There’s something I’ve been meaning to write about for some time now: low-ball offers. Last year we didn’t see too many low-ball offers. The market was just too hot for sellers – properties were being snapped up in wild feeding frenzies, with just about everything going for over asking price in a matter of days. In such an environment, what chance would a low-ball offer have? A snowball’s chance in H-E-double toothpicks, that’s what!
Things have changed considerably of late – and much for the better, if you’re a buyer. Multiple-offers are still happening – for prime properties that are well priced. By and large, though, properties are sitting on the market longer – much, much longer – now than they were last year. What does this mean for you, the prospective real estate buyer?
It means that there are a lot of anxious sellers out there! Examine these listing remarks I stumbled upon recently:
GREAT HORSE PROPERTY- 2 BEDROOM 1 BATH ON 1 ACRE OF LAND. CHERRY FLOORING, STAINLESS STEEL APPLIANCES, HOME HAS BEEN UPGRADED, NEW COMP ROOF, SOLD AS-IS. OWNER ANXIOUS, MAKE OFFER.
Hello! It says right there that the owner is anxious and you are invited to make an offer. By all means, do the owner a favor and put in an offer. Go ahead and offer $50,000 or $100,000 less than asking price. What can it hurt? The pain of rejection? It’s business, don’t take it personally! And if you do offer much much lower than asking price, do not be surprised if you a) don’t get any response from the seller at all, b) get a flat-out rejection, or c) get a counter offer. Of course, once in a while, if the seller is really anxious and the offer isn’t too low-ball, the seller will just accept your offer and you’re off to the races.
What’s a good strategy for making low-ball offers? First, identify a property where the owner might be open to receiving such an offer. The obvious place to start is with vacant properties. If nobody is living here, that means the owner is living somewhere else, and paying rent or a mortgage on that place. Meanwhile, the owner is also making loan payments (probably) on the property that’s for sale. If the owner owes, say, $500,000 on the property – imagine what his payments are going to be! Several thousand dollars per month, easily. Plus, tax and insurance, of course.
So find some vacant houses. Now, check the Days on Market. This is something you can’t check on some web sites – although if you are getting listings via e-mail from me then the Listing Date information is provided. Even so, you’ll want to ask your Realtor (that would be me!) to check the history of the listing. Often times, if a property has sat on the market a long time, the listing agent will de-list it for a week or a month and re-list it again, to re-set the “Days on Market” back to 0 again and make it look like a fresh listing. Even so, the owner will have been paying the mortgage the whole while, bleeding red ink!
The next thing you can have a Realtor check is what the property was purchased for, and how much the owner owes on it. If the owner has built up a large amount of equity in the property, he can better afford to accept a low-ball offer. Often times, the owner will be selling the property because he has something else to do with the money. If the owner is frustrated enough that he can’t move on because all that equity is locked up in a property that isn’t selling, and which is costing him thousands of dollars per month…that’s a pretty good incentive to accept a low-ball offer, wouldn’t you say?
Please don’t misunderstand: many low-ball offers go nowhere, even in a buyer’s market. However, with a little patience and persistence – and the help of a skilled and willing Realtor (such as myself!), you might be surprised how much of a discount you can get off asking price.