to bring money to the table regardless of the 15k difference or not but really compared to the sold comps on our street we are already priced very very well. Prices have increased on our street (we got very lucky) so no matter what we should be able to sell for more than we purchased for.
We are trying to move to a bigger place that's more expensive so we don't want to just give it away... we would like to get a fair amount so that we can put it into our new home. If we don't get the amount we want we will have to forgo a lot of the upgrades we want in the new place to afford it. If we don't sell by June we can't buy our new home (which is the last phase of homes in our price range in the development we want to move too. The next phases are 100K+ over budget so if we want to live there we have to sell - that's definitely a factor.
Our realtors think a better offer will come along and they don't think we need to settle this early on but I'm nervous and I don't really understand the whole low ball game and don't know how to appropriately counter back. The realtors think we just need to say here's our bottom price, take it or leave it. DH wants to go back and forth a little more slowly to our bottom price to buy us time which I agree would be nice but our realtor thinks that if we keep coming back only moving a tiny bit on price it may frustrate the buyers and they may walk away but if we just give them our lowest price at least we've closed the gap a bit and then they either take it or not.
What is your condo listed for and how far below asking are you willing to go?
I'm just asking because there's a big difference in $15K when your asking price is $200K vs $500K...
Oh, I totally feel your pain, having to get everyone out for multiple showings every day is aggravating!
I am in pretty much the same situation, except we have to close on this house by the end of April. We haven't had any offers yet though, even low ball ones. I think I would wait a little longer, maybe they will change their mind and decide to make a more realistic offer?
We did make a lowball offer on the house we are under contract to buy, but it had been on the market for 2.5 yrs; they had already made a substantial price reduction when we first saw it last May. We waited until the end of the summer before we made an offer because DH wanted to make sure they were desperate.
Our offer was 40k less. They didn't counter on price. The house is very unique though, I think the market for 1890 houses is smaller than new construction.
More people want a newer house so I don't think you should have to accept a low offer this soon.
I would stop trying to figure out why they are "low balling" on their offer. This is a buyer's market, plain and simple, and buyers know that the market hasn't bottomed out. They don't care that you want more money for your new place any more than you care that they want to save money. 6 years ago you could be offended and wait for the next higher offer. But it's a whole different ball game right now.
You mentioned Los Angeles - the recent updates on the LA market shows a 6.7% decrease in home value year-on-year, and 0.5% decrease over the last quarter. You need to factor that in when evaluating the comps. If you're using a comp from 6 months ago, it's probably worthless for today's market.
I'm not sure if I read it right, but I think you also mentioned that if you accept their offer that you would be at the low end of the comps. If that is true, then I don't consider that low balling at all.
I would take your husband's approach, and see if you can slow down the counter-offer process a bit. If you are priced competitively, then it's possible another offer will roll in the door while you are haggling with this buyer. It's great that you have an interested buyer, but I would be very cautious about just cutting ties because you only recently listed, and you want to see if a better offer comes in the door. Qualified buyers are rare these days - don't turn your back on one if you really want to sell.
Click it if you can't say it!
I guess I'm just curious what you consider a "major low ball offer" ?
For example, if you want $200k for the house and their offer is $185K, that's around 7.5% below asking price. IMHO I don't consider that a "low ball offer".
Recheck the comps and be realistic. Remember your home will always be worth more to you, but in this market it's only worth what someone is willing to pay for it. It looks like you have a little time to negotiate. Good Luck.
What is the average days on market for sales in your neighborhood? Generally, the first offer is the best one you will get. Unless you are in a 'hot' neighborhood where things are selling quickly at near asking price, I would try to negotiate more with these people. One in the hand is worth two in the bush...
Our particular location in the LA area has increased. Also, maybe my post above was confusing but I meant we'd be at the lower end of the comps if we settled where we are at now - not where they are offering.
We are still working with them and they have come up some so we will see what happens- Hopefully we can make it work.
I'm wondering if it's worth going 5K below our absolute bare minimum we wanted to accept to make a deal happen now (if we even could get there with them... still have a big gap right now though they have upped their offer) or if we should hold out a little longer...
If you do sell now, where will you go until your new home is built?
Will you find a short term rental and would the cost of that rental be less than what it costs for you to carry the mortgage and expenses on your condo?