What Is A Lowball Offer?
I suggested a topic on the moving target that is a lowball offer. “Conventional wisdom claims that lowball offers don’t work. Homebuyers are warned not to ‘insult’ sellers, who are counseled not to counter offers from ‘disrespectful’ buyers. But conventional wisdom doesn’t always hold true. With a severe slowdown in sales, some experts now offer new advice. What is a lowball offer?”
“Karen Monsour, a Realtor in Coral Springs, Fla., says any offer that’s 25 percent less than the asking price falls into the lowball category. Others say the term ‘lowball’ is more subjective. Miriam Bernstein, an associate broker in Scarsdale, N.Y., suggests that just about any offer could be labeled as ‘lowball’ if it provokes the seller to outrage or anger.”
“‘The best definition I’ve ever heard is that ‘lowball’ is an offer that’s so low the sellers can’t contain themselves. They get angry,’ she says.”
One replied, “I get angry and outraged when I see a ‘highball’ sales price, especially when the property sits on Craigslist or MLS for more than 6 months without any play. Disrespected and insulted??? It’s not a sellers market anymore so who cares what they think. That ship has sailed.”
Another, “I would qualify a lowball as anything 25% or more below the intrinsic value of the house, not the wishing price. By that I mean 25% below 120 times rent, or some equivalent investment value metric. IMO, it is those who are ready and willing to buy a house who should be insulted by the wishing prices being asked by ’sellers’ in the current market environment.”
One notes, “We keep seeing stories about sellers who wished they HAD taken that ‘lowball’ offer they got 10 months or so ago. As Forrest Gump said, ‘Stupid is as stupid does.’”
One points to foreclosures, “A house here where I live listed at 179,900 for 2 years, is now REO, listed at 124,900 and still sitting. Obviously for that one, 30% below original listing price still won’t fetch a seller.”
One on upside down sellers, “What if you’re upside down? You can’t afford to sell for the ‘market’ price (whatever that is), much less the lowball.”
One with caution, “The only disadvantage I can see to serial lowballing is that eventually you’re bound to encounter a seller who’s desperate enough to accept, and then BANG!, you’re the new greatest fool!”
One on the process, “Lowball offers are below market value — lower than what a buyer thinks s/he will have to pay and at a level realtors and sellers fear to contemplate. That’s why realtors try to shame buyers into avoiding low offers.”
“Without lowball offers, the RE market would have come to even more of a standstill by now.”
“From property tax records in my area, I can tell you it’s REALTORS who have been making lowball offers to get property off the MLS.”
The Bradenton Herald from Florida. “After complimentary coffee and introductions Saturday morning, the area’s first official ‘foreclosure tour’ headed on its way. Roughly 25 people - the bulk of them investors - attended the tour on a small chartered bus that made stops in east Manatee County.”
“The first of eight houses visited during the tour was a three-bedroom, two-bath home in University Park being offered by the bank for $249,000. The home sold for exactly $100,000 more two years ago, according to Manatee County property records.”
“Another 2,749-square-foot home on a freshwater canal in the Inlets at Riverdale, the most expensive on the tour, was selling for $439,900 - $265,000 down from what it sold for just two years ago.”
“Dan Delzer of Lakewood Ranch took the roughly four-hour tour Saturday in order to work on what he calls his ‘10-year-plan.’ That plan involves becoming wealthy through investing in real estate.”
“‘I have a goal of 10 years, being financially free, and it doesn’t come from bringing home a paycheck,’ Delzer said. ‘I think anyone in Sarasota or Bradenton, you have to get in right now. I don’t think we’re going to see prices this low again. Anybody that’s waiting, I don’t know what they’re waiting on.’”
“Denny Floden of Horizon Realty in Bradenton was looking for investment properties as well as homes for some of his clients.”
“‘There’s some good values - not necessarily what they’re asking, but what you could buy them for,’ Floden said. ‘If you were buying something to live in for a long time, you’d really make out. But if it was going to be a rental, you’d have to be much sharper on your pennies. It doesn’t take much to screw up your numbers if you’re buying as an investor.’”
The Tribune from California. “Kathy Hilstein watched the housing market carefully last year, waiting for prices to fall. In November, she decided to buy an investment property— a foreclosed condominium in Santa Maria. In March, she closed escrow on a second foreclosed property, a two-story home on an acre off Los Berros Road in Arroyo Grande. Hilstein, the owner of a cleaning service, liked it so much that it’s now her permanent residence.”
“‘I kind of knew the market would slow down,’ said Hilstein, who found the properties during four foreclosure home tours. ‘I wasn’t necessarily looking at foreclosures. I was just looking for an investment property with a good price for the location and a good rental return.’”
“‘For me, it’s a no-brainer,’ said Hilstein, who has six rental properties in the county and Santa Maria, (and) bought her Arroyo Grande home for about $80,000 under current market value. ‘I would kick myself if I didn’t buy property right now. The market will go back up. I can’t imagine it not going back up.’”
“There were 635 homes sold in the county from Jan. 1 through April 30 compared to 877 during the same period the previous year, according to the Central Coast Regional MLS. But the median price of a home in San Luis Obispo County during that period stood at $480,000, down from $545,000 the previous year.”
“‘If people are sitting on the fence waiting, there’s not going to be a bell that rings that says ‘OK, it’s over,’ said Jim Liptak, president-elect of the California Association of Realtors. ‘Sellers that want to have a sold sign planted in their front yard have to be. If they aren’t, then they’re kidding themselves. The prices you could get two years ago and the price today are a totally different thing.’”
“In the first quarter of this year, foreclosure filings in San Luis Obispo County jumped 97 percent from the same quarter last year, according to RealtyTrac. There were 432 filings in the first quarter, compared to 219 in the first quarter of 2007.”
“Linda Midkiff, a Realtor in Paso Robles, said some properties—bank-owned and non-bank-owned—are being sold at competitive prices. A 3,000-square-foot house in Paso Robles recently sold for $509,900 one day after being on the market, she said. In another instance, Midkiff said a bank-owned home was on the market for $341,000. Her clients made an offer at $355,000, but she was told that they were not among the top three bids.”
“‘If a house is priced well it will sell at its current price, close to it or above it,’ Midkiff said. ‘Last year, the phone didn’t ring. This year, the buyers are out there. They want the best deal they possibly can, but they’re willing to put in the offers to see if they can get something.’”
How come every ‘foreclosure tour’ is on the small bus?
R.E.tards?
“After complimentary coffee and introductions Saturday morning, the area’s first official ‘foreclosure tour’ headed on its way. Roughly 25 people - the bulk of them investors - attended the tour on a small chartered bus that made stops in east Manatee County.”
Ever tried manoeuvering a full sized bus through the narrow streets you tend to get in new subdivisions?
Has anybody seen what might be the most depressing flip show of all time? I saw it yesterday. It was on Flip that House. A mother and father, their six kids, and the assorted grandchildren were flipping a house in the Inland Empire. They paid $340,000 for this 1,400 square foot palace in Lake Elsinore (guessing on the name). They have done several rehabs as a family project.
Two weeks into the flip the father, aged 60, gets sick and is hospitalized. He had pneumonia. Two weeks later he was dead. The family then had to try to complete the flip. They pitched in and got it done, with a lot of faux art thrown in. The mother, saddened by the death of her husband, was still delighted when a “REALTOR” told her she could price it at $450,000 - $460,000.
The story did not end too happily. The woman did not sell the house. She instead chose to use it as her office. Anybody want to hazard a guess on how much this woman is going to lose on this shack? I would guess it will be $200,000 or so, knowing what little I do about the IE. I’m sure they made a lot of money in the past so I didn’t feel too bad. But it was still depressing.
Why is that depressing? The goal of flipping is to screw the potential buyers. You buy low, do a fluff job, and try to sell high to someone who will eventually find that the new coat of paint hides several major issues such as electical and plumbing problems, but because they over paid they cant do much about it. Flipping only works if you have marks to buy at inflated prices. It also raises prices because the “investors” create artifical demand screwing all new entrants. I get real depressed when it works. I am very happy when these bastards fail.
You are describing exactly what happened to my sister and her hubby, except for the detail that hubby insisted on buying against BIL’s best advice. Now they are proud owners of two homes, one which was flipped to them (in 12/06) at a price high above what the home would currently sell for and the other which is undergoing perpetual renovation in preparation for a future sale.
My earlier post appears lost. Flippers artificially inflate prices by creating fake demand (i.e., their purchase is only to flip, not to take the home off the market for any extended period), and only work if they are able to sell cheap fluff jobs to unsuspecting marks who over-pay. I only find it depressing when they actually make profit. They are parasites.
I’m not heartless. The death of a family member is depressing, but that has nothing to do with their “profession.”
Was I defending their flipping? Why don’t you go securitize a loan? That’s such a noble profession.
I didnt say one thing that attacked you. The only person I ever attacked personally on here was Ann Scott because she deserved to be attacked. I just said I dont feel depressed when flippers fail.
As for my profession, none of my deals have gone into default, and I have never taken advantage of anyone in my life. The goal is rather simple. Take long term paper and turn the majority into short term, and switch from fixed to floating, or vice versa, at various modes, to take advantage of current interest rates. Thus, lowering financing costs. That is evil because . . .?
Also note that I think you are one of the better posters. I may come across as rude sometimes, but my day is spent arguing with NYC attorneys, investment bankers, investors, rating agencies, banks and real estate developers. I am no longer wired for nice. Short, brutal and accurate as possible is all I know, or I would have been weeded out a long time ago. No worries.
What do you see with the rest of your profession? Seriously. Is everybody acting so honestly? Does muni securitization lead to too many bond offerings being funded? The first muni website I look at brags about how they have been asked to craft legislation on the issue. That alone makes me skeptical as hell.
My fear is that nobody really understands the full impact of what these complex products have on the financial world. I look around now and see nothing that makes me think otherwise. It just seems like yet another way for a small group of people to job the system and make huge amounts of money.
“but my day is spent arguing with NYC attorneys”
I think I would rather starve to death. My sympathies. You and I are probably both wound a little too tight. Have a good day.
I dont disagree that it was abused, I agree reform is needed in certain areas. Specifically: (1) who the paper is sold to - my Trusts only allow the paper to be sold to QUIBs and Institutional Accredited Investors in 500k or higher denominations, (2) disclosure - I only due private placements in which the investor has access to anything they request and they do make such requests, (3) quality of the assets - I only do munis - no subprime or single family, and (4) realistic modeling - the rating agencies due needs to fix no doubt.
NYC - I think we are on agreement on most things. Don’t take my challenges as insults. I only do it because I respect your opinion. Otherwise, I wouldnt bother. I encourage ppl to tell me when they think I’m wrong and the reasons therefor. I am far from perfect.
Reminds me of a 1950s add for Fasco Motors I saw the other day in an old magazine my doctor had. “Don’t mess around, get your motor rewound.”
rating agencies due needs = rating agencies do need
You guys are both TOTALLY COOL, but why mention Ann Scott…she’d blow up this blog if she could find a way.
I think the core of our disagreement is that I don’t think humanity has sufficient capabilities to limit the destructiveness of so many of these things. You might say I’m a little cynical at this point in time.
I hear you and understand your position. I have my own bias in light of the fact it is how I have made a living for the past 15 years. I worked with several of the top 5 investment banks creating their TOB programs beginning around 1995. Regardless of what it evolved into now, I know what the intent was back then, and it was simply to make money by turning debt into more efficient products and taking a percentage of the efficiency gains. Thus, moving us closer to equilibrium. Imperfect information is a bad variable in trying to reach equilibrium, and is hard to acheive in connection with complex structures.
I can’t remember what Anne Scott did to piss so many people off….was it her post about selling stuff on e-bay?
I am wrote a long detailed response, but erased it before I sent it. I am trying to reform.
People just generally are hostile toward attorneys. I don’t really understand it either.
Txchic:
I think its because of the cost factor. People can see an auto mechanic charge $95 hr rebuilding an classic engine but $150-250+hr to yell at another lawyer?
Hey, Chick, isn’t your buddy Hillary a lawyer? How do you feel about her? I think the profession attracts a lot of type A a$$holes. These a$$holes often go into politics and have done a wonderful job of creating a system that rewards them, and their cronies, dearly. Lawyers have also created this bogus, sue happy society, we now have. Have you ever heard of such wonderful humans as William Kuntsler, Johnny Cochran or F. Lee Bailey? How about the ACLU? And nobody please give me all this crap about how the wonderful ACLU is looking after my rights. Do we even need to mention how badly the Supreme Court has f-cked things up?
You know you are everybody’s favorite lawyer on this blog. But holy f—ing $hit, do you really wonder why people hate lawyers?
you hate them until you need one.
BTW,
To add more flame to a fire; what happened to Ann Scott?
“you hate them until you need one.”
But a lot of times you only need them because you have gotten yourself entangled in the god awful system that they have created.
I dislike all lawyers, except the one I use.
But as God would have it, my son was voted by his jr. high school class to become the first person to have passed the bar in every state.
Life can be so funny and cruel at the same time.
“I dislike all lawyers, except the one I use.”
We still love you sideline.
Most of the lawyers I went to school with run companies, do transactional work or head public interest organizations. We are not all, or mostly, politicians or litigators. As for being Azzholes. If you work for a mega firm like I do, you have to toughen up or you are destroyed. People try to take your job and clients every single day. Remain loyal to those loyal to you, let others know you have weapons and are not scared to use them, and be accurate. Otherwise you are toast. Not everyone working behind the curtain works for the man. I’m an untrusting independent.
Many of the most amazing, compassionate people I have met are lawyers. Also some of the most intelligent and creative. Of course there are idiots and jerks in the profession, just as any other. By and large, I have nothing but good feelings toward lawyers.
John Cornwell, noted Catholic affairs writer and author of Hitler’s Pope (a must read), in his book Hitler’s Scientists noted the following: In Germany, Nazi party membership and enthusiasm for Nazi programs was significantly higher among MDs than lawyers. IIRC about 60% of MDs were party members but only about 10% of lawyers.
Look: The “Inland Empire” is in Eastern Washington state. Don’t let those noisy Californians fool you!
Sold my house in Chandler AZ for 150K more than I paid in ‘02, couldn’t believe it actually sold! Renting in the bay area for at least the next two years. I know sooooo many people that bought multiple properties at the height of the madness and are in serious debt…some with 4 upside down mortgages totaling 700K+ in negative equity. I warned them…
IMO, Anyone who purchased a house as a investment needs to get their a$$ handed to them…
Untrue, anyone that purchased a house as a get rich scheme needs to get their butt handed to them. There’s nothing wrong with someone buying a house to turn into a rental imo. It helps the renters find good affordable housing, and gives the landlord a way to get a reasonable return on their money plus gives them something to do if the place needs fixing up.
oh you’ll miss the weather it will be a balmy 98F today here in Phoenix. Good job on the house sale!!
It’s been interesting to see the evolution of this discussion. To me, a hundred thousand dollars is still a lot of money, and houses are an oversupplied commodity. I get email from people about almost new houses in Sacramento, for example, selling quietly for $40k. The distressed market is the market. And how do you insult a lender that’s losing money every month? Look at the land sales we see. 20 cents on the dollar, etc. What is the price of a house that’s surrounded by foreclosures? Sure, that neighborhood may be normal some day, but we are talking about now.
The couple who bought my home made (what I considered) a low ball offer I countered and they accepted. They were pre-approved and had 20% cash to put down. They wrote me a nice letter about how much they ‘loved’ the house and it would be their dream home. Reminded me of the ‘feed the squirrels’ letter at the height of bubblemania. I’m happy to be debt free with some cash to purchase a home sometime in the future.
“To me, a hundred thousand dollars is still a lot of money”
A couple years ago the value placed on hundreds of thousands of dollars was nill. It only cost a signature.
Real estate comps work to perfection in an up-market tempo, but once liquidity fades away, so does any meaning of the word comparison, when there aren’t any sales.
“To me, a hundred thousand dollars is still a lot of money, and houses are an oversupplied commodity.”
I am in complete agreement. It’s not that people stopped thinking $100,000.00 was a lot of money. It’s that they stopped thinking $500,000.00 was a lot of money. The guy next to me at work is still in his twenties and he and his wife bought a $550,000.00 home in Jersey. She is an elementary school teacher. He is in the lending industry. Every day he is trying to convince himself that a) Jersey is special or b) he will be in the house so long that it won’t matter if the house goes down in value.
I think of a $550,000.00 debt load and even my toes weep.
“I think of a $550,000.00 debt load and even my toes weep.”
Becuase if youthink of that debt, you think of actually paying it back. People signing up for these loans could not have panned to pay the loans back out of their paychecks. They were going to sell for a profit, or just walk away.
Agreed. The picture has changed 180 degrees now that lenders are once again conceiving of debt as something that needs to be repaid.
It probably has 8 to 10k prop taxes on it as well. 550k buys you a little ranch or a pos cape in NNj. Well at least until 06. Now prices have dropped, but 550k doesn;t get you much withing 90 minutes door to door of NY unless you want to live in gangland.
I’m on LI and thats a tad exaggerated.
It’s that they stopped thinking $500,000.00 was a lot of money.
If the bank told them they would need about $45K in CASH to buy that house, $500,000 would start looking like a lot of money REAL fast.
Actually, if the bank told them they needed 20% down–100K–they would change their tune quickly. And, six months living expenses in the bank, no “gift” funds, and tax returns. You know, prudent lending.
I remember a few years ago my mom was scanning the real estate classifieds in the newspaper and saw a cute, little home that would have been a good fit for my son and I. She said, “And it’s only $250,000!” And then she stopped. And looked at me. And said, “Wow, how brainwashed have we become that I think $250,000 for a tiny house is considered cheap?” I think that was the moment when she finally understood my plight in the market.
Unfortunately, prices have been stuck since. Slight movement, but only noticeable if you’ve been watching like a hawk (like I have been).
What would these homes be selling for these days if “normal” appreciation had occured? Probably around $150,000.
That being said, yes, I agree - $100,000 is a LOT of money. It’s what’s separating me from a cute, little home of my own.
You should think of the 30 years of your labor that you are signing away.
“I get email from people about almost new houses in Sacramento, for example, selling quietly for $40k.”
$40K? Would this show up in comps or in any of the price data?
Jas
I was wondering that too. And where in Sac are homes selling for that price? I’ve been looking at homes in the Sacramento area for awhile. Still a lot of middle class homes advertising in the half a million range.
Sheesh Ben…What’s a mere hundred thousand dollars here or there in today’s happy Springtime “Best Time to BUY that Dream Home” atmosphere ?
Do you want the entire REIC gang, the Fb’s and HouseDebtors to all CALL you …a CHEAPSKATE or a SPOILSPORT ?
Is it to much of a stretch to consider whether the U.S. is starting down the path of Socialism? The atmosphere and proposals to deal with mortgage foreclosures seem to indicate an unwillingness in the government to allow the market forces of capitalism work. We could be headed down a slippery slope in the way future problems, of all kinds, are dealt with.
Good point. Consider the HOA/condo association mess. You’d almost have to pay me to get me involved in one of those situations.
STARTING down the path? LOL!
When a large share of the homes available on the market involve HOA dues, a housing market participant’s consumption choices are limited by staying clear of the HOA/condo association mess.
This is a problem which is made worse by monopoly power of a few big builders funded by Wall Street monies dominating land purchases and construction in urban markets, as they did from roughly 1998 (if not sooner) through the present. Monopolistic competition is bad for consumers and good for big banks with access to Fed-funded bailouts when times are tough.
Excellent point stucco….
Very true. I made the decision long ago NEVER to be involved in HOAs or a condo association because they were not under my control and the potential of getting really screwed existed.
Having said that, is there any way of removing a house from HOA covenants before purchase?
I hope not. My covenants strip me of my mineral rights, forbid me from drilling for oil across the fence from my neighbors hot tub, parking large trucks on my lawn, and building anything over 1000 ft high.
All good things.
“…is there any way of removing a house from HOA covenants before purchase?”
Not in Florida. They “run with the land.” As a legal concept, I think that makes sense in that you know (or should have learned) what you’re getting if you buy and that whatever you paid for won’t change until a date specified in the covenants.
In my mother’s neighborhood in Orlando, the covenants would expire after 21 years, as I recall, unless a specified percentage of the homeowners voted to extend them. The time passed and I believe there were not enough votes to keep the covenants alive.
“My covenants strip me of my mineral rights,”
But somebody has the mineral rights and they can drill on your land if they want to : the HOA doesn’t protect you from that.
starting ?
since 1906 or 1913 take your pick
fight back
lp.org ntu.org cagw.org
NO BAIL !
WE privatize gains and socialize losses. If some of the proposed legislation passes we will actually socialize gains as well.
Don’t get me started on our taxes. We have a lovely combination of high taxes and lousy benefits. And as a resident of New jersey, I resent subsidizing the lifestyles of people in the south and flyover country. If they had to pay the same percentage of income in taxes that the blue states do, they would have to kiss their mcmansions and SUVs goodbye.
Sorry you feel that way but YOU ELECTED YOUR LEADERS (or at least your state did).
You need to place blame where it belongs (i.e., in Trenton), rather than blaming the South for the wastefulness of your government.
Subsidizing the lifestyles of other states?
I’m not understanding this comment this early in the AM. Is this solely about the “progressive” nature of the Federal Income Tax?
If so, let’s discuss removing the state income tax deduction for F.I.T. I’m tired of subsidizing states that use income tax while my state sales tax is no longer deductable.
New Jersey and New York send federal tax dollars to Washington and get a much lower proportion of those tax dollars back than a state like Texas, that receives far more federal tax dollars than the state pays in.
Bairen’s point being that if all states received back proportionally what they pay into federal taxes, states like NY and NJ could lower their state income taxes, while Texans would have to find ways to fund their own expenses.
Man, that would put a real hurt on states like NM. The state gets far more back in fed dollars per dollar sent to DC. It used to be the #1 state (DC is highest).
I think that there can never, ever be a “fair” tax for the simple reason that it is impossible to get everyone to agree on the definition of “fair” when it comes to taxation.
What scares me the most are proposals to replace the income tax with something else. Can anyone identify a country in which that actually happened? Politicians will identify a logical-sounding (or emergency) reason why the income tax needs to remain alive just a year or two more and then we would have two taxes, just as in Europe.
In the 1970s I read an entire book on the concept and history of taxes. What struck me was the author’s observation that the best-preserved records throughout history are mostly tax rolls and records.
You’re misinformed,
You can also deduct sales tax now in lieu of state income tax. Check your 1040. That’s been a law at least the last 2 years.
Chuck Ponzi
The atmosphere and proposals to deal with mortgage foreclosures seem to indicate an unwillingness in the government to allow the market forces of capitalism work.
Gee the government hasn’t had much of a problem with market forces resulting in the outsourcing of manufacturing and other jobs, illegals and H1B’s competing with US citizens, companies discontinuing or greatly reducing health care benefits, busting unions, etc.
But it seems to have a problem with market forces determining whether incompetent firms like Bear Stearns stay in business, or who gets lucrative government contracts.
The proposed government intervention in the housing market is not intended to help troubled owners, who would be better off walking away, rather the financial institutions.
Socialism for the big guys, free markets for the little guys. Or as it used to be called - fascism.
“Socialism for the big guys, free markets for the little guys. Or as it used to be called - fascism.”
Right on, yogurt. What’s good for the goose is good for the gander, IMO. I want the same rights as corporations, financial and otherwise.
“We could be headed down a slippery slope…”
Slope to what? To the hellhole that is Sweden?
When over 50% of the US workforce is employed by the government, I’ve got news for you. Capitalism in this country has morphed into a corporate oligarchy.
There’s a difference between socialism and totalitarianism, ya know? The former is a rational way to order a large, complex society. The latter is what you get when you let PATRIOTS do your thinking for you.
That having been said, I’m off the grid. Watching in horrified fascination.
“Socialism” is just as capable of producing totalitarianism as any other collective ideology. As it has. It substitutes “Internationale”-singing, red-flag waving ideological fervor for patriotic passion for a single country.
Economically speaking, fascism is basically just “socialism in one country,” where the government dominates, regulates, and directs business in the interests of the State, but doesn’t necessarily take the final step of taking actual ownership.
It’s socialism for millionaires and billionaires… regular people still get shafted with crappy medical care and always fear their job will be outsourced at the whim of corporate executives trying to line their pockets….
The United States is a mixed economy–meaning that it has elements of both free market capitalism and collective socialism. All modern economies are mixed economies. Some have a larger proportion of free market elements (South Korea) and some have a larger portion of collective elements (Canada). After nearly five decades of increasing collectivism, brought on by the New Deal–which was in turn a remedy for the prior failure of unregulated capitalism–the United States began to release its market forces with the Reagan Revolution. This trend continued until this year, when once again the market proved it was unable to regulate itself, and we are now facing another major round of regulatory legislation. It’s like making oatmeal: sometimes you need more milk, sometimes you need more oats…
The Depression was far less a failure of “unregulated capitalism” than of Big Government, in the form of a Federal Reserve which had been given unprecedented power over the economy and whose directors had no clue what they were doing.
“Unregulated capitalism” gives you the business cycle — booms and busts at regular, fairly short intervals. It takes Big Government to get you a decade-long depression.
The United States is a mixed economy containing elements of both free market capitalism and government-sponsored socialism. All modern economies are mixed economies. Some mixed economies have more free market elements (South Korea) and some have more collective elements (Canada). After nearly five decades of increasing collectivism, brought on by the New Deal–which was a remedy for the prior failure of fully unregulated capitalism–the United States loosened the reins on the free market with the Reagan Revolution. This continued until this year, when once again the free market proved it was incapable of regulating itself, resulting in the current round of regulatory legislation. It’s like making oatmeal: sometimes you need more milk, sometimes you need more oats…
“This continued until this year, when once again the free market proved it was incapable of regulating itself, resulting in the current round of regulatory legislation.”
I would argue that the free markets were only trying to re balance artificial conditions created by the FED. The government attempts to “manage” the economy inevitably leading to excesses which the free market will try to correct. Decades of government meddling have created a vicious cycle that get more and more extreme.
Yes, the imbalance was created by the Fed–but by the Fed not doing due diligence w/r/t long term economic viability. (I maintain–without absolute proof–that the low discount rates and the real estate bubble were part of a collusion between the Bush Adminstration and Greenspan to divert attention away from this nation’s military transgressions–namely the Iraq War–as well as a means to secure Bush’s relection.) A modern economy without government intervention is just as whimsical as the idea of a communist utopia. We’re not going to be able to eliminate government intervention–we need to make it intelligent intervention instead of the political pandering it’s often been.
Excellent posts, Spykeeboi.
I think its rather easy to define a low-ball offer. It has nothing to do with asking price. Anything more than 5% below then existing market value is a lowball offer.
For example FMV = 300k. The house is listed at 600k. 284k would be a low ball offer. $286k would not be, regardless of what the sellers want and what number would piss them off.
That said. I always put in a lowball offer!!!!!!!!!!! Why not? If I dont feel like I’m getting a deal, I don’t want it.
Do you submit through a realtor? I still find that most realtors out there won’t submit a low offer (and I’m talking anything 25% or greater from asking price). I realize they’re *supposed* to, but I find they just get irritated and treat you like you’re an idiot.
I prefer to deal directly with the owner. When I target a neighborhood I am interested in, I put a flier for each house that I think might meet my criteria on their door or mailbox (not in, to avoid violating any law) saying call me if you want to sell because I’m interested and we can dump the realtors and have an all cash sale. I usually get around a 5% response, with 2% willing to act realistically (i.e., market less 5-10% because they dont have to pay realtors, or live with their house on the market). I know it sounds cheesy, and makes me sound like an investor but I do it for my personal residences and never paid market. If I see a home I like listed with a realtor, I call the realtor directly and say will you take 4% for the entire transaction (usually they split 6-7%), and submit any offer I make? If they say no, I have a friend in the biz submit a low ball. I have never paid market value for any home I have had. I love the game, but have been frustrated because it was not worth playing since 2000. That’s why I’m here and building my house fund waiting for 2010.
The last I knew, a real estate agent is legally obligated to present all offers to their client regardless of how little it is.
If they refuse to submit your lowball offer, report it to the real estate regulatory agency in your state.
is legally obligated to present all offers ??
Not True…
Maybe it varies by state. I believe that in Florida they have to advise their clients (the sellers) of all offers. Doesn’t mean they will do it, but that it is the regulation. And of course the seller can instruct their agent not to bring offers below a certain amount (’b'leeve I’d get that in writing).
I have had at least one seller’s agent in Florida, representing an owner who lived in Texas, tell me that the seller would not consider the amount I verbally proposed. I didn’t want the place badly enough to then submit the offer in writing and see what she would do.
I have been looking in a city in a southern state where, “mysteriously,” no properties within a fairly narrow price range show up in realtor dot com. My suspicion is that the insider agents are using that as a means to buy a couple of very nice properties themselves at greatly reduced prices when the hapless sellers give up. When there is no way to discover that the property is for sale other than to drive by or to go to the listing office’s web site, what other conclusion is to be drawn? I ruled out incompetence because it would be keeping the agents from getting a commission.
In AZ, the seller can instruct their Realtor in writing not to accept bids below a certain amount. Otherwise, a Realtor is obligated per their agreements as a licensed Realtor (not necessarily by state law, though).
–chet
“Karen Monsour, a Realtor in Coral Springs, Fla., says any offer that’s 25 percent less than the asking price falls into the lowball category. Others say the term ‘lowball’ is more subjective. Miriam Bernstein, an associate broker in Scarsdale, N.Y., suggests that just about any offer could be labeled as ‘lowball’ if it provokes the seller to outrage or anger.”
That woman is an IDIOT!!! Use to live in that city area and I can tell you I have kept up with the asking price vs. selling price…she is way way off..the reality is the houses are SOLD(key word) by at least 30-40% off peak..the answer is if you want to sell and someone offers you 25% less than your asking price..you will say SOLD!…
Waiting for the tax delinquent list for Broward County to be published in the Daily Business Review next week…heard that it will be huge compared to last year…have to laugh..my husband knows a guy whose whole life is about image, the expensive cars, lavish lifestyle etc….wait until next week when the image of all his investment properties with his name next to it are published…
I know a guy who would never escrow his McMansions. That’s $15k he wouldn’t get interest on over the year. Of course, now he is delinquent on property taxes as well as principle and interest…
Interesting… Would really like to see that list! Can you post a link to it when it is published?
NO problem..should be out this week…
What is a low-ball offer?
IMO: the question is moot. It is FAR, far too soon to be worried about low ball ofers right now. Besides, if you buy now, you may be throwing away the possibility of a huge tax rebate. You may be throwing out the oppertunity to use some free gov’t money to use as a downpayment.
We are still in the panic phase and it is FAR to soon to know what is going to happen. Will it be a depression? Will we just have a 10 year recession? Will we head down the road of socialism? Which cities are going to see the most houses bulldozed under? Which city is going to be the next Detroit, losing half its population in a couple decades?
It is WAY, way to soon to be concerend with low ball offers.
‘IMO: the question is moot. It is FAR, far too soon to be worried about low ball ofers right now. Besides, if you buy now, you may be throwing away the possibility of a huge tax rebate. You may be throwing out the oppertunity to use some free gov’t money to use as a downpayment.’
I think you got something there. If buyers sit on the fence long enough, stimulus to boost house sales will be demanded by the NAR. We need to get a petition together and an operation Kaos to convince buyers to hold out for stimulus. LOL.
The term “Low ball” attached to an offer tactic used by the real estate industry to shame buyers into paying more for property than they feel it’s worth. To me an “offer” is an “offer”. Plain and simple, take it or leave it. Get over it sellers. Your disappointment that your fantasy is not working out is not the responsibility of buyers.
It is often used in this manner, but it doesnt have to be. If you were a seller you would want market, anything below that would bother you. So to me I see it as any offer significantly below market. That said, I see no stigma whatsoever to making a low ball offer. Who cares, it’s just a product. Do you want to sell today or not?
“If you were a seller you would want market, anything below that would bother you. So to me I see it as any offer significantly below market.”
Between the slowdown (not recession), the insolvency crisis, the subprime implosion, politicians falling all over themselves to propose bailouts designed in part to forestall price discovery, and prices falling on a national basis at double-digit rates*, who knows where the fair market value lies?
The chance that optimistic sellers will properly factor in the dearth of available credit, falling prices, requirements that borrowers can service their debts, requirements for arms-length appraisals, crack downs on mortgage lending fraud and increased buyer precaution in the face of a rising unemployment rate to their asking prices (what have I omitted here?) seems to be approximately nil in most cases. Thus any buyer’s offer which properly reflects the various reasons that market values have dropped by a huge amount since 2005 is likely to be rejected out of hand as a lowball offer.
The standoff between buyers and sellers that results has driven housing market liquidity (and comparable price discovery) to a trickle, as most sellers will need to first see lower comps to reconcile their real estate profit fantasies with market realities. For this reason, I am biding my time and letting the current crop of unwitting knifecatchers drive the comps down to affordable levels before considering a foray into the purchase market.
*12.7 pct YOY decline on the Case-Shiller twenty-cities index reported a couple of days back
True PB. Please note that I did not intend to suggest that current market value was what I would pay or what it should be. It is what it is. I think we would both agree that market value today is not what we would pay based on expected appreciation, but is what a seller would expect in terms of price.
I agree, the term “lowball” really only has meaning in a relatively stable market where there is subtantial general agreement on market pricing.
In stable markets, it’s always seemed to me that there’s a +/- 5 percent band in pricing, based upon how aggressive the seller wants to be. In those markets there’s no need to sell below that band if you’re willing to wait a couple months. So making an offer 10% or more below stable market values is a lowball, because the seller shouldn’t have to take that offer. They only will take it if they don’t understand (or are misled about) market conditions and are afraid, meaning that such a low offer is predatory in a way.
As others said, in today’s market, there are really no lowball offers, just “offers”.
I “can’t wait”
till we get our first lowball offer. Trying to explain to my wife why an educated buyer might want to offer less than the house is “worth last month” (according to an appraiser), because it might continue to decline 10% a year for a year or more.
Once one decides to sell in a declining market, my worst fear would be to follow the market down. This will be a long discussion, unfortunately.
Agents are required by law to submit all offers. Has anyone had the experience of the agent not taking an offer?
But you can’t always know if the agent submitted the offer or not. What’s to prevent an agent from not making the offer and telling you the owner turned it down? I suppose you could contact the owner directly and verify. As much as people make fun of Carlton Sheets, when I listened to his tapes back in the day, he talked about accompanying a realtor to see the owner and make the offer himself in person. Not a bad idea, if you really want the property.
in a peak market or low market-i have always submitted all offers. infact, if my client wants to make a lowball offer, i am all for it. i would be doing the same in this market.
I stipulate ON ANY offer to purchase that I require the owners signature on the returned contract either acknowledging acceptance or rejecting my offer within a certain time period.
About 10 years ago, a RE agent gave me some crap on a distressed sale and my super lowball offer.
I informed her that she either submits my offer as IS or I would personally submit my very specific and detailed complaint to the State Board of Regulations- RE Section with a demand of an investigation and followup.
The owners rejected my offer but they did acknowledge it in writing with their signatures that they had seen and had considered my offer
Requiem for a heavywait
“‘If people are sitting on the fence waiting, there’s not going to be a bell that rings that says ‘OK, it’s over,’ said Jim Liptak, president-elect of the California Association of Realtors.
Fence sitter threat-o-graph
That there is funny no matta who y’are. (Unless you live in San Diego).
Seriously, the second derivative appears positive. A bottom could be forming any year now.
I’m glad I found this post!
We are looking to buy our first home here in Riverside, CA. Our agent keeps looking at homes exactly at (or below) what we want to pay. I thought she would look at homes that are slightly higher priced and negotiate DOWN to what we want to pay. Does it not work this way?
I asked about lowballing and didn’t realize that was a dirty word in agent land. She looked at me like I was an alien.
That’s a great point, too. Realtors ask “what’s your price range?” and then only look for homes currently IN that price range (which we all know we’re not interested in).
Maybe buyers should change their tactics. When asked price range, give a range where - were fundamentals back in place - the homes *should* be back in your affordable range. Then, if you find one you like, submit the lowball offer.
But that brings me back to realtors not want to make those offers (even if they are supposed to).
So frustrating!
When we bought our house, 17 years ago, the agent tried to steer us in the most expensive home we could theoretically finance, and not the best home for us. You should always ignore R-E agents.
I don’t answer that question.
‘Maybe buyers should change their tactics. When asked price range, give a range where - were fundamentals back in place - the homes *should* be back in your affordable range. Then, if you find one you like, submit the lowball offer.’
You all remember a time when sellers scoffed at a prospective buyers first offer and were shrewd because they did get a higher offer 15 minutes later. Those times are legendary.
“I asked about lowballing and didn’t realize that was a dirty word in agent land. She looked at me like I was an alien.”
Fire that idiot and find yourself an agent who likes commissions.
truth ^ ^ ^ ^
exactly, i read all these post and i wonder about the brokers you are dealing with. i represent whomever hires me in a agency realationship. if i am working for a buyer or seller, i submit all offers, you would be surprise what you can negotiate, depending whom you represent. of course during a peak market all logic is gone. people pay illogical prices- which in the end hurts us all. true investor do not invest during peak markets- they sell.
“I thought she would look at homes that are slightly higher priced and negotiate DOWN to what we want to pay’
Funny thing is, prior to the bubble, offering 10% less than asking was pretty much standard. Negotiation was expected.
why don’t you look for sellers who are trying short sales ?
figure out what you want to buy, give the agent the higher price range, tell them not to worry about price, when you find the place you like, you make your offer. All the agent need to do at this point is show you houses.
“I get angry and outraged when I see a ‘highball’ sales price, especially when the property sits on Craigslist or MLS for more than 6 months without any play. Disrespected and insulted??? It’s not a sellers market anymore so who cares what they think. That ship has sailed.”
In my opinion, this attitude reflects a deficiency in basic economics education. In a free market, sellers have the right to price their homes at whatever level they want, and to keep them listed on the market forever at prices where they will not sell — that is their free choice. So long as the taxpayer is not coerced into helping take unsold homes off bagholders’ books at above-market prices, where is the problem if homes are listed at prices where they never sell and the owner gets to eat the costs of holding on to a depreciating asset forever?
I think the point is that buyers are also free to offer whatever they wish for a property (with sellers able to refuse). But sellers consider lowballs “insulting”, so why shouldn’t the opposite be true?
Of course, we’re not talking about actions here, just emotions - and since when are those rational?
If there is a term “lowball” for a price below what the seller asks . . .
shouldn’t there be a term “highball” for prices above a buyer’s range?
Could we tell the retards, “hey, that’s a highball offer”
followed by: “You are going to insult the buyer”
and, “he’s a doctor, you know”
correct?
And if the sleazeball makes you a highball offer for his pos
you could go for his anatomy with an aggresive lowball kick in his balls
pedro
funny post - well written! (you have my vote)
LOL - Vote For Pedro!!
“The only disadvantage I can see to serial lowballing is that eventually you’re bound to encounter a seller who’s desperate enough to accept, and then BANG!, you’re the new greatest fool!”
I worry about this risk, particularly in the case of friends and family members who are overly eager to purchase homes at the moment and don’t get the picture of a credit market going through a historic reversion from ultra-loose to ultra-tight lending standards. Housing market participants who are fortunate enough to have solid incomes, good credit ratings and savings are also most vulnerable to making an offer which is well above market because there are very few similarly qualified buyers. I can think of two immediate relatives and one close friend of our family who fall into exactly this category, and all three have bought homes over the past month. It will be quite interesting to see how they view their hasty decisions (against my own advice) five years down the road.
That said, the risk of becoming the next greatest fool through serial lowballing would seem to only occur if your offers are not sufficiently low. If you understand your own situation from the standpoint of what you personally need and what you can afford, then who cares if your offer mistimes the ultimate bottom of the market?
If you put in the clause “subject to inspection” you’re safe and can always get out of the deal. Also, in many states, the parties have 3 days to change their minds on a signed contract with no penalty.
Subject to inspection is just the standard “we’re serious now let’s get ready for the negotiation” phase isn’t it? The owners of my current house had “another offer” and wanted $1500 more. I didn’t want to spend several more weekends looking at houses to save $11/month and I liked this one. (At my salary, that was hundreds of dollars worth of my time each weekend.) I mollified my wife-to-be by negotiating them down $750 or so and forcing them to pound a few nails into loose metal flashing on the roof.
And I still hear about the full 1500 rather than the 750 delta.
Nonetheless, you are pretty much wasting your time making an offer that is artificially higher than what you are willing to pay, as the seller naturally interprets an offer as a lower bound on what you are willing to pay. The other alternative, of making an offer that is a realistic estimate of market value in light of market conditions and price trend, is likely to result in summary rejection. This is why I am nowhere near even getting my toes into the market’s churning waters.
Karen Monsour, a Realtor in Coral Springs, Fla., says any offer that’s 25 percent less than the asking price falls into the lowball category. Others say the term ‘lowball’ is more subjective. Miriam Bernstein, an associate broker in Scarsdale, N.Y., suggests that just about any offer could be labeled as ‘lowball’ if it provokes the seller to outrage or anger.”
This is nonsense advice. First of all, the “asking price” makes no difference. What matters more is what comparable houses have SOLD for in the past few weeks
Often, it’s futile to make a proper offer. If the current title-holder (I hate to call them “owners”) owes X to the bank, and the only offers that come in are for X - n, then he won’t sell it…he’ll walk away.
A friend of mine in Austin wants to buy the lot next-door to him. It’s a 9000 ft/sq lot, with a tiny 700 ft/sq house on it that is dilapidated and needs to be torn down. The owner wants $280 for it. I told my friend to find the cheapest house that sold in the area recently on the same size lot (that would be aboout $210 IIRC) and divide it by 2 to get the value of the land. *That’s* a fair offer. In fact, it’s generous, because it doesn’t account for the cost of demolition. However, I don’t think the seller is in a position to sell at that price. He owes the bank too much money!
–
“‘I have a goal of 10 years, being financially free, and it doesn’t come from bringing home a paycheck,’ Delzer said. ‘I think anyone in Sarasota or Bradenton, you have to get in right now. I don’t think we’re going to see prices this low again. Anybody that’s waiting, I don’t know what they’re waiting on.’”
I perfect dope.
I know someone locally who calls himself a genius based on his IQ, a resident genius (RG), whose plan is to buy total of ten lots for $15K-40K, some at tax auctions, and he is convinced that in “10 years” they will worth $3M (average of $300K each). He has already bought 5, beginning in 2004, and is in the process of converting HELOC into a first mortgage to get the money to buy the remaining 5. He hasn’t worked for 5 years but his wife has a well paying job in pharmaceutical and commutes 100+ miles 2-3 times a week.
I visited them yesterday and it turns out that a commercial lot they bought last year for $15K in a county tax auction has an unpaid City bill, including penalties, of close to $100K for nonpayment of Mella Roose (?) bond. They didn’t do a title search for few months after they bought the lot. They found out the City bill when they applied for permit to do some improvement to the lot in order to sell. It turns out that there were many commercial lots like these and some settled with the city for payments excluding the penalties when they actually wanted to build these lots.
Jas
“calls himself a genius based on his IQ”
His arrogance will be his downfall. He will rationalize any scheme he comes up with as being brilliant. It must be brilliant, he came up with it, and he’s a “Genius”.
There’s a rather fine line between being an imbecile and being intelligent, quite often.
Sometimes imbeciles can be quite brilliant in their simplicity.
“‘I have a goal of 10 years, being financially free, and it doesn’t come from bringing home a paycheck,’ Delzer said. ‘I think anyone in Sarasota or Bradenton, you have to get in right now. I don’t think we’re going to see prices this low again. Anybody that’s waiting, I don’t know what they’re waiting on.’”
We became “financially free” (more or less) on paychecks and careful savings. The house is paid off, we have zero debt, and savings. Even our energy bill is close to zero with solar-electric on the house and living close to work. (I drive about 2000 miles/year).
Sure we’re still working. But if we both had to exist on $10/hour jobs our budget would easily balance.
(I drive about 2000 miles/year)
This must be the car manufacturer’s version of the credit card’s “dead beat” term
And you clearly aren’t “using your equity” properly
;)
I sat through Saturday morning financial cartoons yesterday and watched the talking head argue about how people should spend their stimulus package money. Most were all for the citizen’s duty to stimulate the economy for the good of the collective, but at least the cuter one tried to point out that it was in the individual’s best interest to pay down debt or save for a rainy day.
It is sadly funny how if everyone did the “right thing,” the economy would quickly collapse through the disruption to major industries that benefit from selling unneeded stuff to the optimists.
I’m on my third car in my life. The first two I had for 11 years apiece. The current one is about 18 months old. All of them were/are “economy” cars.
I was looking at our house loan applications today and found that we owed $26000 in non-housing debt back then… now that number is about $3000 since two cars were paid off (one new computer was purchased this month.)
I am coming to the conclusion that the US needs to change its car habits about as much as it does its housing habits. How much of consumer debt is from over spending on cars?
I’m sure my out-of-work friend who expects his electricity to be cut off this coming week regrets buying (and hanging onto) his $50,000 sports car. Hey, it’s almost paid off (if he was making payments). No point in selling it now I guess.
I once owned a car for less than 24 hours before I crashed it. A 69 Mercury Comet with a 302. That said I’ve never spent more than a 2 week paycheck on a ride, always a cash purchase. The last one I owned was a 98 Jeep Grand Cherokee I gave away to my sister, she still drives it daily and its got over 250K miles on the original engine. Cars are a dime a dozen compared to houses and I’ve never seen a seller insulted by one of my lowball offers or used an agent.
“‘I have a goal of 10 years, being financially free, and it doesn’t come from bringing home a paycheck,’ Delzer said.
Let’s interview Delzer in 10 years. My best guess is that he’s living in a shelter or working a menial job, angry at the world because he wanted to make money by doing nothing. The only way to get financially free is to work. Buying land with hopes of selling to other is speculation, at which there is X(win) and 1-X(Loss).
Great plan!
–
‘I would kick myself if I didn’t buy property right now. The market will go back up. I can’t imagine it not going back up.’
You are more likely to kick yourself in another year or two or three for being hasty. We got millions of bottom callers like you, lady, trying to justify their recent purchases. You people should form a club to console each other in 2009 and later.
Jas
“‘I have a goal of 10 years, being financially free, and it doesn’t come from bringing home a paycheck,’ Delzer said. ‘I think anyone in Sarasota or Bradenton, you have to get in right now. I don’t think we’re going to see prices this low again. Anybody that’s waiting, I don’t know what they’re waiting on.’”
Something funny about this guy…why push others to compete with you?
Unless…
http://bigskyrealty.com/our_team.php?aid=2
“As Dan says, “I discovered early in life the mountains of Montana was where I wanted to be. I graduated at the top of the mountain and have been an avid skier since moving to Big Sky. I love and appreciate every aspect of life here and realize home really is where the heart is. I’d be honored to help you find a special place that I know to be the best of the ‘last best place’.”
Yet another ass**** ready and willing to sell out the place he “loves”.
In another instance, Midkiff said a bank-owned home was on the market for $341,000. Her clients made an offer at $355,000, but she was told that they were not among the top three bids.”.
She will be real soon, once “Bidder #1″, “Bidder #2#, and “Bidder #3″ drop out, as if they even exist.
What a stupid bank.
Fixing myself a Mojito lowball offering, with a twist of lime…
Bottom’s gottem~
Went to see a house for sales across the street where we rent. It was listed at 1.5 mil. Yep. 1.5 mil. I rent my place for $1900. Of course the house for sale was remodeled and looks grande inside but who in their right mind will buy a house that is for sale for 1.5 mil when you can rent a house in the neighborhood for $2500 or less.
Anyways, I kind of blurted that I would buy this house at around $400,000 and that is the “future” going rate for this neighborhood. about three other couples looking at the house heard me. Realtor was pissed!!! Realtor and seller thinks it’s 1.5 mil and I think it’s wrth $400,000. I’ve been hearing that Bay Area homes are losing around $10,000 month in value. Some more and some less. but it is a slow bleeding and won’t stop until it reaches 1994 prices.
“I’ve been hearing that Bay Area homes are losing around $10,000 month in value. Some more and some less. but it is a slow bleeding and won’t stop until it reaches 1994 prices.”
I’m not sure I agree with you…$10k per month is pretty fast bleeding, particularly for people who actually do (or did) have a bunch of equity in their home.
It’s just such a long way to come down, it seems like forever.
What does the rate of market value decline have to do with how much equity the homeowner has?
It’s real money for them…that they could have had in their pocket…if they had simply been willing to sell and then rent (as MANY have done on this blog)…and this was big money, hundreds of k’s.
For a recent buyer with no cash down, it’s simply bad (or worse) credit due to a foreclosure or short sale…but they never had a real shot at grabbing any large amount money…so it couldn’t sting as much, at least to me.
And this shows how far out of whak your thinking STILL is. $400K for a house you could rent for $2500?
$320,000 at 6.5% for 30 years is over $2K a month just PI. Add TI and you are already over your $2500.
Now factor in the oppertunity cost of the $80K. Even if you just take 4%, you are tossing away $300 a month.
HOA fees?
If you could rent the place for $2500, it should not sell for over $300K.
If you are evaluating it as an investment, should you be including the P of the PITI? It certainly is a “cash flow” cost (opportunity cost) over the life of the loan.
When you do these rental rate comparisons, would one include the P of the PITI, or just “ITI” times their favorite local rate? (e.g.: 120 for me, or 600 if in CA
)
I haven’t thought it through to understand it yet myself. I’m just asking.
House down the street is asking $1600/mo rent. Been on the market for over a year. Initial asking price? $565k. House next door to it (and a nicer house, with a finished basement) sold for $400K in 2006. Current asking price is $495K — with the for rent sale in the yard.
When I first started purchasing residences, I always started at 20% off asking. Until the past few years, this was not considered unreasonable by the realtors or owners I dealt with. It was considered a place to start negotiations. If the owner came back with their original asking price, indicating they were offended, we didn’t go any further. If I were to make an offer these days (I’m not going to right now, but if I were…) it would probably be at a 1995-1998 level, on account of factors in Florida like insurance, taxes, economy, energy costs, etc.
Here’s my view: no one in Florida and I mean NO ONE, ought to be shocked, offended, pissed off or whatever about such an operating basis. That means owners, realtors, banks, trustees, builders, whatever. This is reality. If I were to make an offer at mid 1990s levels, my attitude is, you’re lucky I took an interest in your property. Here’s why the offer is what it is and I’d mention the above factors. I may piss off the owner, but it will give them food for thought while the property sits on the market. The bitch of it is, human nature being what it is, people can’t admit when they’re wrong and no way will the owner come back to me and say OK, I’ll do it, he’d probably rather stick needles in his eyes than admit he should have taken the offer or negotiated, so the next lowballer might actually get the property, based on the fact that I softened up the owner for them with an earlier lowball.
Right, Palmy. The lowballers are doing future buyers a service by bringing tears of reality to the overpriced POS owners. Along those lines, I try to make about one lowball offer a week as a service to future buyers. I rarely even hear back from the seller, if I do, it’s usually a polite go to H-E-L-L. One of these days, I may get lucky and get a nice house for half its going price or less (here in the Land of Non-Capitulation). But, as I posted above, I always put in an escape clause in case I decide it’s not what I want. Today’s offer is 300k cash for http://tinyurl.com/49vntg
(It’s been on the market for 1.5 years)
Nice place. I’d outbid you and go 350 for it.
Tell you what, if they accept my offer, I’ll turn around and sell it to you for that.
i don’t mind helping you guys out.. seeing as how I got nothin better to do.. i’ll offer $250K to get the ball rolling in the right direction. How about if 20 of us spam that owner with lowballs over the next couple of weeks..
Great idea! Let the worst offer win!!
Hey Lost,
what are the taxes on a place like that? 23 acres? And did you notice, one of the RE agents names is Snub Liles…you can’t make this stuff up.
Based on other places I’ve looked at in that area, I’d guess taxes between 1600 and 2000/year, and that may be a bit high.
Also, those 23 acres are scrub pinon trees, highly flammable as they’re likely in the process of being beetle-killed. No water to irrigate or grow anything, and that area is very very rocky. Good for wildlife and privacy only.
Am I the only one who wonders if the cliff dwellers died out for good reason, one of which might have been high incidence of blindness and the subsequent tumbles?
They didn’t die out, they migrated south to the Rio Grande.
And they used rope ladders to access their cliff dwellings. I myself have found a few of these (I’m an archaeologist).
I just realized I have a phobia to adobe that results in style-snarkiness. Does adobe handle rain well? Maybe my phobia is from growing up in rain country.
A Dobe-Phobe, eh? Out here, we call it Santa Faux. I used to love it but it’s now become somewhat cliche and I’m leaning toward old 60s Trailer Trash, myself, with an old washing machine or two out front, old collectible pickups, and some pink flamingoes. Maybe even an old drilling rig in the backyard next to several old blackened burn barrels.
That’s great! If I had the time and energy, I’d move into a HOA-controlled McMansion subdivision for a couple months as a renter and start a car collection. Ever hear a 1975 Ford F150 crank up at 2 AM without mufflers?
I have mixed feelings about this. I used to sell coins at a flea market. Different people have different policies, but I try to offer fair when buying (not take advantage of the seller’s likely ignorance) and to ask fair when selling. If I made a buying mistake and the nasty thing is sitting in the display case mocking me I’ll accept almost any offer, no problem. Also, 5-10% discount if they buy several items is usually no problem.
However, I do get irritated by people who just reflexively offer half of whatever’s marked. Frankly that IS insulting, because the implication is either that I’m trying to cheat people with my asking price or that I’m too stupid to know what something is worth. There’s also no reason I should respect someone who’s too lazy to come up with their own price - it’s just my price less X% or $Y.
AND ANOTHER THING - lots of times they aren’t serious offers. Because, in a borderline situation where maybe I’ll think about it, I’ll ask if it’s a firm offer, and do they have the cash? Often it’s just an idle question.
So, if you are making a serious offer that a) is close to your honest belief of the true market value; b) you have the resources to execute promptly if accepted; and c) you aren’t going to back out of or renegotiate on some pretext - it’s not a lowball, it’s A-OK. If you are just pretending, though, and wasting the other person’s time, it IS unfair and insulting.
JR, in theory you are right and I agree with you. However, the problem is, we really don’t know what market value is in this part of Florida right now. I know what people would like it to be. It’s the old saw about how something is worth what people will pay for it. Right now many people would probably pay more than I would for a particular property in this part of Florida. Which means for me, the market hasn’t come down enough. I looked at a little property not far from my old neighborhood where I sold at the peak of the bubble. Also saw my old place, broke my heart to see it so run down, it’s a rental property right now. Anyway, I’d only pay about $65,000 for it, max. That is honestly what it is worth to me, but the lady who owns wants over double that. Good luck to her.
Whatever happened to this:
http://lowballoffers-r-us.com/?p=3
Seemed to me like a wonderful idea!
“I try to make about one lowball offer a week as a service to future buyers.”
LOL. Good one.
Snub uses coloring!!
They’re all insulted, at anything under asking price.
It’s just a defense mechanism.. they’re still in the denial stage. The fact that their home is worth only what people will pay for it can be, at first, an impossibly uncomfortable thing to deal with.
Pre-qualify your seller. Deal only with those that have advanced to the final, acceptance stage.
I prefer to think of a lowball offer as an offer that has a snowball’s chance in hell of being accepted but still has a chance. Of course, counteroffers are welcome!!
Real estate agents have to start learning who really butters their bread. The seller may pay the agent a commission from the sales proceeds, but that money first had to come from the buyer. If agents want to continue to lock up the market with their B.S., then they will only hurt their own income.
If you aren’t having to hide your face and whisper your offer, then you offered too much.
Lowballing = “Sport Chiseling”
Here’s one you DON’T want to lowball…you’ll get it…
http://tinyurl.com/4usu4g
What about lowballing a house that has obvious damage??? I am up in the Manchester, NH where a lot of houses on the market are bank owned and have freeze damage. I have been watching a house that is bank owned asking price 179 and they say the extent of freeze damage is unknown. Back in 2003 the house sold for 235 so the bank is already taking a hit on it, would it be appropriate to offer way less than the asking price??? 179 to me is way too high. I can’t wait till the market goes down in this area…I am patient but it’s taking forever. Thanks for your time.