Wonder what it is like trying to get a deal these days? Wouldn’t you think that the agents must be going out of their way to sell their listings?
Not in NSDCC – most listing agents just want to whip you into shape.
Rather than go to the trouble of having my clients sign lower offers, I’ll check with listing agents to see if they might be open to making a sale.
These are actual responses this week:
1. Will you entertain an offer of $1,500,000 on a house listed for 3 months at $1.7 to $2.0 million?
No response.
2. Will the seller consider an offer at 20% below list price on house listed for five months:
No, They have turned down a much higher offer.
3. A house priced at $1.9 million, on market for 3+ months:
I am sure you have seen the television show “Deal or no Deal”….At $1,500,000 it is “No Deal” If they are serious make an offer that is market related and we will work seriously to make a “Deal”.
4. A short-sale on the market for one year. We’ve made the same offer three times since June:
I did speak with the seller and he is willing to work with your clients but they have to come up over the $750k. He wants to sell the house but he also wants to be realistic and work with a serious buyer. Have them come up a few thousand dollars and he will sign it.
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Notice how they mention that if you are a serious buyer, then you will pay their price.
Some listing agents make other demands just to consider your offer. They’ll require approval letters with FICO scores, require bank statements, or how about this one – requiring that the good-faith deposit be a cashier’s check made out to his escrow company – JUST TO MAKE AN OFFER!
There are commenters here that think someday sellers will be giving away properties left and right.
But once you get in the game, you quickly realize how the listing agents are a major barrier. They think it is their job to defend their price, and wait until “the right buyer” comes along. In the meantime, they try to blow off everyone they can.
You can say that it’s their job, but realize that listing agents are a major hurdle to price discovery.
For it to be different someday, we’d need a major push of REO listings to change the status quo. As long as the banks aren’t foreclosing, the short-sellers list high and have no reason to cooperate. The elective sellers will only consider offers that aren’t insulting – which means ‘really close to list price’ – and their agents back them up.
We’d need to be hit by the REO tsunami to knock any sense into the agents & sellers.
Jim,
I think you are exactly correct on this. It’s exactly the situation I saw when we were seriously looking a couple of months ago.
It’s really sad that those people not paying their mortgages can dictate the price they’ll except for a sale. If the foreclosure process was actually working sellers would be forced to do something over time. The way the market is currently running it makes more sense to list high not pay your mortgage and scare buyers off than to list low and make a deal.
For those new to whats going on. Banks are operating off your tax dollars (TARP) and screwing you on savings interest rates (Fed Reserve). If banks that were operating poorly were forced to close their “assets” would have been auctioned allowing prices to go down as crazy betters were cleared out of the market. Instead those that caused the bubble and banked on the way up are now screwing everyone on the way down as well.
With the federal government propping up house prices nothing is going to happen anytime soon.
FHA, monetization by the Fed, foreclosure moratoriums, encouraging mark-to-myth accounting in banks, etc. are all proping up prices.
Can’t always blame the LA as they are most likely just doing what the sellers want. If they were motivated sellers the stance of the LA would most likely reflect that circumstance.
None of the listings described said that they were REOs. Only one was a short sale. Buyers need to realize that there are legitimate home-owners out there which have options besides short sale or foreclosure. Homeowners can stay in their home, move and rent out their home, or move and sell. With foreclosures stopped or slowed, the only sellers left are non-bank owners who will think logically about their options. If buyers think it will ever collapse, they are going to be in for a nasty surprise.
I disagree with you Shadash, I think that in most of Jim’s examples (probably not the short sale) they are likely still paying their mortgages. Not everyone who is listing their house for sale is a deadbeat (even if they are unrealistic on their prices). It certainly is frustrating for a buyer.
The Government is no different. Go to the Fannie Mae/Homepath website. When it goes to an auction, you are not buying the property. The high bid `wins` the right to submit the offer thru a third party REDC. If they accept it (mostly they counter offer – you could have done it before it went to auction) you get to pay a 5% buyers premium. Oh, boy.
What we have is a situation where today’s buyer is paying for the mistakes of the sellers and the banks. It is not the buyer’s fault that someone paid too much for their house; it is not the buyer’s fault that the banks made a loan they shouldn’t have. The buyer is basically bailing out the bank or seller. As a potential buyer, I refuse to pay for the mistakes of someone else.
FirstTimeRenter,
Maybe you’re right but the two houses I put an offer on for me were deadbeats. One is still living in the property 6 months later and not paying their mortgage. The other finally gave up and just moved out. The property was empty for 5 months and then the bank put 30k in it and relisted 150k higher than it was listed before. (Now it’s just sitting there not selling.)
What are your examples that house “owners” trying to sell right now aren’t deadbeats?
FirstTimeRenter,
Also BOTH houses I put an offer on the listing agent demanded a Short Sale Negotiators Fee. This is an extra fee that listing agents charge on top of the 3%-6% they’re already charging to do their job. If I didn’t pay the fee the listing agent wouldn’t submit my offer to the bank.
I live in a different universe called Northern California. And I seem to recall that any offers have to be presented to the sellers by their agent. The assumption that someone not paying their mortgage must be a deadbeat is revealing. I believe a few people have lost their jobs, some have had medical problems and insufficient insurance and some are going through bitter divorces. Are they all “deadbeats?”
When I listed my condo I gave my realtor specific instructions not to call about offers below X amount. She would give summaries about Y number of offers below X amount to me anyway, and tell the ‘buyers’ that I was not interested. There are just too many phone calls of people thinking they can drive prices down by offering low for every listing agent to present every offer when it comes in. Buyers need to realize it is a two-way transaction for most homes. Sellers will not take any offer just because it is presented.
Oh, and I turned down a much higher (all cash) offer than X amount. I’m glad I did.
I think, at some point, you have to just accept that those sellers do not really want to sell unless they can get their price. So, move on. They aren’t really selling, they are just posting a “make me move” wish price.
Either the seller wants/needs to git ‘er done or not. If not, you have to assume they either have the means to wait it out until a buyer who likes the price shows up or they will ride the free rent program until the sheriff knocks on the door (which could be years for some.)
Sure it isn’t fair, but when has life been fair? Living and buying within your means is a reward unto itself, best realized by the ability to sleep well at night.
3.Can’t always blame the LA as they are most likely just doing what the sellers want. If they were motivated sellers the stance of the LA would most likely reflect that circumstance.
11. There are just too many phone calls of people thinking they can drive prices down by offering low for every listing agent to present every offer when it comes in.
Thanks for the enlightenment.
Sellers can do whatever they want – I’m talking about the how listing agents are insulted by the suggestion of such a lowball, and take the oppotunity to lash out.
It never occurs to them that my offer might be the only one they ever see.
I never do that as a listing agent, I don’t want to have to eat my words some day.
I’m with Troubled Loner. Ultimately you have to blame the buyers who are out there overpaying. They’re the ones enabling LA’s to act like teenagers.
“Living and buying within your means is a reward unto itself, best realized by the ability to sleep well at night.” Very well said.
Shadash,
My examples are the houses above. I’m trying to get them for less than the owners think they are worth. The owners aren’t in default and having looked them up on the tax rolls, they are in fact quite wealthy and still working. I don’t know for a fact that they are paying their mortgages since I didn’t call their banks, but I don’t believe that just because banks aren’t foreclosing everyone stops paying their mortgages.
I agree that the listing agents responses are ridiculous.
A simple “that offer is too low” would suffice. I actually get a chuckle out of their responses so I guess it doesn’t hurt anything. Makes me glad I’m going with Jim and not them though.
@Art Eclectic
“I think, at some point, you have to just accept that those sellers do not really want to sell unless they can get their price. So, move on. They aren’t really selling, they are just posting a “make me move” wish price.
Either the seller wants/needs to git ‘er done or not. If not, you have to assume they either have the means to wait it out until a buyer who likes the price shows up or they will ride the free rent program until the sheriff knocks on the door (which could be years for some.)”
Hey if these sellers are so out of line how come you are still looking? If there are so many bargains out there (and these three sellers are so unreasonable), why haven’t you bought? Not every seller is waiting until the “sheriff knocks”. A lot of them have money in their bank accounts and equity in their home, and they don’t have to move or sell. If you want them to move you are going to have to pay for their property accordingly or go without. If you insult them with a low-offer they might just feel like insulting you back. You really think if you offer someone 50-60% of what they paid they are going to write you a thank you note? Say, “gee I didn’t see it your way. If you think that is what my home is worth you must be right.” A lot more people are going to be staying put or renting out their property rather than give out away to someone just because they had a couple hours to write an offer.
SoCal – A. I’m not looking. I just refinanced.
B. Things are only worth what someone is willing to pay for them. If nobody wants to pay the asking price, then the property isn’t worth the asking until somebody comes along who thinks it’s a fair value. Either you, as a seller, are in a position to wait it out or you aren’t.
C. Speaking of insulting, look in a mirror.
When I was a kid, I remember telling my dad that we should buy something because “it was worth twice as much”. I don’t recall what the item was, just the lesson my now 91 year old father taught me. He said, “It’s worth what someone will pay for it”.
Now you can call me an old fart by doing the math on my 91 year old father and me, but he’s still living and has taught me many important life lessons (and I’m still learning).
An item is only worth what someone will pay for it. Months (not days) on market and relisting certainly seem to reinforce dear old dad’s wisdom.
No one is ever really insulted by an offer – it’s just something a delusional seller says to make himself feel better about overpaying. Has anyone ever claimed to be flattered by an offer?
And, no, not everyone with a high list price has to move or is skipping payments, but they may wish they had made better use of that extra $100-500k and want it back. They can be identified by, “I’m not really trying to sell – I just want to see what I can get.”
I wonder what you would do if someone offered you $4 for your car. Any financial transaction has at least two sides. The buyer is not the only party to come to the table. Even though those houses have been on the market for months does not mean that they didn’t get many many offers which were not accepted, many which may have been higher than those presented.
Maybe home owners may be upset that they bought at the height of the market. However, how will some of you feel when you realize you let the bottom of the housing market pass you by? Many years of rent you will never get back, and for what? So you can hope to get a better deal later? So you can sweat inflation with whatever cash you have sitting waiting for that ‘great deal’ that is just one tsuanmi away?
But I’m not offering $4, I’m making a good-faith offer worth considering if the sellers and agents were paying attention.
The market will never be strong enough that sellers and agents should get cocky, and blow off an opportunity to sell.
You own a condo and are so confident?
A reader checked in a couple of months ago with her plight. She had an economic hardship, and was behind on payments.
But her lender wouldn’t foreclose on her. Why? They found out that her condo HOA had so many delinquent dues-payers and repairs that they were going to assess each owner a few thousand dollars to get even.
Between that and the recurring costs, the bank said no thanks, and the assessed amount was filed as a lien personally against the reader. So much for free rent.
Plus, I haven’t heard any news about condo financing getting any easier either. It’s a time for everyone to be humble.
4. A short-sale on the market for one year. We’ve made the same offer three times since June:
I did speak with the seller and he is willing to work with your clients but they have to come up over the $750k. He wants to sell the house but he also wants to be realistic and work with a serious buyer. Have them come up a few thousand dollars and he will sign it.
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Jim,
This line of reasoning always has me confused. Unless the seller is going to be foolish enough to sign an agreement to pay any deficiencies, they aren’t going to take a loss, no matter what the property sells for, even if it sells for $1.00.
Why in the world would they pass up a solid offer? Is it just another way to scam the lender, showing them that they are “trying to sell, but haven’t gotten any offers,” so that they can continue with the free rent program?
SoCal condo owner,
Did you ever sell that condo where you told the LA not to accept any offers under $X?
What we have is a situation where today’s buyer is paying for the mistakes of the sellers and the banks. It is not the buyer’s fault that someone paid too much for their house; it is not the buyer’s fault that the banks made a loan they shouldn’t have. The buyer is basically bailing out the bank or seller. As a potential buyer, I refuse to pay for the mistakes of someone else.
Troubled Loner | October 9th, 2010 at 2:13 pm
TL,
I cannot begin to tell you how strongly I agree with this post. The fact that somebody overpaid for a property is NOT the next buyer’s problem. Sellers need to accept that they made some serious mistakes and move on.
“As a potential buyer, I refuse to pay for the mistakes of someone else.”
It’s always cool to find someone who shares similar sentiments. In addition, I refuse to fund someone else’s retirement.
CA Renter: This really doesn’t answer your question (which you asked Jim anyway so I should probably just stfu), but one of my friends has been on the free rent program for well over a year. From the sounds of it, he isn’t at all involved in the aspects of listing price or acceptance of an offer. I was the first one to tell him that the bank reduced the LP of his house (I have it in my redfin favorites). I don’t know how similar his situation is to the majority of short sales.
Oh Boy! This is a topic so near and dear to my heart as both a seller and a buyer! We were a serious seller. We sold our custom house on 2 acres here in a small town (86323). In fact, we had to sell it twice! First time around we had it sold in 2 weeks listing, then the buyer’s lender (BofA) notified they wouldn’t give funding a day after escrow was supposed to close. Second time we dropped the price to below what it appraised at. Walla-sold again in 1.5 weeks. We were serious sellers and we were realistic on price. We did not HAVE to sell, we WANTED to sell. Now for what I thought was going to be the fun part. NOT SO!
3 offers later and 2 ‘bidding wars’ that we WOULD NOT bite on. Here’s the latest-it’s an REO: http://www.redfin.com/CA/San-Marcos/2090-Aspen-Ct-92078/home/3849466
The place is pretty trashed. Needs paint, carpet, all new appliances (ancient, dead, or gone), and the deck off the MB consists of termites holding hands. They want $525k. Comps say MAX $460k according our agent-I say comps say closer to about $430k especially considering the work it needs. Agent says lender won’t consider less than $500k. IT WILL NEVER APPRAISE! And here’s the really funny thing. They had multiple offers, us and at least one other and did the H&B dance. We stood on our offer ($440k+termite cert) and lost. In it goes to escrow last week, and low and behold, it’s back! Another property new to the market, same development, in MUCH better shape (regular sale) is listing at $176/sq ft which would put the one we’re interested in at $413,600. Sellers and banks need to get a grip, or at least consider sharing whatever it is that they’re on!
Deb, Split the difference, bid at $480K and move on with your life. $20K over 30 years amounts to very little.
Thanks MB for the advice. I thought about that. But I also feel that if I did, I would be contributing to the problem, not part of the solution. As long as there are home buyers (read, not house as a commodity) that go willingly to the bidding war slaughter, paying at least 10% more for the privilege, there will be sellers, lenders, investors, and agents more than willing to lead them through the door. At least on eBay I know what the high bid is and how many bidders there are. At the bottom of the food chain is the serious, honest, well qualified home buyer in a particular price range. I’m well aware that this perspective is self defeating, and when the home that really tweaks us as ‘worth’ the premium comes on the market, we will go with the rest of the herd. Gotta live some place!
Jim, I’m a big fan, but where is the law that says sellers must be serious? Just as buyers do not have to be serious, why can’t a seller let his house sit on the market for years or even decades? After all, it’s a free country. The seller puts his house on sale at a certain price; there is nothing forcing potential buyers to pay it; just move on to the next house that is priced reasonably. If there are no houses priced reasonably, then rent. Isn’t it called the free market?
John, I agree with you. However, the current housing market is anything but a true free market. In my opinion, that is why the buyers are frustrated. The game is rigged against them.
“Jim, I’m a big fan, but where is the law that says sellers must be serious?”
The basic point is that there is huge cohort of people that need to sell their homes but are unwilling to set the price low enough to make it happen. They can’t hold out forever. Many of today’s elective sellers will be tomorrow’s distressed sellers.
Personally, I know of several situations where people “needed to get out”, but were unwilling to price low enough. Many of them opted to rent the property out. I see this as only a short-term fix. If they get one tenant who stiffs them or damages the property they will be back into negative cash flow. For them that will mean tapping savings or defaulting. Even if they don’t get any bad tenants, the home is still racking up deferred maintenance that will have to be addressed before the home is put back on the market.
I fear everyone could end up worse off due to the stubbornness of sellers. The sellers may end up suffering financially and the buyers may suffer a lower standard of living while they are renting.
Deb,
Congratulations on selling your house! It’s amazing what a fair price and reasonable sellers can do, isn’t it?
Sorry you have to join the rest of us in buyers’ hell. It really stinks being a buyer in this market — a market that is more rigged against buyers than ever before in U.S. history, IMHO.
Troubled Loner nailed it. I wouldn’t mind buying at these prices if I knew that lenders were foreclosing on deadbeats and bringing the product to market…and if interest rates were not being manipulated into the ground, and if the govt weren’t providing/guaranteeing 95% of the mortgages, and if the govt weren’t offering “tax credits” (tax credits are over for now, but there’s always the risk that they’ll start back up again).
Oh, Deb, one more thing…
Don’t give into the “just another $XX,XXX isn’t so much over 30 years” stuff. That’s exactly the thinking that got us into this mess — people totally ignoring price because they were fixated on “monthly payments,” thinking like the debt serfs we’re trained to be. As a matter of fact, that $20,000 (or whatever the sum) will be *more* expensive if you pay it off over 30 years because of the interest. And don’t count on wages going up over the next few decades…maybe they will, but it’s at least as likely they won’t. Don’t feed the “bidding war” game. Good for you for taking a stand on this! 🙂
So here’s the epitome and antipathy of why some of us buyers are so frustrated. This Carlsbad flip is listed at $349k. Market value is probably around $500k+. I won’t waste my time trying to figure any closer than that. Tell me, if you were a buyer, would you put on the waders and throw in a line? Not me, those fish are piranhas and just want to feed on me, each getting a few bites. Here’s the ‘bidding’ parameters:
“Home to be sold thru round Robin Bidding Process to Highest Bidder. Bidding terms available by emailing listing office. Opening Bid is $349K – 2% buyer premium will be added to Final Bid to create Final Sales Price, subject to Seller reserve price.”
And the proof: http://www.redfin.com/CA/Carlsbad/2620-Chestnut-Ave-92010/home/3415052
If this is what it’s coming to, I need to find a rental. 2 adults, 2 dogs and a cat.
Personally, I refuse to get into any sort of bidding war. Call me paranoid, but I don’t trust the process. One only has to look at Jim’s Del Mar Property bid vid to see that the game is rigged, and that was out in the open, just think what goes on behind closed doors.
Deb,
In case you missed the prior listing…
http://www.redfin.com/CA/Carlsbad/2620-Chestnut-Ave-92010/home/3415052/sandicor-100004591
Looks like quite a bit of mold, and some cracks to boot!
This flipper claims to have obtained the house through foreclosure, but the property history clearly shows that it sold through the MLS in March. Funny how they claim they are disclosure exempt, yet the pictures from the prior listing show plenty of evidence that these flippers know what was wrong with the house.
Yes, they did a nice job with the cosmetics, but what did they paint/spackle over? This is exactly why I refuse to buy from flippers. They are some of the biggest fraudsters around, IMHO.
CA Renter-All I can say is wow. Didn’t see the original listing since it was before we were looking. We weren’t considering getting into this one purely because I’m so opposed to the RE bidding war, lack of transparency, and questionable antics. But these pictures are astounding! At least Redfin gives us buyers a few tools to try to research the history of a property since sellers so often don’t disclose.