“The Art & Risk of Offering Less” Part 3 – Buyers in Kitsap County WA
May 3rd, 2009 by Rich Jacobson
This is the 3rd and final installment in a series entitled “The Art of Offering Less” and deals with the unique nuances associated with tendering an offer that is lower than the asking price.
In the 1st article we discussed the market dynamics that tend to encourage or breed low offers.
In the 2nd article, we shared various strategies for Buyers to achieve success with low offers.
In this final part, we’ll talk about the risks that are inherent with making low offers.
Obviously, the biggest risk you run in offering less is leaving the door of opportunity open for another Buyer to come along and rain on your parade. By this I mean, that while you and the Sellers are negotiating the price, and countering back and forth, another Buyer can come along and offer something more attractive. This effectively puts you in a defensive posture, and usually results in you having to sweeten your offer. As a result, you typically end up paying out way more money than you would have if you had simply offered a reasonable amount in the first place.
Therein lies the true secret of writing a low offer – determining that ‘magical’ initial price that doesn’t insult the Sellers, but yet is still within reason so that it attracts their interests and serious considerations.
As a Listing Agent, I always counsel my Sellers to consider each and every offer as a serious offer, regardless of whether it’s low or not. Unfortunately, not all Sellers are properly represented or counseled. As such, there are those who take low offers as a personal insult and refuse to respond back to the Buyers. At the very least, you should always counter back to an amount you feel is more reasonable.
Just because the market has slowed and the inventory of available homes has increased, don’t assume that every Seller is desperate and willing to consider a lowball offer. Many Listing Agents are now counseling their Sellers to price their homes very aggressively right out of the gate in order to effectively compete against short sales and foreclosures. Be sure to work with a Buyer’s Agent who has an intimate knowledge and understanding of your local market, and can provide you with accurate comparative analysis/justification for home valuations.
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Rich Jacobson is a licensed real estate professional providing knowledgeable empowerment and relentless representation for his clients of residential properties and vacant land throughout all of Kitsap County WA and portions of Pierce, Mason, and Jefferson Counties. You can also find him at KitsapLife.com and Crabbing in the Hood, or e-mail: kitsapagent@gmail.com
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Tags: buyers market, home buyer tips kitsap washington, Kitsap County WA real estate, making a low offer, Silverdale WA Real Estate
Dear ODASBB: Our most humble apologies! Somehow we have not been getting timely notification of pending comments. Hopefully we’ve corrected the error and it won’t happen again.
Your comments are always welcome here, whether in agreement or contrary in nature. Your prophetic warnings since 2005 are ringing true. The global economy is so fickle and precarious at this point, it’s very difficult to say what’s in store for the next 4-5 years. If the current administration continues on its present spending spree, it will no doubt have a significantly adverse affect on any meaningful level of recovery, and will only serve to push us closer to your .20 on the dollar scenario.
Did my post get eaten, or is it awaiting approval? It’s been a while since I have been here.
RJ,
Once again, you show that your blog is a class act. Thanks.
I would say that if people are trying to pick up properties at firesale prices, they should still be sitting on the sidelines, as we are NOWHERE NEAR the bottom. As you pointed out, if there is a genuine threat of getting outbid, we are not at the bottom. The bottom is when there simply are no bidders, and yes, that can happen.
I also think that prospective bottom fishers need to seriously consider how we could be at the bottom without the complete immolation of the bond market and the FNM/FRE bonds. 6% is nothing. The true bottom will be when financing is not offered and only cash (real cash, as in Ben Franklins) is what the banks will consider. Will we get there? I would say that the odds are at least 50/50.
People that are trying to scalp the bottom in mid-09 are better known as impatient knife catchers. If you want the house at present prices, then that’s one thing, but if you are trying to be a vulture, the prey isn’t dead yet. Wait until the bear has finished mauling the housing and bond markets and save your cash for later.
Trust me. The bottom will be such that there won’t be multiple bidders on a property. Granted, the banks will probably own the property, but that is another story.
I’ve been predicting “20 cents on the dollar by 2010″ since 2005, and I am more confident than ever that we will see exactly that. There are several metrics that all point to this. As of now, we still need to wring out the “speculative premium” that is the lion’s share of the retail price of residential real estate.
http://clearcutbainbridge.blogspot.com/2008_08_01_archive.html
Thanks! Sara’s fantastic. We’re lucky to have found her.
Traci:
Great house! Sara did a nice job with the photo gallery. Hope you get a buyer quickly!…
Here it is, Rich! MLS#: 29063017