Asset Management & Recovery: We Don't Respond to Crappy Offers - Says Seller

Good Point. As a seller's agent you cannot get too personal with a low ball offer and sometimes blowing it off is the best was to get in a buyers face about raising their offer.

I love the logo on the post too :-O 

I always tell the buyer that in advance.  You can write whatever offer you want, and the seller can ignore you, then we can write a serious offer for the next seller.  No problem.  I call the process "market education".  :)

I've actually had 2 lowball offers accepted in the last few months.  One was listed at 249K and we closed at 150K.  Another listed for 219K and we closed at 140K. 

I also had a buyer make an offer of 325K on a 375K property.  The seller "was insulted by the offer".  3 months later they called me back and the listing agent said they would accept the offer now.  My buyer told them to "get lost".  My buyer was POed that the seller would not respond to the first offer.  Now the seller is the sorry one because the house has been on the market for almost a year and my buyer bought something else.

Daniel - I don't get personal with them unless I know (and yes, I do know a lot of the time) that writing the offer is a waste of my time.

John - It is usually the next seller, isn't it.  Once you piss of the other side it is tough to bring them back.

Rob - You are right.  It does work both ways sometimes.

It is interesting how emotions can make or break a deal. I read your previous post and was curious how it turned out. Thanks.

I don't handle low ball offers like that at all. 

On a $1,000,000 offer, if we received a $550,000 offer, we'd counter back at $1,250,000.

Not a problem. 

Craig - Most times it is a "screw that guy for wasting my time" attitude.

Lenn - Thing is, it takes time and effort to counter.

We have done what Lenn has suggested above. Want to see a buyer get pissed? I love it when that happens. LOL

Jay - I can see the fun in it, however I am more interested in maximizing my return on time invested.  Every minute spend on non-generating activities blows my average.  Makes me wonder what the #&($$ I am doing blogging !!!!!

Even though it seems to be a 'buyers market', the buyers have to realize they don't run the show. I'm working with a waste-my-time lowball offer and they're also asking for closing costs!

Chrissy - You could consider giving them the "are you sure you want to risk pissing off the seller" speach.  I am living proof that not all offers get countered and some buyers are deemed persona non grata once the first crap offer is tendered.  If going low, there needs to be an incentive for the seller.  If it is all one sided, forget it.

Some seller's react badly.  I am a listing agent with 20+ at any time in inventory.  When I take the listing I not only tell the seller, but I guarantee them a low offer.  I also let them know that buyers try it...and they would too, if they were a buyer.  I have seen them actually work out after inviting the buyer to bring a healtier offer so that we can begin negotiating.

Chris - I suppose many sellers consider an outright rejection or a lack of response an invitation to the buyer to bring a healthier offer.

Since I deal primarily with REO properties, I am pretty used to people submitting low-ball offers. What annoys me are those buyers and/or agents that insist the sellers "Have to" counter or send through a signed rejection. I sometimes feel like I am in the education field more than the real estate field. Unfortunately, most of the people I have to educate are the agents whose brokers tell them that "the law says" the seller must counter or reject every offer. No, they can just ignore it and let it die. Sometimes it is better that way...

Rich:  I am receiving lowball offers on one of my listings.  It is a major fixer-upper though.  They have come with a letter of needed repairs on why their offer is low.  Although my Seller is not amused, but learning the value of his property after 4 offers now that are 100K less than asking price, it is still not sold, nor have we reduced the price.  Oh well, I enjoyed reading this posting.  Thank you

Amber - Don't get me going on that!!!!!!  You and I are on the same page!!!

Donald - Sometimes the seller just needs to bleed before they will believe you.

I'm right there with you Amber (and Rich) ... I had one just a short time ago where an agent's assistant called me requesting a response to a BOB (Read Rich's last post!)  and I told her that the lack of response WAS the response.  About 5 min later the agent calls and proceeds to loudly explain that the law requires the seller to respond and that he expected my seller's signed rejection.

I calmly asked him if he's ever read the contract before.  He didn't like that question for some reason ... He continued to yell and demand that my seller signs the rejection.  I calmly informed him that she wouldn't be doing any such thing since the offer had already expired and it would be a waste of her time.

He continued to yell about the law and ethics and stuff and threatened to call my broker.  I calmly told him to go right ahead and I gave him my broker's cell phone number so he could be sure to reach him ... I then told him to have a pleasant day and hung up.

I was with my broker all day that day and the guy never did call.  Sometimes I love being passive-aggressive.

 

- James 

James - Of couse he didn't call.  The brow beating he tried on you didn't work.  Two rejections in a 24 hour period are more than most can take. 

Too bad he didn't call two days earlier - he could have gotten the rejection out of the way sooner.  I just thought it was funny that he tried having his poor assistant do the dirty work first.  I'm not sure if he was more pissed at my tone, my response, or that he had to call me personally.

I actually would have loved to hear the conversation if he had called my broker. 

 

- James

 

Avocado?  Finally something I recognize! 

James - The conversation would have probably included the word "idiot" and would not have been directed at you.

Actually he likes to play "dumb country boy."  He probably would've asked the guy to go look up the law with the DRE and get back to him with the code.

After he hung up, the word "idiot" - among others - would have come up in our conversation.

 

- James 

Now THAT'S funny.

First of all-- If I get an offer-- even a low-ball offer-- I'm grateful.  It's something to show the seller that we are getting SOME activity. 

Now if the offer is truly laughable-- I simply recommend a BLANKET REJECTION ... This helps me build my credibility off the back of a crappy offer-- so when we get a decent lowball one-- I can have some standing to make a suggestion.

So far as the rejection-- One agent Kept pushing for a rejection letter-- I told her that I'd be happy to email her--- She wanted one from the asset manager...  I simply told her that 1) the asset manager has 500 properties and does probably 50 rejections a day-- and can't write letters for each.  And secondly-- I will not share any information about my asset manager with her or anyone else.

 Oh, she wrote a contract-- less than full price, with no pre-app letter, asking that the seller pay 5 grand to some 3rd party contractor to oversee repairs, didn't check whether or not (or even know) if she wanted a home inspection.... Oh-- and the contract she used -- was 6.04-- We use the 1.07 contract now.

But long and short-- I'm grateful to receive any offers-- even if they are low-- It gives me a way to show the bank that I am able to get activity -- and convince people to write offers.  Besides-- I have a legal obligation to present all offers to the client (And the listing agreement calls for it too).

 Just notate the account that with your recommendations!

-Jason

Well Jason, there are lots of things that can and will be wrong. 

In this situation, the offer was essentially $64,000 per unit when we had comp sales in the last 45 days at $130,000.  This is a condo complex.  The units were essentially the same.  The buyer was just being silly.  His justifiaction was the time value of money.

I'm not that good at math, but cost of carry and possible downward cycle of the market take a LONG time to get to a calculation that justifies 50% off today.

I do the same as Lenn Harley, if we get a ridiculous offer then we counter w/ a ridiculous price by going up $ 20% or more. But you are right in the REO world there just isn't a Counter to most of these.

We have a form known as the "Seller's Invitation to Submit New Offer".  I have heard from some others in my market that it's the polite way of asking "are you freaking kidding me?" or something along those lines. Now, being the sweet little Texas girl that I am, I don't use it in that regard but have been known to fire one back a time or two none the less.  My goal is to use it 5 more times before the end of the year and I am on a roll with it so far.

Rich,   You got a lot of funny comments here, and i can totally feel your pain.

 

The Keutla Team

Amanda - Please please please emial a copy of that form to rfk@gryphonusa.com.  It sounds perfect.

Just emailed it to you...

Thanks Rich for sharing this heartwarming story. Some times these poor buyers actually value winning more than money. The end result is SOLD!

There is no harm in trying. An offer is an offer and it gets the ball rolling even if it does come to a screeching halt

Oh the fun of today's real estate market!!!

I live for low balls, I even will take deflated low ball offers, in writing, on proper format, with deposits ready...yeah, you bring it, I present......Yeah I present and I'm proud of it

02/2008
It's so hard to get some sellers to understand that in this market their asking prices are simply too high. The sale of their home is such an emotional experience that they are insulted when someone actually offers what the property is worth. It's common for listing prices to be 20-25% too high, but agents 'buy the listings' by agreeing to list the properties for what the sellers think they're worth. Actually, that gives the sellers false hope and results in no shows and no offers. After the properties eventually sit around on the market for months after months, then the offers may start coming in at 25% or more less than listing price. In essence, you can blame much of the problem on the listing agents who agreed to list the properties for crazy prices in this slow housing market.

Now in 2008, the market is even more depressed and homes values have fallen across the country 10-12% in 2007 and are expected to fall the same amount in 2008. The housing market will not bottom out for several years to come, then the uphill climb will be very, very slow. Some sellers may want to sit on their eggs for several years in hopes that values build back up, but some sellers simply can't afford to wait that long. So that is where the lower home values and legitimate lower offers come in now more than ever before.

The higher priced the home the more of a stab the sellers will have to take to sell the home. An offer of $75K to $100K less than listing price on a $500K home is common now, and many homes are selling for much less than tax appraisal value and/or mortgage value.

I have found that regular home appraisals are of little value when you're selling the home. Buyers always see them as too high, and you'll never get appraisal price out of a home. After all, and appraisal is someone's OPINION, and it's not uncommon for appraisers to be many thousands of dollars apart.

Also realize, that all types of appraisals are not the same. A listing appraisal, a relocation appraisal, and a mortgage appraisal will yield VERY different values. And the buyer really doesn't care much about any of them. A home is worth only what someone is willing to pay. The buyer actually sets the value of the home. In this market, the values are falling rapidly.

When I get lowball offers, my asset mangers ask for "highest and best."  I communicate that to the buyer's agent who responds to me after reviewing with the buyer.

If it's not in the ballpark, the offer is rejected.  Simple as that.  And agents, no one is 'obligated to make a counter-offer.'  My asset managers are very busy, I look for ways to help them preserve their valuable time.

Low ball offers are all too often the fault of the buyers agent.  If you educate your buyer and even REFUSE to write it you would save a few trees.  Low balls are a waiste of time especially if you're writing a 500,000 offer on over a 1 million dollar property.  Why?  I also enjoy the offers that come from buyers that are only approved for let's say $250K and the agent is out showing them $400K+ properties. 

In the market I'm in getting low offers helps me with some often needed price improvements... we are still dealing with many sellers who think they will get the $ from 2 years ago.