Return to the Buying and Selling Homes Forum | Post a Follow-Up

 o
Frustrated with ridiculous offers

Posted by gdma (My Page) on
Mon, Feb 15, 10 at 23:09

I'm going crazy, don't know what to do.

We don't need to sell. We own our current house and a smaller townhouse we bought as an investment, all fully paid. But decided to list the small townhouse about 8 months ago.

It's in superb condition, like new. We got a good deal on it in 2007, don't think it's crazy to try to list a bit higher, with the expectation that the buyer will try to negotiate at 90% of list price, and close at 95% of list price.

All we're getting are ridiculous offers. We live in MA in a GREAT town. Realtor has confirmed house prices are holding steady and even increasing. We don't NEED to sell. Hubby has a great job. The offers are ridiculous! About 80-85% of our list price. What are these people thinking?

It's so hurtful to see these people mock our house. But at the same time, I'm beginning to wonder if we should take the next offer and just write this episode off. Hubby thinks we should wait and try to rent it, but I can't take much more of this.

Real estate is not collapsing everywhere!


Follow-Up Postings:

 o
RE: Frustrated with ridiculous offers

Did you have a market analysis done? What are similar townhomes selling for? Are prices really higher now than in 2007? Buyers submitting low offers are not mocking you house. Stop taking it personally.


 o
RE: Frustrated with ridiculous offers

How are the comps compared to your list price? Some people are out for fantastic bargains, but if everyone is offering 80-85%, there must be a reason. Is your list price, 15-20% above comps?


 o
RE: Frustrated with ridiculous offers

85% offer is not so far from your negotiating point, is it? Have you even bothered to counter any of them? Is is showing frequently? How are people mocking it? Are they pointing out what they consider negatives or referring to price specifically?

It is almost a given, no matter how nice a house is, that buyers will hold the asking price in mind and then justify knocking off dollars for any item not specifically fulfilling their expectations of the perfect home. It's a tool. Not mockery. That happens even when they love your home, if the price is more than they'd hope to pay.

I sold a little house in town and listened to the same dialogue. I know one party who really wanted it and they were pretty savy real estate investors, but out came the litany of all the reasons why I should sell it to them cheaper than anyone else. LOL. I expected a low ball offer and a hassle and just outright refused it, but I wasn't offended. That's part of the game. The next prospect not only bought it, but paid more than my asking price. He wanted a home instead of making a killing.

I have another house and in the same situation in that there is no mortage on it, and I don't want the hassle of renting it, so I'm just sitting on until the market levels. Like you.........money is going out on insurance, taxes, utilities and maintenance. There is a magic point where it's fiscally wise to move it. Only you know where that point is.

Yes, your house may be worth what you are asking, but there are a lot of homes on the market ........maybe not in your immediate area, but close enough for a buyer to consider, selling for much less than their cost three years ago. And there are a lot of people who are trying to advantage the housing glut to get a bargain. Can you blame them?


 o
RE: Frustrated with ridiculous offers

If 85% of listing is 'ridiculous', then you must have a palace to sell! That's actually a fairly good starting offer - have seen a LOT worse even in a good market.


 o
RE: Frustrated with ridiculous offers

If you don't "need to sell", why are you listing your house in the worst market in any of our lifetimes? If this is really an investment, you are supposed to "buy low and sell high."

BTW- property values are not "collapsing" everywhere, but pretty much everyone is down a couple percent from the previous highs. If your house has been on the market for 8 months and all you are getting is "low offers", then you are overpriced. The market has spoken even if you refuse to listen.


 o
RE: Frustrated with ridiculous offers

Get an appraisal to learn the current value. It should cost approx $300 or so. Your appraisal from 2007 is worthless.

Once you know what it is worth today, you will then know what to price/sell at. Comps should only consist of SOLD comparables from the last 6 months.


 o
RE: Frustrated with ridiculous offers

The market will tell you what your house is worth. If you don't like what it's telling you, you can always take it off the market and try later.


 o
RE: Frustrated with ridiculous offers

Taking these offers personally is like going postal because you applied for a job and the company decided to hire somebody else slightly more qualified from the 13,000 resumes they received.

You have little skin in the game and aren't risking much nor intend to. What's there to get offended about?

Many RE transactions are falling through right now because the banks must use independent appraisers who are really low-balling appraisals. So it may not matter that your price is "what is right" if the bank won't fund a loan for that amount. Even if a buyer was willing to pay you the extra amount, if the bank won't fund your sales price because the appraisal can't justify it, the buyer would then be stuck coming up with the extra cash to satisfy you. And very few buyers can do that.


 o
RE: Frustrated with ridiculous offers

The price you paid in 2007 is irrelevant.

The economic value of the place is determined by replacement cost and rental value.

Market prices can move away from economic value for years at a time. Home prices rose above economic value during the last decade; there was more value in renting than purchasing. You imply that the reverse is true now. If so, you will do better by renting it.

What rent could you obtain? What would your net (i.e., after expenses) annual cash flow be? Compare that cash flow to your potential selling price. If the cash flow is high compared to your offers (e.g., 10% of net sale price), then the market is indeed undervaluing your house and you should rent it. If the cash flow is low compared to offers (e.g., less than 5%), then those offers are more than fair and you should take them.

In any event, the potential buyers are not insulting you. They are offering you a business transaction. You are free to say, "No thank you."


 o
RE: Frustrated with ridiculous offers

"The economic value of the place is determined by replacement cost and rental value."

Only to an investor.
Local market values drive RE for owner occupied.

"It's in superb condition, like new."

And a couple years older than when you purchased it.

"We got a good deal on it in 2007, don't think it's crazy to try to list a bit higher, with the expectation that the buyer will try to negotiate at 90% of list price, and close at 95% of list price."

You seem to have an odd idea how the RE market works.
A lot of folks seem to think that RE always goes up.

In the long run it usually does, but 2 years is hardly a long run.

Even in a decent market a 2 year sale might barely cover costs of sale.

In a less than great market 2 years is likely to be a loser in many places, even ones that are relatively stable.


 o
RE: Frustrated with ridiculous offers

The original poster sounds a bit like the owner of a home that is near mine. The current owner bought in 2006 at what seemed like a good deal at the time. But the market has dropped drastically since then in the area.

The new owner has been trying to sell it for over 2.5 years now.

Asking price is approx 10% more than it sold for in 2006. Current market value is approx HALF of the asking price( or a bit lower).

The owner has made comments that people expect him to give it away and they are wanting it for too cheap and he won't do that. The asking price has stayed exactly the same for the 2.5 years it has been listed.


 o
RE: Frustrated with ridiculous offers

A lot of folks leveraged themselves to the hilt and purchased houses for a quick flip.

For some reason they seem to thing RE always goes up.

While in the long term it usually does, there are often bumps along the way.

Not having to sell makes it a lot easier to ride out the vagaries of the market and pocket profits until the market improves.


 o
RE: Frustrated with ridiculous offers

"I'm going crazy, don't know what to do. We don't need to sell. We own our current house and a smaller townhouse we bought as an investment, all fully paid. All we're getting are ridiculous offers. We live in MA in a GREAT town. Realtor has confirmed house prices are holding steady and even increasing. We don't NEED to sell. Hubby has a great job. The offers are ridiculous! About 80-85% of our list price. What are these people thinking?"

Why drive yourself crazy? You have a realtor. Let them do their job. If you don't want to entertain 'ridiculous offers' then tell your agent you will talk to a buyer only after they have signed a contract for a price you can live with.


 o
RE: Frustrated with ridiculous offers

Hello??? You are getting "offers"? As in more than one? Plenty of people would love to be in your shoes! However, I think you're confusing the asking prices around you with the selling prices. If your offers are consistantly around 80% of your asking price, then that's the market price of the home. It doesn't matter what others are asking. It only matters what homes are selling for. And yours isn't selling at 20% over market price. If you don't want to sell at current market price, then pull it off the market and save yourself some anxiety. Hopefully you'll develop some emotional distance before you decide to put it on the market again. This is business, not personal.


 o
RE: Frustrated with ridiculous offers

Sorry, but when you get more than just a few offers in the same ballpark I don't think it's the buyers that are being ridiculous but the seller for not taking a second look at what is going on around them in the housing and job market.


 o
RE: Frustrated with ridiculous offers

I think gdma must have moved on to a new message board. I can just imagine her next thread:

FRUSTRATED WITH RIDICULOUS COMMENTS

"I'm going crazy, don't know what to do. I started a thread on Gardenweb about the ridiculous offers we're getting on our house we're trying to sell, and all I got were ridiculous comments that we are being unrealistic about our selling price and the value of our house.

What are these people thinking!"


 o
RE: Frustrated with ridiculous offers

Hubby thinks we should wait and try to rent it, but I can't take much more of this.

If you're this stressed and personally involved about selling, you don't have the emotional distance to be a landlord. You will be miserable and your tenants will be miserable. Either take the property off the market or sell and consider it a lesson learned.


 o
RE: Frustrated with ridiculous offers

In the original post you state, TWICE, "we don't have to sell."
So, take it off the market! You're only contributing to the glut of housing inventory out there.
I wonder though, why the housing hogging? You already own a primary residence. Did you actually want to become an absentee landlord?


 o
RE: Frustrated with ridiculous offers

"We own our current house and a smaller townhouse we bought as an investment ..."

"Hubby thinks we should wait and try to rent it, but I can't take much more of this. "

These are not consistent thoughts.

If you purchased to flip quickly it sounds like you got caught.

While prices have been stable in some areas (and even started up in a few) you rarely make money on a 2-3 year holding period on an investment property UNLESS it is rented out during the period.

An RE commission of 5-6% and selling expenses are very likely to consume any increase in value from only a few years.

The 10%+ per year increases are gone.


 o
RE: Frustrated with ridiculous offers

If I had a nickle for every time I heard from someone who thought that because they "don't have to sell" buyers should pay more than market value...yeesh.


 o
RE: Frustrated with ridiculous offers

You are fortunate that you don't have to sell right now. Hold your own in the tug of war between buyers and sellers. If you aren't wanting to sell for less, you have the luxury of waiting and perhaps renting to a carefully selected tenant you feel will respect your property. Don't let the hagglers bring you down. The market is down generally and there are bargains to be found. They will play it. Sellers who give in, lower market values.

I would get a current appraisal, or check out similar listings or sales in the neighborhood, to see what your particular home is expected to bring in the current climate. You would then have an idea of how far off your selling point is and how long you might have to wait a tough market out.

Good luck to you. The right buyer will come along at some point.


 o
RE: Frustrated with ridiculous offers

"The economic value of the place is determined by replacement cost and rental value.'

I thought the price of something was: [the price a buyer is willing to pay] and [the price a seller is willing to accept]

It doesn't matter in the least what it could cost to replace it. Not if there are many homes on the market! In those situations, if it burned down, it would be cheaper to buy a new home than to build a new one.

it only matters what someone is willing to pay. And if you aren't willing to accept it, then there's no sale.


 o
RE: Frustrated with ridiculous offers

TallySue - It's a technical definition of 'economic value' versus 'market value'. Economic value is an investment angle; market value reflects what someone would pay.


 o
RE: Frustrated with ridiculous offers

I don't get it. Sounds to me like you've had some pretty good offers. As someone already asked, did you counter? Believe me, 80 percent is not, IMO, and from what I've seen around here, "ridiculous" at all.

Do keep in mind that financing is much more difficult for folks to obtain these days than it was when you purchased in 2007.

Also, housing crash rebound-wise, could it be that townhomes are not keeping-up with some of the housing market in your area? I know that is the case in our area... townhomes and condos are WAY below detached properties when you compare their value before real estate took the plunge and their value today.


 o
RE: Frustrated with ridiculous offers

I live in MA. i'd be interested to see a link to the listing for this house - I would look into neighborhood comps and see if it's listed for a fair price.


 o
RE: Frustrated with ridiculous offers

The original post was made Feb. 15, and she hasn't come back, so I think this one is pretty well dead now.


 o
RE: Frustrated with ridiculous offers

I suppose it's possible that GDMA's original post was intended to stir the pot so to speak instead of asking a genuine question. If it is a genuine post, then I would suggest GDMA pull her house off the market if she is not happy with the market's valuation of her house. 85% of what sounds like a very high listing price should have GDMA jumping for joy instead of complaining.


 o
RE: Frustrated with ridiculous offers

"I don't get it. Sounds to me like you've had some pretty good offers. As someone already asked, did you counter? Believe me, 80 percent is not, IMO, and from what I've seen around here, "ridiculous" at all."

I'm not sure I agree with that universally. I have a house priced at $400K. it should sell somewhere around $380K. 80% of 400K is $320K. That would be a ridiculous offer on my house. there are definately some overpriced home that 20% off still isn't a really fair deal.

Now if you were talking 20% off the "value" during the height of the market, that would be a different story...


 o
RE: Frustrated with ridiculous offers

I'm not sure I agree with that universally. I have a house priced at $400K. it should sell somewhere around $380K. 80% of 400K is $320K. That would be a ridiculous offer on my house.

No, an offer of $320K on a $400K house shouldn't be considered ridiculous but a starting point. Thinking of offers as ridiculous means that you are putting to much emotion into the process.


 o
RE: Frustrated with ridiculous offers

Everyone is entitled to their opinion and every market is different. In my town $320K is the price of a knock down... maybe my comparison isn't completely valid, since there is a high floor in my market.

Buyers starting with unrealistic expectations doesn't make a sale either. You may think that is a completely valid offer, however, offering 80% of list when the inventory is selling in the 95% range is wishful thinking. Looking forward 3 steps in the back and forth, Mr. 320K isn't coming up to an acceptable amount.


 o
RE: Frustrated with ridiculous offers

In terms of percentages, 80 percent of list price may be a very reasonable OFFER, ie, a place to begin negotiations. I'm not saying that someone should "accept" an offer of 80 percent. Perhaps that is a fair price, and perhaps it is not (most likely in many cases it is not). Obviously, some properties are priced more reasonably than others and every listing and negotiation is unique for many reasons.

In the $400K house example, if someone offered $320K, my guess would be that they are hoping to get the house, after a counter-offer exchange, for $360K (unless they truly are trying to see if they can steal the house with a low-ball offer). If you are looking for $380K, then the deal might not work. That's where having a great realtor comes into play. Maybe he/she can get the deal done to your satisfaction. Or, maybe buyer and seller each end up sacrificing another $10K to meet in the middle...? In the end, even if the offer and subsequent exchanges don't end up panning out, are they so far off that you would call them "ridiculous?"


 o
RE: Frustrated with ridiculous offers

Trinkette, you are so right. If a buyer bid 80% of the list price "take it or leave it", that would be one story. But I think your guess is usually on the mark: the buyer is merely making a STARTING offer. It may be counterproductive for the Seller to blindly reject even negotiating with that buyer. Separately, I'm not a broker, but I can see how a broker could add value to a buyer by advising them as to the reasonability of list prices. Using the $400K house example, maybe the broker might discover similar houses are asking for $450K. In that case, the buyer might not start with an opening bid of $320K, but maybe something like $365K.


 o Post a Follow-Up

Please Note: Only registered members are able to post messages to this forum.

    If you are a member, please log in.

    If you aren't yet a member, join now!


Return to the Buying and Selling Homes Forum

Information about Posting

  • You must be logged in to post a message. Once you are logged in, a posting window will appear at the bottom of the messages. If you are not a member, please register for an account.
  • Please review our Rules of Play before posting.
  • Posting is a two-step process. Once you have composed your message, you will be taken to the preview page. You will then have a chance to review your post, make changes and upload photos.
  • After posting your message, you may need to refresh the forum page in order to see it.
  • Before posting copyrighted material, please read about Copyright and Fair Use.
  • We have a strict no-advertising policy!
  • If you would like to practice posting or uploading photos, please visit our Test forum.
  • If you need assistance, please Contact Us and we will be happy to help.


Learn more about in-text links on this page here