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#348446 - 08/19/10 03:48 AM How do you handle lowball offers
joehildebrand Offline
Member

Registered: 08/19/10
Posts: 10
Loc: Denver, CO
I know there is another lowball thread. The intent of this thread is to see how other agents are handling lowball offers.

I recently had one and the agent is taking the counter and all other communication very personally.

Scripts? Ideas?

__________________

Joe Hildebrand, REALTOR
RE/MAX Unlimited
http://www.aroundhighlandsranch.com
http://www.denvershortsaleblog.com

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#348466 - 08/19/10 12:11 PM Re: How do you handle lowball offers [Re: joehildebrand]
Devil's Advocate Offline
Veteran Member

Registered: 01/03/05
Posts: 538
Loc: Ontario, Canada
Once upon a time, many years ago, there was a husband and wife team working for a large franchise, who submitted lowball offers on everything available on behalf of a friend of theirs (co-conspirator) who never intended to actually buy anything.

What this team wanted was the Seller’s sign-backs and to learn just how much under list price the Seller was prepared to accept.

They would then let the deal die, but would shop their ability to buy properties, well under the list price and save potential buyers, investors and developers who bought through them, lots of money.

In order that the seller was free to accept other offers and to conceal the lowest price the seller was prepared to accept, It would be advisable to explain to the seller the possible risks and consequences as opposed to the benefits and suggest that they not do a sign-back, and that you could verbally suggest to the opposing parties the various ways in which their offer could be made acceptable and for them to re-submit their "Best" offer.

In any event, an agent of the seller would also,be well advised to obtain and follow the express instruction of their client, in the event that their client erroneously, might come to believe that their agent failed to act in their best interest.

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information .

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#348483 - 08/19/10 01:44 PM Re: How do you handle lowball offers [Re: Devil's Advocate]
Vermont Offline
Major Contributor

Registered: 04/12/08
Posts: 6201
Loc: Vermont's North-East Kingdom
Originally Posted By: Devil's Advocate
They would then let the deal die, but would shop their ability to buy properties, well under the list price and save potential buyers, investors and developers who bought through them, lots of money.

Did these Parties not place any earnest money at risk in tendering these Offers ?

Did they not ever get sued for Breach Of Contract when they failed to follow through ?

Just letting a "deal die" should never be without consequences . . . . some of them quite severe.

Your senario points out further the reasons for not entertaining VERBAL Offers and for ALWAYS obtaining a substantial Contract Deposit BEFORE suggesting that Sellers consider or respond to ANY Offer, and for that Earnest Money to be in the Escrow Account of the Seller's Broker . . . . NOT by the Buyers' Agent.

But these are desperate times and people are beginning to do desperate things.

_________________________
Dale C. Hittle of GOLDEN RULE PROPERTIES in Glover, Vermont
Where We're Always Striving To Put Together "THE FAIR DEAL"

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#348501 - 08/19/10 03:54 PM Re: How do you handle lowball offers [Re: Vermont]
Devil's Advocate Offline
Veteran Member

Registered: 01/03/05
Posts: 538
Loc: Ontario, Canada
Locally, the initial buyer’s offer is open for acceptance by the seller, but when the seller amends the buyer’s offer, in any way, it is deemed a counter offer of the seller’s and now open for acceptance by the buyer and until the buyer signs acceptance of the amended terms and/or conditions, there is no binding offer between the parties.

Deposits/Earnest money is mandated by statutory law to be placed in the brokerage firm’s trust account. Brokerage firms will not make a refund, until they are in possession of the appropriate releases signed by all parties, and until they receive their bank statement, (which could be as much as 30 days) that indicates that the buyer’s cheque has cleared the bank.

Therefore, earnest money is frequently submitted, “upon the acceptance of the buyer’s offer”, and failing the seller's acceptance, the earnest money is not tendered.

Previously, when earnest money was tendered to the listing broker, it had to be deposited in the brokerage trust account, regardless or whether or not there was an accepted offer. This created an unfavourable position for the consumer/buyer who had their earnest money tied-up in what was deemed an unreasonable length of time, especially in a offer that had been rejected by the seller, and leaving the buyer in some instances without the necessary funds to submit earnest money on another property, and upon recognition of this problem, the practice was changed to “Upon Acceptance” or upon some other agreed term between the parties.

Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information .


Edited by Devil's Advocate (08/19/10 03:56 PM)

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#348504 - 08/19/10 04:07 PM Re: How do you handle lowball offers [Re: Devil's Advocate]
Vermont Offline
Major Contributor

Registered: 04/12/08
Posts: 6201
Loc: Vermont's North-East Kingdom
If there never was an "acceptance", then there never was a "Deal".

If there never was a deal, information regarding what the Seller would accept would/should have never been communicated.
_________________________
Dale C. Hittle of GOLDEN RULE PROPERTIES in Glover, Vermont
Where We're Always Striving To Put Together "THE FAIR DEAL"

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#348523 - 08/19/10 05:55 PM Re: How do you handle lowball offers [Re: Vermont]
Devil's Advocate Offline
Veteran Member

Registered: 01/03/05
Posts: 538
Loc: Ontario, Canada
Fishing Expedition

In my first post herein, I was referring to a team of agents that were basically on a "fishing expedition".

It was the hope of these devious agents that a seller in making a counter-offer would reveal a lower selling price and/or any other information that they might find useful.

In my original post, I perhaps use a poor choice of words in "let the deal die" whereas, I could have said "to allow any further negotions to come to an end" or words to that effect.

Although clearly unethical, the agents in question apparently found some success in the use of this ploy.


Important Notice: This information is provided as basic educational information by the author and is not a substitute for the advice of an expert and/or the advice of a lawyer. There is NO representation as to legality, accuracy, correctness of the herein information and the reader is strongly urged to consult a lawyer in the relevant jurisdiction to ensure accuracy before acting on this information .


Edited by Devil's Advocate (08/19/10 06:13 PM)

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#348527 - 08/19/10 06:24 PM Re: How do you handle lowball offers [Re: Devil's Advocate]
joehildebrand Offline
Member

Registered: 08/19/10
Posts: 10
Loc: Denver, CO
Definitely interesting.

I guess the problem I am up against is two fold: 1) the agent is relatively new. 2) He firmly believes price per square foot is the best way to determine value.

While I try to educate him as to the fallacy of depending solely on PSF, it always can be viewed as patronizing or condescending. I have even gone so far as to send 12 comps that show we are priced BELOW market already.

I guess ultimately, I will approach them one more time at my seller's request and explain it is a final counter.

Keep the good replies coming.

By the way, in the future I think it would be best, at least for me, to simply not respond officially and explain to the buyer agent to bring a realistic offer.

_____________________

Joe Hildebrand, Realtor
RE/MAX Unlimited
http://www.aroundhighlandsranch.com
http://www.denvershortsaleblog.com

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#348538 - 08/19/10 07:02 PM Re: How do you handle lowball offers [Re: joehildebrand]
DeeVee Offline
Member

Registered: 09/16/08
Posts: 147
Loc: Denver Metro
I'm not sure how much under market the buyers offered in your deal, but I have buyers all the time who believe that their offer is quite fair and realistic, given the current market. Then these buyers get insulted that the seller would counter at such a higher amount.
Just this week, I had a buyer who wanted to place an offer on a $230k listing for $200k + closing of $5k. Seller countered at $235k + closing of $5k. My buyer was outraged! "In this market, if they want to sell then they should take my offer".
Really?

Two weeks ago, an offer came in on one of my listings at 35K below asking. Seller countered at 15k below asking, and the buyers agent told me, "well you should talk to her and tell her to come down" When I stated that seller has come down rather fairly, then the buyers agent said "good luck on getting that one sold". By the way, it's already 10K under market!
Really?

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#348553 - 08/19/10 07:55 PM Re: How do you handle lowball offers [Re: DeeVee]
super realtor Offline
Major Contributor

Registered: 05/01/05
Posts: 8596
Loc: georgia
It's all in the eye of the beholder.Unless you are in a sellers market which most of the country is not unless you are in an isolated area then the buyers hold the power.

As a qualified buyer I dictate the terms the seller will take.Time is on MY SIDE and not the sellers.Homes are a dime a dozen right now. I can go down the street if the seller isn't realistic.Much of the problem is sellers are watching show from HGTV from 2 to 3 years ago and that's not the negotiating market of today.

Unless the house is a TRUE 10 and not being able to be found down the street you have no leverage.

Also on the point of the low-ball that's a perception as well.Say market is 220,000 and you price at 235,000.I submit offer of 210,000.You think it's low-ball. I am giving 95% of market price.Since you are at 235,000 you feel I am low-balling at 89% of your list price.

Nobody should take offense at low-ball offers.I welcome them with open arms to discuss negotiations.I explain to sellers buyers can always go up in price with their offer but never back down unless in contract with repairs etc.

So expect a low-ball first offer most of the time.The key will be the first and second counter and how much the buyer is willing to move from the initial low-ball.

I do the same with buying investment property for myself.The asset managers always know the first offer isn't the last offer from the buyers.

If we are say 50k apart I will try to get them to come down 40k and I go up 10k from 2 to 3 counters.If after 2 counters the lender is doing 1 to 2k reductions I know the deal is dead and to move on.Just like regular sellers some banks are motivated and some aren't.As a buyer you want to drive the best deal possible on your purchase.

This is just the way I see it from a buyers perspective.

Joe if your property was priced so well and such a great deal you shouldn't have to be trying to SELL this one buyers agent and should have multiple agents and buyers lined up to go into contract with.

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#348565 - 08/19/10 08:35 PM Re: How do you handle lowball offers [Re: DeeVee]
joehildebrand Offline
Member

Registered: 08/19/10
Posts: 10
Loc: Denver, CO
Well we are priced at $384,900, back to open space, have views throughout, and completely upgraded. The next two homes in the neighborhood are priced at $402 and $411. Simialr model just closed for $397. 11 other sold comps in $390's. Suffice it to say we are priced right. They came in 30K under list.

I always explain to my clients that an offer is simply to "open dialogue" and not to take offense. Be more offended at the people who don't see the value in the home and dont make an offer.

It sounds like Dee, you and I are dealing with the same agent LOL. We have moved on. Here in Highlands Ranch, we have a good market. It is not a total buyers market. I just would prefer to put a deal together but sometimes you can't get the others to see the value.


Edited by joehildebrand (08/19/10 08:49 PM)

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#348571 - 08/19/10 08:48 PM Re: How do you handle lowball offers [Re: super realtor]
joehildebrand Offline
Member

Registered: 08/19/10
Posts: 10
Loc: Denver, CO
[quote=super realtor]
Joe if your property was priced so well and such a great deal you shouldn't have to be trying to SELL this one buyers agent and should have multiple agents and buyers lined up to go into contract with. [/quote]

Well the truth is I have had two other agents say they intend to bring an offer. I have yet to communicate with the other buyer and agent further because of this.

Again, my intent for this thread is to see how people actually handle low offers. Had this not gotten so contentious at times and felt personal, I wouldnt have started this thread.

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#348639 - 08/20/10 04:00 AM Re: How do you handle lowball offers [Re: joehildebrand]
super realtor Offline
Major Contributor

Registered: 05/01/05
Posts: 8596
Loc: georgia
You were just trying hard for your sellers. No biggie that buyer probably would have fallen out of contract anyways.With your low list price you should be able to land a less demanding and easier to work with agent and buyers.

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#348649 - 08/20/10 10:43 AM Re: How do you handle lowball offers [Re: super realtor]
OverTheEdge Offline
Veteran Member

Registered: 08/24/08
Posts: 1008
Loc: Middle of Ohio
My buyer's agent and I were just having this discussion the other day. We were laughing about his view vs. my view. A true listing agent through and through, I told him his buyers are doing it backwards. They start with the listing price and subtract the necessary repairs or their view of the market - ie listings are selling for 90% of their asking price. As a listing agent, I start with the value of the property when it is rehabbed, subtract the repairs - with a smidge off due to the work level necessary to get it back to move in condition. I even tell him the comps he needs to look at - the ones I used, and he still sends me stuff that I can not believe.
Low ball offers are a starting point. Once I have a counter, I call the buyer's agent and lay it out for them. Here is where we are and why. Just put one of my "real" listings in contract Monday with this approach, and they were $13,000 below our ask price on a $92,000 listing. I just fight low balls with facts, and if they walk - fine - my sellers are happy that they got an offer, even if they walk away. The reality is - there are a ton of listings out there that aren't getting offers. My real stuff sells, we stand firm and it maybe an offer or two down the road but it always sells. Just give them the concrete facts you used to get to your price - some of these agents are being lead by their buyers - they are not running comps just throwing mud at the side of the barn hoping it will stick. You are looking at this in one way - you are assuming the buyer's agent is doing their job - some are - most aren't. In this market - you might have to show them the way - comps, upgrades, features and where you are price wise compared to the other stuff that sold. I agree with Super - there is a buyer out there - unfortunately you may need to educate their agent to get it sold. WOW - it sounds like I hate buyer's agents - I don't - just some real doozies out there lately and they are all writing on my stuff.
_________________________
"No cause is lost as long as there is one fool left to pursue it". Wil Turner

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#348660 - 08/20/10 02:02 PM Re: How do you handle lowball offers [Re: OverTheEdge]
Kjmendy Offline
Veteran Member

Registered: 05/17/10
Posts: 935
Loc: London, Ontario
It's my belief that the seller always thinks that the house is priced properly and is at a fair value. Sellers expect that they will have to drop the price a bit to negiotate the sale, but don't expect to drop a lot. Because of this sellers obelief, if a low ball offer is anything other that a negiotating tactic then it is wasting everybody's time.

Seller will not sell if they feel that they are getting riped off.

In my opinion the only way a low ball works is if the property has been on the market for some time, and the sellers agent is of the opinion that the offer price is a fair price.

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#348862 - 08/22/10 01:10 AM Re: How do you handle lowball offers [Re: joehildebrand]
Brian Carion Offline
Member

Registered: 07/19/10
Posts: 93
Loc: St. Paul, MN
I always try to respond to lowball offers with simple facts. For example, I will suggest that the sellers are not in a strong equity position to be able to entertain this offer. By keeping your response "non-personal", you will less likely invoke the emotions of the bidding party. Good luck!

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#350106 - 09/01/10 02:33 PM Re: How do you handle lowball offers [Re: Brian Carion]
JLNorthOC Offline
Member

Registered: 06/17/10
Posts: 132
Loc: Fullerton
IMO there is a lot of issues with how uneducated other agents are out there. Just because you past the real estate state exam doesn't mean you are ready to start helping people buy and sell real estate.

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#350107 - 09/01/10 02:36 PM Re: How do you handle lowball offers [Re: JLNorthOC]
Perky_REALTOR Offline
Mod Squad
Major Contributor

Registered: 11/27/06
Posts: 7686
Loc: PA
I like that response - "not in an equity position to entertain this offer."

However, that would only be after the SELLER says no. I present all offers to my sellers. Sometimes the education, when it comes to "low ball offers" is for the SELLERS to grasp reality...

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#350696 - 09/08/10 02:14 PM Re: How do you handle lowball offers [Re: Brian Carion]
Kristi Leak Offline
Member

Registered: 08/26/10
Posts: 175
Loc: US
[quote=Brian Carion]I always try to respond to lowball offers with simple facts. For example, I will suggest that the sellers are not in a strong equity position to be able to entertain this offer. By keeping your response "non-personal", you will less likely invoke the emotions of the bidding party. Good luck! [/quote]

This is very smart. I would even go as far as to say that this should be part of "best practices" whether it's a low-ball offer or not. Some people - buyers, sellers, agents, brokers, you name it - put a lot of emotion into their work. Speaking in terms of facts on the ground always keeps things in perspective.
_________________________
Apartments for rent Boston

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#351385 - 09/14/10 10:04 PM Re: How do you handle lowball offers [Re: Kristi Leak]
joehildebrand Offline
Member

Registered: 08/19/10
Posts: 10
Loc: Denver, CO
I love the "not in an equity position."

Great stuff.

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#354197 - 10/11/10 03:41 PM Re: How do you handle lowball offers [Re: Brian Carion]
Rush1169 Offline
Member

Registered: 10/11/10
Posts: 12
Loc: US
[quote=Brian Carion] I will suggest that the sellers are not in a strong equity position to be able to entertain this offer.[/quote]

Would making such a statement or suggestion be a confidentiality issue and need permission from the seller make such a disclosure? My thought was that you're almost telling the buyer how much the seller owes against the loan. Obviously, you would not be disclosing an exact amount, but it seems grey to me. Then again, there is a lot of grey out there to me as I'm just entering this silly profession :)

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#358545 - 11/22/10 09:53 PM Re: How do you handle lowball offers [Re: Brian Carion]
NOVANIDA Offline
Member

Registered: 06/01/10
Posts: 40
Loc: Fairfax County,VA
I agree with Brian. The more you say the less someone remembers. Basically, use the K.I.S.S method wihen responding.
_________________________
Bret Nida REALTOR
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"Personality can open many doors but character must keep them open"

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#361383 - 12/21/10 02:19 PM Re: How do you handle lowball offers [Re: NOVANIDA]
stevenl Offline
Member

Registered: 12/20/10
Posts: 33
Loc: PA
Low ball offers are so common, but who can blame those home buyers? It's their time to dominate now! This is why it is so critical for home sellers to adjust their mindset accordingly, that selling homes is not going to be easy.

The seller needs to put aside personal feelings and look at the positives: Hey, someone wants to buy my house! The offer to buy is binding if accepted by the seller so no buyer would present an offer unless he/she wants to live in it - investors are different, of course.

The buyer may be just testing the water. The buyer may be making an offer at his/her upper limit, but they really want the house. The buyer may have nothing better to do other than insulting the seller. We don't know the reasons for the low offers so the proper way to respond is to negotiate or make a counteroffer.

This is why it is so critical for the seller to know the home value AND their financial situation (so that they know how low they can sell the home for) and stick to the plan.


Edited by stevenl (12/21/10 02:22 PM)

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#365391 - 02/01/11 11:51 AM Re: How do you handle lowball offers [Re: Brian Carion]
JohnJohny Offline
Member

Registered: 01/28/11
Posts: 28
Loc: New York, USA
What constitutes as a low ball offer? This is the problem. A seller may think he has a house that's worth $300,000. But the bottom line is: your house is really only worth what someone will pay for it. We don't live in a perfect world and there's no such thing as a perfect house. Even brand new homes are not without problems and defects.

"Low ball" offers work quite well when a house has been sitting on the market too long. Sellers get desperate and tired. The offers have ceased coming and they eventually end up taking whatever is offered, especially if the seller is purchasing another home and is pressed for time..

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