I've been showing a lot of first time buyers lately that have been watching a lot of television shows that show home remodeling, home decorating, and home buying.
Don't get me wrong, most of those shows are full of useful information, remodeling and decorating ideas and they can even give you tips on things to look for when shopping for a home that could be problematic... so they can be useful.
But please keep in mind that these are nationwide shows, some are even shot in Canada, and not everything they say apply to every area of the country.
Remodeling projects that they say can be completed in a weekend would be a tough job for seasoned hands, let along two women single handedly.
One show suggests that when you find a home you want to make an offer on "low-ball them." In other words, if they are asking 225,000.00 go in and offer them 25,000.00 less right off the bat.
I'm an advocate for negotiating a good deal, but my experience has been that this type of low-balling offends the sellers. I've even had a couple of sellers even refuse to make a counter offer because they were insulted.
Work with your REALTOR®. Ask them to show you comps in the neighborhood of homes that have sold as well as those for sale. Compare them to the home you want to make an offer on and proceed with a sensible offer.
I hear more and more REALTORS® working with sellers stressing the importance of pricing homes properly to sell in this market of over abundance.
Then there are those sellers who are having to bring money to the table to even sell their homes and have very little wiggle room.
I understand everyone wants a deal but just because the television shows are telling you to "low ball and ask for your closing costs to be paid," doesn't mean that it always happens or it's the rule of thumb to follow. In my opinion that only happens every-time on television.
I work with buyers and sellers so I see, feel and understand both sides.
As a buyer if you really want the home and give an outrageously low offer on a home that is priced correctly and the sellers get offended and refuse to counter - then you have lost out on a home that you really wanted and you are disappointed. That isn't a win/win for anyone.
Work with your REALTORS® and as buyers and sellers make mindful decisions.... and remember everything that is seen on television isn't always the case.
Fran White, REALTOR®
Reece and Nichols Residential
816-682-3897
www.kansascity-realestate.net
www.franwhite.reeceandnichols.com
I too have dealt with this in my area. I do my best to educate the buyers in the local process. It is difficult and many don't want to hear how it is different from the TV Shows. Sorry guys, but it is! I have been known to ask a buyer how they would feel with a low ball offer.
Thanks for responding Kim. When I posted this on my http://www.kansascity-realestate.blogspot.com/ blog this is the comment I received from a reader:
Words of wisdom from someone who makes their money based on the price of the house. Obviously the lower the price is, the less the realtor makes. Any homeowner looking to sell puts the price higher than they're willing to accept, knowing offers will come in for less. If that seller if "offended" its because they're not looking at this as a business transaction but instead taking it personally as an insult of their house. Low Ball away people. the worse that can happen is they say no. theres MANY more houses out there!
And this is how I responded:
Thanks for your comment, I wish you would have left your name so I could address you properly.
Also please know that I had the option of not publishing your comment but I did, so now I'll be glad to respond.
Sounds like you do not like realtors, I'm really sorry.
My intent of writing the blog was not to "make more money" as you stated...and obviously I'll present any offer a buyer wants to make.
Yes, sellers take it personal, it's their home that they have lived in and taken care of. It's part of their life.
But then buyers take it personal when the sellers refuse to negotiate... so no one ends up happy.
Sorry if the post didn't set well with you.... and money isn't everything. :)
So there must be a misconception out there that all we think about is the moolah!
Thanks for stopping by.
If it is illogical to pay the price that the seller is asking, I honestly see nothing wrong with making an offer that you feel is fair to both parties. For instance, we are going to look at a house tomorrow that was originally listed for over 300K. It was lowered to under 200K, didn't sell and the listing expired. So I called the man, and he was going to have it torn down? He said that houses didn't do too well sitting vacant for so long. Knowing that it's been vacant since at least 2004 if not longer, and he's going to tear it down and try to sell the land, it needs an entire kitchen and who knows what else, I can't get past the idea that it would be idiotic to offer over 85K. We need a place to live, (in an apartment now but must buy or rent a house as things are being stored) he needs to sell this place or tear it down... basically if he doesn't want to talk to us again after we make an offer, then it is his loss. He can spend more money bulldozing the house and having it cleaned up, and I'll wish him the best in selling the land?
Dear New to Town:
Thanks so much for leaving a reply!!
Your situation is totally different and I agree with you and would offer what you feel you could get it for.
Are you talking about Kansas City Missouri or say Shawnee Mission or Prairie Village and him wanting to sell the property in those locations? I've seen that happen. Complete rebuilds, they cannot sell it the way it is so othey tear it down and build a new one right there.
I wish you the best in your offer tomorrow and hope you get it for the price you want. Please stop back by and let us know the outcome of your offer.
Respectfully,
Fran White
Fran,
I've always enjoyed (I guess secretly) reading your blogs and learning from them. I'm just now "breaking out" and getting into the rain... You always have such great and useful information to share. A lot that really hits home directly and tends to reinforce everything else I keep hearing and learning. Maybe it's because we work for the same company, maybe it's because we're in the same area, maybe it's just because we're both Realtors?! I think it's all good and I applaud your exposure.
As for the low-balling and the trend that follows. I wish I had the magic answer! I've been showing houses to some good friends that are relocating and every house that interests them I hear the husband say, "it's a nice house, but I wouldn't offer them any more than $XXX,XXX." Which is always at least $20,000-30,000 less than the asking price. And everytime, I cringe and just bite my tongue. Of course, I'm going to present any offer that any buyer wants to make, but we must also try to educate our buyers too. After showing them houses, I try to reitterate the fact to them the similarities in the value of the homes they've seen in the price ranges and the areas. I also run comparables for them on the house they want to make an offer on, so that they do know the comps and the history of that particular home as well. If they do decide to make the low offer, we just have to do the best we can to educate them on the market the conditions and how the seller reacts. In presenting the offers, we have to try to communicate the best we can with the cooping agents and a little prayer never hurts in any situation either.
And I just can't keep my mouth shut with your anonymous commentor either..... Isn't that just the typical uneducated response?! I hate it when it comes down to the commissions like that! Unfortunately, there are agents out there that are only looking out for themselves and their bottom line; but that doesn't mean we're all like that! It's like you said, they need to work with their Realtor. We are working for their best interest and we're there to take the emotion out of the process, it really has nothing to do with the commissions! (Somebody needs to break that down for them and show them how little the difference that low-ball offer is going to make to your paycheck...) But if nothing can be worked out and the offer is refused point blank, ain't nobody happy! It just doesn't make good sense. And for that matter, I don't know if I came across clear either, but nonetheless, I'm on your side!
Karisma:
First off, I love love love your name!! And I want to tell you that I am so glad you came out of the closet and are posting on Active Rain.
Thanks for all the nice compliments, I really appreciate them... but mostly thanks for throwing in your opinion about the whole thing!
We're not that far away, we must get together and talk blogs sometime!
James: They kind of remind me of the Wizard of Oz..... pay no attention to the man behind the curtain!
Don: Thanks, appreciate it!
Thanks to you both for stopping by
Hi Fran,
I was born and raised in your part of the country...attended Park Hill High before moving with my family to the Great Northwest. It's nice to talk to someone from "home". I think your post is on target and very well written. The negative response you received is probably shared by a lot of people...but I want to share a positive "commission" experience.
Recently I had a seller ask me to break down the commission for him and tell how much I would actually earn. So I did. He was astounded and tried to offer me more money (it was a really difficult transaction). So not everyone has this negative money-hungry opinion of us. Some of my coworkers thought I did the wrong thing in disclosing splits and getting down to what I was actually getting paid. When dealing with a seller, I think it's their right to know...if they ask.
Thanks again, Fran, for your encouragement! We went to look at the house, and my gut feeling was that it needed more investigation before I would be comfortable making any kind of offer. So we have came to an agreement to do a rent with option to buy, that in all honesty I believe will be beneficial to both parties regardless of the outcome. He does not want to tear the house down, and unless it needs tore down, I don't either! I love those win/win for everyone situations too!
If we end up looking for a house again, hopefully you'll give us a shot at your services. Realistically there isn't a lot in our price range (in a good neighborhood) up here, but I've checked out your listings and they seem to be priced consistently, and I really liked the looks of the North Kansas City house @ 150K. Take care!
Dear New TO Town:
Hoorayyyyyyyy!! Sounds like you are working on a win/win there... and that's fabulous!!
Absolutely, if you ever need me, give me a call.......... since I don't know your name, just remind me of the "new to town" way you signed your post.
Best of Luck and Best Wishes to you and your family !!
Maegan.... thanks and thanks for stopping by!
Shannon: I missed answering your post, please forgive me! Go Trojans!!! Thanks for stopping by and commenting! I've never had a seller or buyer ask me to break down my commission, but you know what I would! I think they'd be relatively SHOCKED at what we don't make on a deal........
Russ: Hmmmmm....WOW.... glad you liked the post! So what did you do about the house?
It has been my experience within the last two months that the houses in Kansas City are selling at list price or not more than 5K lower. Why? Because REALTORS are doing their jobs correctly and pricing homes appropriately for the market we are in. That is what we have to do to get them sold in this tight market.
Now, I don't know what area you are talking about in Kansas City, which could also determine a difference.
Here's a link you can check out to see (by clicking on the zip codes) which areas have gone down and which have gone up. :) http://www.kansascity.com/static/media/KCHomePrices_Flash/
Best Wishes.....
Fran:
You state (in part) "I'm an advocate for negotiating a good deal, but my experience has been that this type of low-balling offends the sellers. I've even had a couple of sellers even refuse to make a counter offer because they were insulted."
Perhaps the "low balling" offends the sellers, but keep in mind the current market. Perhaps you should take the position that any initial offer is a good offer. Buyers may just be trying to see how "desperate" (for lack of a better term) your sellers are to sell. Or, they may have been conditioned to start that low. Rather than be "insulted" and refuse to make a counter offer, take a different approach. In situations like this, and especailly in today's market, you don't want to shut out a potential sale. Why not counter with "My counteroffer to your offer is my asking price." By doing that, what you're saying is, "I'm willing to negotiate, but you need to come up a bit more in your offer in order for me to consider selling to you." Sure, some buyers will walk. But you might be surprised and see a potential buyer actually make a higher offer, and perhaps with some tough negotiations come to a "meeting of the minds." And then you can say you really earned your commission!
Fran,
I specialize in first time home buyers and many come to me after they've watched one of these shows. They want to know why they can't duplicate the same effort as those in the TV show. They also listen to what is being said on those shows and treat it as gospel, especially the points about offers and contingencies, etc.). I've had some really weird contigencies expected to be put in the offer (just because some TV show host said that they should). Unfortunately, some buyers think they are real estate/ivestment experts just from watching a few of those shows.
Fran - I wasn't surprised to see your "anonymous" comment. I am often defending agents to the general public. Many uninformed people think agents have it easy; stick a sign in the yard and sit back to wait for the order. If only they knew the time and energy and finances you guys have to put into your listings.
Fran: These "reality" shows really don't depict real estate realistically at all. There was only one show that looked like it truly showed real estate as it was, from the Realtors perspective. It was a show that featured Sotheby agents selling homes to pain the butt, can't make up their mind, clients. Sound familiar? Sometime there was no conclusion by the end of the show.