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While
the news media has etched into everyone's minds the message that
"it's a buyer's market" in residential real estate, sellers
wonder where that leaves them; low-ball offers and closing-table
demands are evidence, experts say, that the market remains
unpredictable.
"The most counter-intuitive part of buying in a buyer's
market is to make the first offer the best offer," said Lawrence
Roberts, author of The Great Housing Bubble and industry
analyst. "Most sellers, even in this market, will not reduce
their asking prices more than 15 percent to consummate a
transaction, so 'low-balling' a seller with an offer 25 percent
away from their asking price is a waste of everyone's time...if
the asking price is not within 15 percent of the price a buyer
is willing to pay, the buyer should not even instigate a
negotiation."
Roberts says the current real estate climate - and the fact
that the buyer-seller relationship is only a temporary one - is
sometimes the motivating factor behind low balling.
"A buyer will likely never see the seller or the seller's
realtor again," Robert said. "In the mind of the buyer, he or
she is insensitive to whether or not the seller is offended by a
low-ball offer."
Given the rising number of foreclosures - and relocations due
to job loss - the buyer may low-ball a seller because the reason
for the sale is never disclosed by the seller's agent, according
to Roberts.
Al Suguitan, president and chief operating officer of the
Greater Gateway Association of Realtors, says sellers who have
their properties reasonably priced in this market need to hang
tough if they can afford to.
"We saw an offer recently of $260,000 for a $300,000 home,"
said Suguitan. "That offer was summarily rejected. A lot depends
on how the (buyer's) agent approaches it, or if the seller's
realtor comes back and says, 'They're not desperate.'"
If a realtor is doing his or her job well, Suguitan says,
buyers will be qualified before they ever step into the seller's
home. "But there are all kinds of intriguing strategies going
on at this time," he said. "I had one customer who was buying a
house and a couple acres of ground from a fellow who was
divorced with a couple of kids. The prospective buyer went to
the courthouse, researched the amount of child support the
fellow was paying, who his employer was, his earnings and more.
It's true that people are looking for deals, trying to gauge the
sellers' desperation. But what buyers and sellers need to do is
not to waste their time figuring each other out, but to make
realistic offers on properties that are properly priced."
Even in these times, price may not always be the only crucial
factor, Suguitan says. Other factors that can work in favor of
the seller are: lack of any major problems found during the home
inspection; an opportunity for quick move-in; and the seller's
willingness to cover some of the closing costs typically borne
by the buyer.
Sellers whose properties are realistically priced, according
to Illinois Association of Realtors president Pat Callan, are
more likely to avoid potential pitfalls associated with the
appraisal that is done after the offer is accepted.
"Especially during this more restrictive lending environment,
properly pricing your home is essential," Callan said. "Say you
sold the home at $140,000 but the appraisal only comes in at
$120,000...the buyer will only be able to borrow based on that
$120,000 amount and it could mean your sale won't materialize."
Callan, who is broker-owner of Realty Executives Premiere in
Wheaton, says appraisals are actually trailing indicators of the
market; thus, lenders don't want the appraisers going back three
months, given that the market has experienced more of an upswing
compared to several months ago. "Lenders have been shortening up
those times," he said.
"Sellers need to try to keep the buyers talking, rather than
being insulted by an unusually low offer and backing off," said
Callan. "We are seeing more deals coming together than several
months ago, but everyone has their line in the sand."
Realtor Lee Cameron of Watson Realty agrees. "Low-ball
offers are difficult things to deal with," Cameron said.
"Usually they are received with scorn by the sellers who cannot
believe that someone would make that low an offer. Chances are
that a true low-ball offer - one that's 25 percent or more below
a fair asking price - will be under the appraised value of the
home, and the seller would be taking a loss in selling it. A
buyer who is serious about a particular property needs to
consult his realtor for comparable homes' values in that
neighborhood, present a realistic offer and proceed from there,"
he added. "Even a desperate seller will bristle at getting a
dismally low offer." |
