What is a Lowball Offer in a Hot Real Estate Market?

It is a very hot real estate market with extremely low inventory. So a savvy buyer wants to impress, not insult the seller of their dream home. So what initial offer can insulting to a home seller? 10% less than asking? 5% less? A full priced offer with 3% of buyer's closing costs paid by the seller?

When housing inventory is as tight as it right now across the Minneapolis/St. Paul area, what is considered a "lowball offer" might be less than you think.
 
As a REALTOR® in the north and east Twin Cities metro, I have seen my share of sellers who were insulted by a buyer’s offer over the years. There are times when anything less than a full priced offer is insulting. But should a buyer be afraid to request a few thousand toward closing costs with a fear that the seller will balk and accept the next offer in line?
 
The answer to that question really depends on the price and specific location. In some neighborhoods, it could be insulting to offer less than full price especially if it is a home priced under $250,000. There are an abundance of first time buyers out there looking for affordable, move-in ready homes. In fact, there are so many buyers that a well prepared and priced property can get an offer (or 2, 3 or more) in a matter of hours and be in pending in a matter of days. There are many neighborhoods and communities throughout Anoka, Washington, Ramsey and Chisago Counties where I work daily with a very small number of homes for sale. Well priced homes do not stay on the market long.  It is very stressful being a home buyer with a limited budget in this seller's market.

In many situations, buyers will feel frustrated and that they might never get a home. They get well-meaning advice from friends and relatives to not pay full price. "Sellers always negotiate", they say. But in reality, many sellers will not negotiate significantly, if at all. And a perceived offensive or  "lowball" offer could put the buyers’ dream home purchase in jeopardy.

How to Coming up with an Acceptable Starting Point:

• Request that your REALTOR® to do a market analysis. When representing a buyer, I will look up the recent comparable homes sold in the neighborhood before the "what to offer" discussion begins. In this low inventory market, a seller that lists at market value but could still be in a multiple offer situation due to demand. If the home is properly priced and in high-demand area, anything that is not close to full price could mean that the seller will wait for another offer. By looking at the neighborhood comparables, my buyers better understand what offer will be considered reasonable.

• Consider the original list price. If a seller started off too high and adjusted the price of the home it could be priced right now. If a market analysis shows the current price of the home is fair, offering 5-10% less could be considered insulting. When a buyer has found "THE: house and fallen in love with it, it might make sense to make an offer closer to the asking price rather than haggle and risk losing it.

• The Overpriced Home. If the market analysis shows the home to be significantly overpriced and the offer will be more than 10% less than current the current asking price, it may be helpful to provide the comparables to the seller and his/her agent. Sometimes when the offer is accompanied by documentation to back up the offer, the seller is less offended.But be careful not to overlook good comps to justify your offer. This strategy can be worse that not providing documentation at all.

• Buyer’s Plans to Remodel and Update. Some buyers think sending a long list of planned updates complete with associated estimates is a good strategy to negotiate for a price reduction. Often these lists include changes that reflect cosmetic and personal taste. Most sellers are not impressed when a buyer’s offer indicates that they are offering tens of thousands less due to paint, carpet and other cosmetic changes. If the updates are necessary due to age or wear, make note of the fact. But slamming a well maintained and updated home to justify a low offer is insulting and make continued negotiations difficult if not impossible.

• Avoid Considering Price Paid for Home. I have come across a few buyers who research tax records to determine the price the seller paid for the property. They assume if someone purchased a home at a very low price, they have a ton of equity. This can be true but not always. Some sellers have taken the equity out of their home for improvements or for other reasons. And well sellers do have equity, they usually don't intend to give it away either. Keep the negotiations focused on the fair market value of the home.

Right now, sellers are in excitedly anticipating a non-contingent, pre-approved home buyer to write an offer on their home. In most cases, they understand the market and have worked hard to prepare their properties to entice a written purchase agreement (or several). But buyers must think through their offers; the perfect starting point for negotiations must contemplated thoroughly. Discussions can go south very quickly between buyer and seller when the initial offer is deemed rude.

Need help coming up with that perfect starting point for your home offer? If you are buying, selling or relocating to Minnesota and need help from a professional REALTOR®, give me, Teri Eckholm of BOARDMAN Realty, a call or visit my website for a FREE Home Buyer Success Guide or FREE Home Value Report. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District! Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.

Copyright 2017 terieckholm.com

What is a Low Ball Offer in a Hot Real Estate Market?

In a hot real estate market, what initial offer can insulting to a home seller? 10% less than asking? 5% less? A full priced offer with 3% of buyer's closing costs paid by the seller?

When housing inventory is as tight as it is currently in many north and east Minneapolis/St. Paul metro communities, what is considered a "lowball offer" might be less than you think.
 
As a REALTOR®, I have seen my share of sellers who were insulted by a buyer’s offer over the years. There are times when anything less than a full priced offer is insulting. But should a buyer be afraid to request a few thousand toward closing costs with a fear that the seller will balk and accept the next offer in line?
 
A lot depends on the price and location within the Twin Cities. In some neighborhoods, it could be insulting to offer less than full price especially if it is a home priced under $200,000. There are an abundance of first time buyers out there looking for affordable, move-in ready homes. There are so many buyers out there that a well prepared and priced property can get an offer (or 2, 3 or more) in a matter of hours and be in pending in a matter of days. There are many neighborhoods and communities throughout Anoka, Washington, Ramsey and Chisago Counties with a very small number of homes for sale. Well priced homes do not stay on the market long.  It can be tough being a home buyer with a limited budget in  this changed market.

In fact some situations buyers will feel frustrated and that they might never get a home. The get advice from friends and relatives to never pay full price. Sellers always negotiate. But in reality, many sellers will not negotiate significantly. And a perceived offensive or  "lowball" offer could put the buyers’ dream home purchase in jeopardy.

How to Coming up with an Acceptable Starting Point:

• Request that your REALTOR® to do a market analysis. When representing a buyer, I will look up the recent comparable homes sold in the neighborhood before the "what to offer" discussion begins. In this low inventory market, a seller that lists at market value but could still be in a multiple offer situation due to demand. If the home is properly priced and in high-demand area, anything that is not close to full price could mean that the seller will wait for another offer. By looking at the neighborhood comparables, my buyers better understand what offer will be considered reasonable.


• Consider the original list price. If a seller started off too high and adjusted the price of the home it could be priced right now. If a market analysis shows the current price of the home is fair, offering 5-10% less could be considered insulting. When a buyer has found "THE: house and fallen in love with it, it might make sense to make an offer closer to the asking price rather than haggle and risk losing it.


• The Overpriced Home. If the market analysis shows the home to be significantly overpriced and the offer will be more than 10% less than current the current asking price, it may be helpful to provide the comparables to the seller and his/her agent. Sometimes when the offer is accompanied by documentation to back up the offer, the seller is less offended.But be careful not to overlook good comps to justify your offer. This strategy can be worse that not providing documentation at all.


• Buyer’s Plans to Remodel and Update. Some buyers think sending a long list of planned updates complete with associated estimates is a good strategy to negotiate for a price reduction. Often these lists include changes that reflect cosmetic and personal taste. Most sellers are not impressed when a buyer’s offer indicates that they are offering tens of thousands less due to paint, carpet and other cosmetic changes. If the updates are necessary due to age or wear, make note of the fact. But slamming a well maintained and updated home to justify a low offer is insulting and make continued negotiations difficult if not impossible.


• Avoid Considering Price Paid for Home. I have come across a few buyers who research tax records to determine the price the seller paid for the property. They assume if someone purchased a home at a very low price, they have a ton of equity. This can be true but not always. Some sellers have taken the equity out of their home for improvements or for other reasons. And well sellers do have equity, they usually don't intend to give it away either. Keep the negotiations focused on the fair market value of the home.

Right now, sellers are in excitedly anticipating a non-contingent, pre-approved home buyer to write an offer on their home. In most cases, they understand the market and have worked hard to prepare their properties to entice a written purchase agreement (or several). But buyers must think through their offers; the perfect starting point for negotiations must contemplated thoroughly. Discussions can go south very quickly between buyer and seller when the initial offer is deemed rude.

Need help coming up with that perfect starting point for your home offer? Let me be your professional guide. If you are buying, selling or relocating to Minnesota and need help from a professional REALTOR®, give me, Teri Eckholm of Boardman Realty, a call or visit my website for a FREE Home Buyer Success Guide or FREE Home Value Report. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District. Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.

Copyright 2015 www.terieckholm.com 

The Art of the LOWBALL offer on Real Estate—How Low is it Safe for a Home Buyer to Go?

So you have scoured the internet for the perfect home and you found it! But it is tens of thousands overpriced compared to similar homes. Is there an art to submitting a lowball offer in this changed real estate market? Where do you start? 10% less? 20% less? 50% less? And is it the percentage less than the original list price or the current asking price?

Welcome to the reality of the real estate market today! There is no one-size-fits-all answer on this one. It really depends.

As a REALTOR® working in the north and east Twin Cities metro for several years, I have seen my share of sellers who were insulted by a buyer’s offer. And not just in a market where buyers have the upper hand either. A decade ago, anything but a full priced offer was insulting. Buyers were afraid to request a few thousand toward closing costs lest the sellers would balk and accept the next offer in line. So buyers would skip inspections and write offers thousands more than asking just to get into their "dream" home.

Those days are but a memory now...Sellers throughout Anoka, Washington and Chisago Counties are anxious to sell. They know that they are competing with short sale sellers (those who have to sell and owe much more than their home is currently worth) and foreclosed homes. Few traditional home owners with “for sale” signs in the yard are naive enough to expect a full priced offer in this changed market.

The problem is that there are naive buyers who believe sellers are desperate to take ANY offer. But in reality most sellers can't or won't accept just “ANY” offer. An offensive lowball offer could put the buyers’ dream home purchase in jeopardy.

How to Coming up with an Acceptable Starting Point:

• Ask Your REALTOR® to do a Market Analysis for the Home. In this market, I always pull the comparables to see what has sold recently in the neighborhood before my buyers decide what to offer on a home. Many sellers are listing homes at or below current market value. If the home is properly priced, anything less than 15% of the current asking price could be considered an insult. Currently, in the Twin Cities market, most homes are selling for about 990-95% of asking price. This percentage does not include seller paid closing costs either which does reduce the net offer. By looking at the neighborhood comparables, my buyers better understand what offer will be considered reasonable.

Keep in mind that if you are working directly with the listing agent who is under contract with the seller, they cannot ethically prepare a market analysis for a buyer. As a dual agent (working for the buyer and the seller) they must remain neutral regarding price negotiations.

• Consider the Original List Price. If someone has come down 25-30% or more from when they originally put their home on the market, they have made improvements since listing to the condition and now the market analysis shows the home is priced fairly, writing an offer over 10-15% less could be insulting. If this truly is THE home for my buyers, we discuss whether it makes sense to offer closer to the asking price rather than hitting the seller with a lowball offer.

• The Overpriced Home. If the market analysis shows the home to be significantly overpriced and the offer will be more than 20-25% less than current the current asking price. I provide the comparables to the seller. Sometimes when the offer is accompanied by documentation to back up the offer, the seller is less offender especially when it is explained that these are the same comparables that will be used by an appraiser. If the home doesn't appraise, the offer will have to be renegotiated in most circumstances.


• Buyer’s Plans to Remodel and Update. Be careful when using documentation for changes that reflect cosmetic and personal taste. Many sellers will be insulted when a buyer’s offer indicates that they are offering tens of thousands less due to paint, carpet and other cosmetic changes that a buyer wants to make. If the updates are necessary due to age or wear, make note of the fact and consider whether the home is currently priced to reflect the condition or not. Slamming a well maintained and updated home to justify a low offer is insulting.


• Avoid Considering Price Paid for Home. Many buyers think that if someone purchased a home a decade ago they mus have tons of equity. This could be true but it is not a hard and fast rule. Many sellers have taken the equity out of their home for improvements or for other reasons. Keep the negotiations focused on the fair market value of the home.

Most sellers are in waiting impatiently for that non-contingent buyer to write an offer on their home. In most cases, they understand the market and have worked hard to prepare their properties to entice an offer. But buyers must think through their offers; the perfect starting point for negotiations must contemplated thoroughly. Discussions can go south very quickly between buyer and seller when the initial offer is deemed rude. If you want to try a lower offer to see how low a seller will go but are prepared to pay more, make sure a note or letter accompanies the offer saying this is a starting point for negotiating on the beautiful home and property...a little kindness often goes a very long way.


Copyright 2011www.terieckholm.com

A Lowball Offer in Today’s Real Estate Market—How Low is it Safe for a Home Buyer to Go?

When is a lowball offer insulting? 10% less? 20% less? 50% less? And is it the percentage less than the original list price or the current asking price?

Well, my answer is it depends.

As a Realtor working in the north and east Twin Cities metro for the past several years, I have seen my share of sellers who were insulted by a buyer’s offer. And not just in a market where buyers have the upperhand either. A few years ago, anything but a full priced offer was insulting. Buyers were afraid to request a few thousand toward closing costs lest the sellers would balk and accept the next offer in line.

However times have changed. Sellers throughout Anoka, Washington and Chisago Counties are anxious to sell. They know that they are competing with new construction homes and foreclosed homes. Few home owners with “for sale” signs in the yard are expecting a full priced offer in this changed market.

In fact some situations may lead buyers to believe sellers will take ANY offer. But in reality most sellers won't accept just “ANY” offer. An offensive lowball offer could put the buyers’ dream home purchase in jeopardy.

How to Coming up with an Acceptable Starting Point:

• Ask your Realtor to do a market analysis for the home. In this market, I always pull the comparables to see what has sold recently in the neighborhood before my buyers decide what to offer on a home. Many sellers are listing homes at or below current market value. If the home is properly priced, anything less than 10% of the current asking price could be considered an insult. By looking at the neighborhood comparables, my buyers better understand what offer will be considered reasonable.


• Consider the original list price. If someone has come down 25-30% of the value of the home already and now the market analysis shows the home is priced fairly, offering 10% less could be considered insulting. If this truly is THE home for my buyers, it might make sense to make an offer closer to the asking price.


• The Overpriced Home. If the market analysis shows the home to be significantly overpriced and the offer will be more than 10% less than current the current asking price. I provide the comparables to the seller. Sometimes when the offer is accompanied by documentation to back up the offer, the seller is less offended.


• Buyer’s Plans to Remodel and Update. Be careful when using documentation for changes that reflect cosmetic and personal taste. Many sellers will be insulted when a buyer’s offer indicates that they are offering tens of thousands less due to paint, carpet and other cosmetic changes that a buyer wants to make. If the updates are necessary due to age or wear, make note of the fact. But slamming a well maintained and updated home to justify a low offer is insulting.


• Avoid Considering Price Paid for Home. Many buyers think that if someone purchased a home 5-10 years ago they have a ton of equity. This can be true but not always. Many sellers have taken the equity out of their home for improvements or for other reasons. Keep the negotiations focused on the fair market value of the home.

Most sellers are in waiting impatiently for that non-contingent buyer to write an offer on their home. In most cases, they understand the market and have worked hard to prepare their properties to entice an offer. But buyers must think through their offers; the perfect starting point for negotiations must contemplated thoroughly. Discussions can go south very quickly between buyer and seller when the initial offer is deemed rude.
Need help coming up with that perfect starting point for your home offer? If you are buying, selling or relocating to Minnesota and need help from a professional Realtor, give me a call or visit my website for a FREE Relocation Packet. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District! Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.
Copyright 2008 terieckholm.com

Minnesota is In a Buyer’s Market—So Let’s Give a Lowball Offer!

In Minnesota, we are currently experiencing a buyer’s market. There are many more homes for sale than buyers in the Twin Cities market right now.

As a Realtor working in the northeast metro, I can pinpoint homes in neighborhoods throughout Anoka and Chisago Counties that haven’t sold after being on the market for several months. Communities north of the Forest Lake and Ham Lake areas that were booming a few years ago, like Stacy, Linwood and North Branch are experiencing a tremendous slow down. From Hugo to Lino Lakes, acreage properties and lake homes aren’t exempt from the slowdown. There are hundreds of choices for first time buyers and move up buyers alike. Buyers looking in these markets have the upper hand and can offer anything right? So why not go in with a lowball offer and see where it goes?
My position on the subject of lowball offers hasn’t changed with the market. It has been and always will be, “How much do you want the house?”
There are times where a low offer makes sense and times where it can blow up in the buyer’s face. If you are willing to walk away from the home and there are several others homes you can go to, a low offer on a home could work for you. If this is your dream home and you have few options, listen up. It might be a mistake to go in too low.
Though a seller may desperately need a buyer and be willing to consider all offers, it was still their “home” with all of the emotions that go with it. They may have raised children there, worked the garden, put in the tile floors, redid the kitchen, etc. There are going to be emotions tied to the property and even after being on the market for months, a seller could be incredibly insulted by an extremely low offer. Insulted people can do irrational things, like not bothering to counter offer at all.
Now, I am not advocating paying full price on a home in a buyer’s market. This IS the time to get a great deal on a home and some houses are incredibly overpriced. But if you really want a particular home, what do you do?

Work with your Realtor to figure out what the home is worth and write an offer that reflects that analysis. As an experienced agent, I work with my clients to find the right starting point for an offer that might not be accepted as written but doesn’t offend the seller. Be prepared to discuss what needs to be done on the home with estimates for the repairs to justify the offer. As a skilled Realtor, I am able to present my clients’ offer in a positive light so there will be a Win-Win negotiation for all parties involved.

There are times when the Lowball offer works:

• Corporate owned Relocation Home



• Bank-owned Foreclosed Homes



• Investment homes used as Rentals



• Flipped Homes

In these cases, the sellers are business people. There is little or no emotional attachment to the property. It is all dollars and good sense. This is the perfect time for a “low ball” offer to see where their bottom line really is. Beware on the flipped home though. If it is a first flip and a labor of love, the owner may have developed some emotional ties to the property and they too could be offended by an extremely low offer. Even in a buyers market.
If you are relocating to Minnesota, are looking for Homes for Sale in the north and east Twin Cities metro area and need help from a professional Realtor, give me a call or visit my website for a FREE Relocation Packet. Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.
Copyright 2007 terieckholm.com