Low-ball Offers

[(former)FormerSanDiegan]

Hypothetically, if you gave someone a lowball offer at 2001 price level and they accepted … would you go ahead and buy??

The likelihood of this happening currently is about equal to finding and purchasing a Porsche Carrera for sale from a pissed-off spouse for $100 in the Sunday newspaper.

Obviously, one would take that deal.

[Eugene]

“You just need to allow the market conditions to do the tenderizing for you. That way it’s not your fault they’re losing out. Once the sellers are softened up enough to cooperate they’ll sell.”

Making 2001 level low-ball offers is one way of tenderizing. Too many people are stuck in the first stage of grief (denial). They need to be helped through to acceptance.

Look up hopeless properties that have been listed for 6 months or more. Leave them a voice message or an email. Explain how much their house is worth based on fundamentals. Make them an offer based what their house was worth in 2000. (Ideally you should adjust for inflation, that’s 20% between 2000 and 2007, but i’m not sure if incomes grew that much around here)

I recommend to get a disposable cell phone and a new email address for that. You don’t want them to find out where you live.

[PadreBrian]

I have been making 2002price offers. No budge yet. Sellerss are down to 2004 prices, but needs another few years of flipping knocked off.

[donaldduckmoore]

“Hypothetically, if you gave someone a lowball offer at 2001 price level and they accepted … would you go ahead and buy??”

Why not!! you can always back out if there are any problems with the property after inspection and everything.

[luxuryglow]

esmith,you are funny!

[JC]

SD Realtor, can i put on the spot and ask you how you feel about taking on clients that only want to pursue low-ball offers and in the 30 to 50% off range? I truly respect the viewpoints of you and the other realtors that are regular posters. (I’m singling you out because you were the one that responded to this thread).

To be clear about why I am asking — I am in no rush to buy, but I wouldn’t mind starting the hunt on the remote chance that I get luckier sooner rather than later. However, I wouldn’t want to go down this path yet if it would just be a total pain for a realtor.

I did enlist the help of a realtor last year and I was very clear up front about what I was looking for at the time (low ball offers in the 10 to 15% range). He told me he was fine with that. However, when I never got a response from an offer on a REO that had been on the market forever, I followed up directly with the agent handling the sale. To my surprise, she told me that my realtor had never submitted my offer). So, he obviously was not ok with my strategy.

I hope this makes sense and I hope I am not putting you on the spot too much. 🙂

[people_are_smart]

I think it is too early for reasonable (IMO) lowball offers. I made an offer on an El Cajon REO condo that is listed for 181K. It sold for 268K in 2005. There is an identical unit in the same complex listed for 161K (possible short sale?) and another for 175K. I offered 125K as that is what I feel comfortable paying and makes sense considering current rental prices. I didn’t expect it to be accepted but was interested whether I would get a counter offer. I did not.

I’m not sure if counter offers are usual. My guess is it might sell this year for around 160K but I think I will do better for the money later on. I’m starting to think SFR (no HOA) may be doable in a few years. I’m going to sign a new lease in the next week.

The bank asking price is already 33% off the 2005 sale price. My offer was over 53% off peak, or an additional 30% off the current asking price. I think 2000-2001 prices seem reasonable as well but it will just take a few more years of chasing the market down for banks to get it.

[people_are_smart]

I think it is too early for reasonable (IMO) lowball offers. I made an offer on an El Cajon REO condo that is listed for 181K. It sold for 268K in 2005. There is an identical unit in the same complex listed for 161K (possible short sale?) and another for 175K. I offered 125K as that is what I feel comfortable paying and makes sense considering current rental prices. I didn’t expect it to be accepted but was interested whether I would get a counter offer. I did not.

I’m not sure if counter offers are usual. My guess is it might sell this year for around 160K but I think I will do better for the money later on. I’m starting to think SFR (no HOA) may be doable in a few years. I’m going to sign a new lease in the next week.

The bank asking price is already 33% off the 2005 sale price. My offer was over 53% off peak, or an additional 30% off the current asking price. I think 2000-2001 prices seem reasonable as well but it will just take a few more years of chasing the market down for banks to get it.

[NotCranky]

“I’m not sure if counter offers are usual.”

Counter offers are not the norm on “low balls”. But then again that’s not the point. There are other threads on lowballs. I’ll go see if I can find one in a minute. You have to work like crazy for a good lowball project.
“low ball” them all,let them go and check back later… keep looking. You normally wouldn’t lowball then sit back and see if you won the lottery, on one property.

I like low ball strategies because it is a good way of giving fate a chance to work in my favor a chance to strengthen the upside. I did this looking for land to build on in mid to late 2003. I abolutely got a way better deal on the one I purchased compared the ones I got no response on. I offered only 10% lower than a list because I wanted it even at list and the offer was accepted.My neighbor just paid almost three times what I did for a smaller but otherwise similiar lot.

It is hard for a Realtor to work with a random lowball bidder because they can be pretty flakey and sometimes have wierd expectations.It can easily require 15-20 hours a week to do it right. Not a good risk to take on,except for the most trusted clients.
http://piggington.com/are_we_scared_or_shy_to_make_low_ball_offers

[amy]

I have been looking a lot (although we probably won’t buy until next summer, depending on how things look) and there was a house that we really liked at 1687 Fisherman Drive, 92011. It was listed at $1,429,000 for just over 4000 sq ft & brand new construction on almost 1/2 acre lot. My realtor knew I really liked this house, and asked me straight out what was keeping me from making an offer. I told her that we thought prices were going to drop significantly, perhaps 30% over the next 12-24 months (she’d heard this from me before). She then asked why I didn’t make them an offer at 20% under asking, that “lots of people were doing that now”. We decided not to do so, and I am sad to see that the listing is off MLS as of this week. I assume an offer was accepted since it’s a new house and the builder is in close-out for that development. I’d be very curious to see what it went for. The listing agent told me the builder was very motivated.

As an aside, my realtor doesn’t think (or won’t admit) that the market is crashing. She says there was a needed correction, but that things are leveling out. Whatever!

[salo_t]

I think the up coming RE auctions are going to set the new price trends and with thousands of homes going into forclosure
this is were we might get our lowball offer/bid accepted in the short term. Eventually the average home seller will have to stay competitive or just not sell. Like others on this thread have said once its common knowledge that homes are not going to fetch insane prices anymore will sellers begin to take a second look at a lowball offer, were not quit there yet.

As for me, I’ve stopped even submitting offers. RE is dropping so fast that I feel like I’m going to cheat myself if I buy now even at a discount. I’ll let it run its course a little longer and jump in when it feels just right.

[HereWeGo]

It’s a little too early for lowballs. Ultimately the banks will be the most responsive to lowballs, anyway … everyone else will just walk away, if necessary.

Maybe a time will come when banks eagerly encourage short sales, but that time is not yet upon us.

[SD Realtor]

Hi JC –

Hey no harm in asking right? I would rather people be up front as that is how I am…

I am okay with taking on clients that are in the lowball camp. I don’t mind writing up those offers and submitting them. I do let the clients know that there is no chance at this point in time that those offers will get accepted. I also do ask them (my client) if they are okay with me calling the listing agent and running it by them verbally so that I save both myself and the buyer time of writing up something formal. If the buyer insists on me writing something up then I will go ahead and do so. Also in alot of these types of cases I ask that the client help me out and do drive bys on the homes they are really interested in before asking me to show. You would be surprised how many homes get filtered out on a simple drive by. Anyways as you can see it is somewhat cooperative.

Most buyers who are really selective and looking for a deal kind of work in cycles…. they will be really active for a few weeks/months, then lay low for awhile, then repeat the cycle again.

********

I think there are some good points made in this thread about lowballs. I do think it is way to early for those homes (sellers) in desireable areas to accept lowball offers. They just are not doing it…at least not at the percentages we are all hoping. It cannot hurt to try, and I think that the odds go up if you are trying to lowball in Eastlake or El Cajon as opposed to Carmel Valley or Carlsbad…

Amy even though the home you really like didn’t happen for you just stick to your guns, it will happen someday. For your realtor to not acknowledge what is happening is not uncommon. Believe it or not there are realtors who firmly believe the correction is done. Even if it flies in the face of all logic.

[people_are_smart]

I should add that after the bank rejected my offer this week, they immediately lowered the asking price 9K to $171,900. I guess my offer must have been the only one? At least I feel like I’m doing my part to restore sane expectations.

[NotCranky]

I write the one page Letter of Intent rather than do a verbal SDR. It is non-binding and I like the idea of the listing agent getting a piece of paper.
As far a receptivity to lowballs goes, I would recommend not writing any offers for less than 10% under list price, even for competetive list prices. (That is for you people who just “have” to buy now).I mean that for all neighborhoods including “less distressed” ones and absolutely in housing tracts where similiar houses are coming on the market. If they won’t take 10% off …move on…unless 10% of X price doesn’t matter to you.

[Author]

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