In yesterday’s video you heard about the agent who said he had written 70 offers on behalf of a well-qualified buyer, many at $10,000 to $50,000 above list price, and he still hadn’t sold her a house.
To see how frustrated I should be, I checked my Y-T-D stats:
131 offers written on behalf of buyers.
17 solds and pendings to show for it.
A success rate of 13% sure looks frustrating, but let’s examine. Reviewing the 131 offers, here are my thoughts, based on those results:
1. Willing to write low offers.
Many get no response at all, but you can’t take it personal. I don’t mind writing low offers because it serves as my primary ‘listing-agent-desperation gauge’, plus they help satisfy the buyer’s curiosity on whether you can steal a good one. My best closed sale this year was 8% below list price, though have two short sales pending at 15% off. I’ve written offers at 20% below list, and 15% above.
2. Making offers help educate buyers.
The paperwork is overwhelming, there are at least 23 pages required on each offer – let’s get familiar with it. If you haven’t bought a house in a while, you’ll see something new on the forms every time you read them, so review as many as you can!
3. Expect to lose some bidding wars.
The likelihood of getting into a bidding war is excellent with 90% of the buyers chasing 7% of the inventory – today’s active REO listings/total active listings is 657/9,070 = 7%. Other buyers are going to out-bid people just to end their frustration, and someday that could be you – unless your agent is willing to temper the emotion and write lots of offers.
4. Listing agents are going to take the wrong offer.
The over-worked staffs of the big REO agents are going to screw up. They’ll lose offers, terminate the bidding prematurely, and/or flat out ignore you, hoping you’ll go away.
5. Buyers blow out during inspections.
It is a two-part negotiation. First buyer and seller settle on price, then the buyers execute their due diligence. The REO listing agents don’t want to fix anything, so if you find a deal-killer in a bank-owned, it’s usually a cancellation. Hopefully on a non-REO you can get some love from the seller, but almost always it depends on the listing agent’s zest for closing deals, instead of re-selling them over and over.
6. Making an offer is much easier.
Today, with electronic signatures, the writing of offers is much quicker, but not frivolous. Every offer I’ve written was made in good faith, and almost always a better reflection of actual value than the list price.
7. Timing – sellers are overly-optimistic during the spring and summer.
Buyers have a better chance of getting the sellers’ attention between September and November. By December the sellers throw in the towel, figuring that springtime isn’t far off.
All in all I don’t feel that frustrated, it’s all part of how the market has changed.
These three game-changers:
a. lower pricing
b. electronic signatures
c. the internet exposing virtually every property for sale to waiting buyers
have helped increase the competition for the good deals, and the rush to snag them has intensified that any house put on the market today that doesn’t get an offer in the first week or two must be listed at the wrong price!
Yet the frustration endures with so many of the REOs listed with robot realtors that you can’t get on the phone, and who let new listings run active for days and days. If we see a substantial increase of REO listings in the coming months it will help soothe some of these frustrations. Agents are pleading for them, and sales should increase because there will be more inventory to go around!
Expect to write a few offers too!