More often than not optimistic home buyers setting out for their first place are inclined to do as they have been instructed. From advice of parents, grandparents, or other friends or family they follow a rule that was popular years ago when times were much different.
Lowball those sellers. A lowball offer is a mediocre at best attempt to get the property at a price that often defies market trends, area statistics and is sufficiently lower than what a seller has offered their home for sale at. Well times have changed so why is the low ball dead? Here are a few reasons…
- We live in the Fraser Valley, a suburb of Metro Vancouver, one of the most attractive cities worldwide to live in. This means there is demand to live in our community. Prices will vary month over month yet unless we are in dire affairs with our real estate market, there is not much sense in a home selling for far under its fair market value because people will pay for fair value.
- Sellers are educated. There is an amazing amount of information you can pick up from a real estate professional and even online regarding neighbourhood trends and market prices relating to particular and individual home details. Sellers tend to have a very good idea about what their home is actually worth.
- Some sellers can only go so far. With the decline of many property values after the crash of 2008 many sellers cannot afford to take a large loss on their property. If their equity is cleared out they lose their ability to move into a new home after they lose a chance at a down payment, selling fees or property transfer taxes.
- The homes that are desperate to sell are the ones in foreclosure. A suggestion that any family about to go into foreclosure on their property would align with the thought that a sharp asking price would attract a prompt sale.
When you as a buyer decide to lowball a seller, you do one thing. You seriously offend and upset that seller. By doing so you enter into a world of swimming against the current, provoking much emotion and pride to get wrapped up in the negotiations, which only hurts your chances of making a good deal. Now, this is not to say that a low ball will never work again because that is just not true. There are some cases that scream a low offer is a great move, yet the large majority do not. So what is the best way to get a great deal on a home? Put yourself in the seller’s shoes and ask yourself, “What is a fair market value for this home?” Once you figure that number out, try for slightly under that number. If you can save $2000-$5000 on the price of your home versus what the market tells us is under market value, you are winning. You may never hit a homerun in baseball as long as you try, but a good base hit will still help you win the game.
Blog post provided by Darin Germyn Personal Real Estate Corporation, a REALTOR® with Macdonald Realty in South Surrey / White Rock. Visit Darin’s blog at Germyn.ca
Real estate listing inventories in Greater Victoria have been relatively high in the past few months, so it comes as no great surprise to us that we are seeing more “Low Ball” offers in the market of late.
That being said, sales activity remains steady, albeit at a lower level than the frenetic pace set last year in the wake of low interest rates and an unwinding of demand left over from the financial crisis of late 2008 & early 2009.
When faced with more homes to choose from than usual in the current market, some buyers are starting to write very low offers in the hopes of “getting a deal”. I used quotes there because in real estate, a “deal” means different things to different people; no two houses or lots are alike.
Resist the urge to walk away
Most people realize that real estate transactions usually involve a mix of logic, emotion and pride, on both sides of the transaction. Those realizations usually fly right out the window for both the buyer (when writing the offer) and for the seller (when receiving the offer), even when the purchase price is not in “low ball” territory.
Your REALTOR® is there to help you not only with the legal, logistical and negotiating aspects of selling your home, but to also be a sounding board, an ally and your advisor for those times when emotions are running high!
If you receive a low offer on your home, do your best to limit your emotions & pride and do your best to focus on the facts.
It may help to keep in mind that even a low purchase price offer means that the buyer wants to buy your home. Many buyers may prepare a really low offer because they are afraid they will pay too much, because they are trying to get an indication of where your expectations are, or simply because they think a low ball offer is normal business practice.
Unless the offer is ludicrously low, prepare to counter the offer to keep the buyer engaged and interested in your home, because, as mentioned, they have more than a passing interest in your house.
In the absence of multiple offers for your listing, consider countering a low ball offer with the price, conditions, closing dates and other details that you’re willing to accept. If you choose to just ignore a low ball, you won’t ever know if there was a possibility of a low offer turning into a negotiated sale that leaves both parties happy!
Consider the comparable sales
Some buyers will provide a list of recent sales with their offer to attempt to justify a low offer price. Your REALTOR® will be able to help you decide if those comparables are similar to your home, or not. If the sales in that list do represent similar homes to yours and are at lower prices, you may need to lower your price if you truly want to sell your home.
In the absence of a list of comparables from the buyer, your REALTOR® can also help you prepare a list of comparable sales to send back along with your counter offer that support your asking price.
Blog post provided by Sean Farrell, a REALTOR® with Macdonald Realty in Victoria. Visit his website farrellgroup.ca for more information.