On one of my new listings that went on the market this last week, I had an agent show it twice and call to tell me they were coming in with an offer. I did expect this one to sell fairly fast, so I wasn't surprised by the immediate interest.
I just closed escrow on a condo just down the street that had almost the same floor plan and was a few square feet smaller built by the same developer. It recorded the day before and went in escrow in just a week after putting it on the market.
She said she would be e-mailing the offer that evening (Friday). I just received the offer today (Sunday morning). The offer was far below any comparables in the neighborhood and far below our asking price which was the lowest in the sub-division. After telling us an offer was coming Friday to have it show up on Sunday; leaves the seller disappointed. Fortunately I did warn them when we signed the listing that they may expect silly offers.
Here is the rub on an offer like this. If the buyers are actually interested in the property they have just sensitized the sellers. Their best chance to get a good deal was their first offer. If they had made an offer closer to reality the seller would have either accepted it or at the worst countered it. At this point they have an offer. (I almost forgot to mention, no pre-approval or pre-qual from a lender). It is a silly low offer that they probably will not even counter. Today's open house will bring more interest and hopefully a real buyer (which this one may or may not be).
I do not know whether this offer was driven by the buyer or their agent. The lack of communication and the lack of a pre-approval letter I lay on the shoulders of the agent.
I will present this offer to my client. I will printout an updated comparable report for them to compare this to. I will also get back to the other agent immediately after my client gives their response. That is what professionals do. If my client decides to counter this offer, I will highly recommend they also require a pre-approval letter from a funding lender and to clean-up a few housekeeping issues on the contract.
As agent we can do our buyers a big service by writing clean offers, getting our clients pre-approved with a reputable lender and communicate properly with the other side.
Randy,
I totally agree, see my blog about low offer! By the way, you have a beautiful state, I spent Thanksgiving week in Maui last year. A paradise. Good luck!
Randy, not sure who to blame on this one, the agent trying to impress their client or the buyer who stayed up late and ordered the latest "how to buy a home WAY under market". Here's a thought...if the buyer wants to fit into the neighborhood, a low ball offer won't get them hugs and kisses from the neighbors. When they find out, no welcome wagon greeter will be knocking on their door, if they still do that kind of thing :-)
Hi Randy,
Unfortunately with the market conditions today many buyers feel they should get every home at a steal. That is the agents job to educate the buyer with comps. We always include a lender pre-approval letter to strengthen the offer. Sounds like you have priced the home properly and should sell pretty quickly.
Have a nice weekend & good luck on your open house.
Michael A. Caruso
Randy, A well written offer with all addendum and financing data goes along way in getting the sellers to take it serious.
I just negotiated a deal for a buyer. The property was priced at $159,900 with comps in the low $170,000s. We sent over a beautifully presented cash offer with no buyer contingencies. I attached bank statements and a large escrow check. The offer was for $120,000!!!! We ended up getting the property at $130,000. They knew we were serious and knew we could close. We just wanted our price and we got it. Presentation is very very important.
Randy,
It seems that people have been watching too much news on tv saying real estate is bad everywhere. I keep having to educate my buyers that it is not the case here in West Tennessee. I do lots of market analysis.
Randy,
Yep, I present them all. Actually I extend the offer to present "live" to my sellers, like we used to in the old days. Sorry to say, very few agents actually take me up on it. Irrespective of my feelings about an offer, it's up to the seller in the long run. Fortunately most take my counsel in their decision making.
Sometimes buyers don't really care about comps. Comps are factual data, but each buyer is different and should be treated as such...
Mary P. - I will check out your blog. I love it here.
Dorene - That is true.
Serena - You never know. I have had offers come in similar to find it was the agent not the client pushing the low offer. Other times I have had agents tell me they tried to talk their client out of it.
Michael C. - Our market is pretty stable. There are a few communities that have seen a negative turn, while others are climbing. Even when the market was hot as a pistol some folks were fired ridiculously low offers.
Tina - It is only fair since some sellers feel they can price their homes the same way.
Stephanie - I agree the media has helped create some of the monsters.
B.B. - I agree completely. A clean offer, a strong loan letter and a proper presentation can make a huge difference.
Jason - I present them all, but rarely see one like this go any further.
George - What really surprise me is how many agents are not professional enough to get their clients pre-approved before showing property or presenting an offer.
Mike - I have even heard real estate agents repeat bad news where it doesn't exist.
Dan - Why would I be violating my code of ethics to point out the comps to my seller? We carefully did our homework together when we set the aggressive sell price.
I already listed several reasons why the offer is silly.
Dorene - Too funny.
Lynda - I present them all. I am not sure what the benefit would be of having the buyer's agent there. They have already insulted my client.
Michael - I am not sure what the means exactly. Does that mean they do not need to be pre-approved or make a reasonable offer if they want the property? If they truly want the property they and their agent did not give them much of a chance. Even a low offer with everything else in place would make it easier to negotiate.
Harley - I got an e-mail from another agent that it looks like another offer may be coming in. This may be a mute point tomorrow.
Unfortunatley to many buyers and their agents think the "buyers market" equates to INCREASED equity for sellers. Sellers don't alwasy have MORE to give!
I present all offers, as required by ethics.
Under agent remarks on the MLS I type the following: "All offers to be presented with verifiable pre approval letter." No PRE QUALS. I discuss this with each seller before inputing this and get their written approval to do so. If an agent still submits an offer I politely ask them if the FORGOT! If they still persist with asking then I ignore their igorance.
I just recieved 80k offer on a listing thats listed for 125k, not it's not a short sale or in foreclosure. My seller countered back $50 off the list price.
Priceless!
I realize some buyers are difficult to educate on the market... statistics sometimes mean nothing so the low offers I can deal with but the agent writing the offer is responsible for protecting and promoting the clients best interest... isn't that our primary obligation? How they think sloppy offers accomplish that I'll never know. Oh, that's right... they don't think.
Jesse & Kathy - I spoke to the buyer's agent. It would appear the agent is the problem. The agent was still unable to comprehend why the seller was less excited with their offer.
Even after I told the agent I represented the sellers on the most recent comparable sale (last Thursday, a fact that is posted in the MLS), she still tried to repeat bogus numbers back to me.
Here is a perfect example of where the broker needs to be more involved with inexperienced agents.
Randy,
I have a town home that I put on about a week ago...we had buyers look at it last weekend. The agent called me and told me they were going to make an offer. 4 days later still no offer. I figured I would call the agent and see if they really were going to make an offer...she told me the buyers were interested but work late hours so there didn't seem to be a rush. Also wanted to get their approval for a loan. Well she called me two days ago to tell me they were still going to make an offer but the people went out of town and were planning on something today...so we are here today and so far nothing. I was tempted to tell the sellers what was happening but I would rather not get them all keyed up in case nothing occurs...
Wow, I see the strangest use of launguage here. Insulted? Not serious? Who says the buyers are not serious and if sellers are insulted by a low offer, then they are dismissing out of hand a good opprtunity to sell their property.
Buying real estate is a business deal. All the buyer is saying is "I'm interested, how low will you go?"
Neal - They do not sound too motivated. If I were to bet, I would predict a very low offer, but you never know.
Richard - I think you did not read the entire post. Rediculously low (yes I will use the word rediculously)offer was one of several problems.
So we have a property that was priced competitively, the lowest priced in the valley. It is in a great location, near the base. It is vacant ready to move in. The phone is ringing off the hook and their agent presents an offer that is incomplete, ridiculously low and contingencies that no seller in their right mind would accept.
To everyone - The property is now in escrow for many thousands higher than that first offer. It had an accepted offer after only 10 days on market that included back and forth countering. I will not disclose the details of the accepted offer, except to say the issues listed above do not exist.