Last night and this morning I was put in a position that no realtor really wants to be in. I am currently representing two buyer clients who both came to a decision about how much they wanted to offer on properties that we had viewed. Unfortunately, both offers are much lower than I had advised. When you work with a real estate agent as a buyer, that agent is there to keep you informed and to carry out your wishes. I informed both of my clients about what comparable properties were selling for, and both of them decided to make offers that were lower than the market dictated. What did I do? I wrote up both offers and have submitted them to the sellers’ agents.
This poses a question that many buyers wonder: is there any reason to submit an offer that you aren’t sure is going to be accepted? If you’ve ever seen the movie “Dumb and Dumber,” you may remember a scene where Jim Carrey’s character is flirting with a female. She isn’t all that interested, but she does offer him some hope. He looks at her with his goofy grin and says, “So you’re telling me there’s a chance.” When you’re interested in buying a property, but you’re not comfortable with offering the full asking price, there is absolutely a chance that the seller will still accept your offer. Is it likely? Probably not. Is it impossible? Not by a long shot.
The only time that you don’t have a chance at getting the house that you’re interested in is when you don’t make any offer at all. The greatest hockey player of all time, Wayne Gretzky, once said, “You miss 100% of the shots that you don’t take.” I can assure you; you will miss out on 100% of the homes that you don’t make an offer on. Remember, as a buyer, your real estate agent is there to work for you. If you decide the amount that you want to offer, he or she has a fiduciary responsibility to write and submit that offer.
Yes, I do make sure that my clients understand that a low offer on a property in a market as competitive as the greater San Francisco Bay area is a long-shot. However, it costs you absolutely nothing to make an offer on a property. Sure, it costs your realtor some time. In the offers that I mentioned earlier, I had to fill out the paperwork, and I made a couple of trips to the properties to check things out. But that’s my job. That’s what I do. If you want to make an offer on a property, tell your realtor how much you want your offer to be and see what happens.
Things to Remember for Buyers
A lot of people are afraid to make a lower offer on a property out of fear that it won’t get accepted. Guess what? Only one offer gets accepted. There can be 10, 15, 20 offers on a property, and there’s still only one that is going to be accepted. Does making a low offer on a property mean that yours may be less likely to be accepted? Sure. It doesn’t mean that it’s impossible.
It bears repeating, you should not worry about what your realtor thinks about the offer that you want to submit to the seller. We are only there to advise you and then carry out your wishes. If we’re being honest, realtors don’t expect every offer that we write up to be accepted.
Things to Remember for Sellers
The presence of low offers doesn’t only impact sellers. I’ve represented countless sellers over the years, and sometimes a buyer’s agent will reach out to me, letting me know that their client is a first-time homebuyer, has a small down payment, and that they’re going to offer less than asking price for a property. Do you know what I tell every one of those buyers’ agents? “Go ahead and send over your offer!”
Now, this doesn’t mean that I offer the buyer’s agent any type of false hope. In fact, I usually let them know that their offer probably won’t be accepted, but I still encourage them to send over the offer that their client wants to make on the property.
So, why would I waste my time and my clients’ time with these lowball offers? Because I can use them as a prop in higher-level negotiations. Let’s assume that I have a property listed, and I receive 10 or 20 offers on it. Obviously, some are going to be higher than others. As a realtor, I’m required to be honest in all communications with clients and other realtors. When I receive low offers on a property, I can honestly contact the agents representing the highest bidders and say, “Hey, I’ve got 10 or 20 offers on this property. Is your client willing to up their offer?”
I’ve also had buyers who came in with a low offer that my seller clients decide to counter. Those lowballing buyers have suddenly jumped their offer and become the highest bidding potential buyer for the property.
There is always room in any listing for low offers. When you’re selling a home, you should welcome these low offers because they give your REALtoR more bids that he or she can use as a cudgel to get other buyers to offer sooner and offer more. And if you’re a buyer, you never know…your low offer may get accepted! Even if it doesn’t, you may receive a counteroffer, which still keeps you in the game for the property that you’re trying to purchase.