Why Do Buyers Think Cash Offer on House Justifies Low Ball?

[Leo99]

Originally Posted by hatt
Originally Posted by Leo99
10% isn't low balling.

I'd expect a significant discount if I had cash in hand.

What differences does it make that the seller doesn't have a mortgage?

In a horrible market or special circumstance where the sellers needs to close in ASAP cash might bring a big discount. Not so much in active markets.



If you need to sell your house in order to buy a new one, you are locking in a contingency or taking the risk if you go without a contingency. If one buyer has cash in hand and the other has a contingency on them selling their current house, the cash in hand looks a lot more attractive.

 

[Wolf359]

Originally Posted by hatt
Counter or move on. People low ball offer every day. Sometimes the seller accepts the offer. 10% under asking isn't big time low ball territory either depending on the circumstances.


In the down market, we used to say that if you're not embarrassed to make the offer, you're offering too much.

 

[hatt]

Originally Posted by Leo99
Originally Posted by hatt
Originally Posted by Leo99
10% isn't low balling.

I'd expect a significant discount if I had cash in hand.

What differences does it make that the seller doesn't have a mortgage?

In a horrible market or special circumstance where the sellers needs to close in ASAP cash might bring a big discount. Not so much in active markets.



If you need to sell your house in order to buy a new one, you are locking in a contingency or taking the risk if you go without a contingency. If one buyer has cash in hand and the other has a contingency on them selling their current house, the cash in hand looks a lot more attractive.

Yeah, special circumstances and hard up sellers.

 

[Wolf359]

Originally Posted by ARCOgraphite
Having bought and sold a couple houses I find Real Estate agents to be worse than car sales(persons).

An agent on my sick moms house in Fl made 18K in one week. the house was priced to sell quickly ( est less tan 2 months) due to medical and financila circumstances but iIlater Find out she had buyers for these condos on a waiting list and we were too far below market given the trajectory.(and yes I researched comparables)

One of the most overpaid and under worked professions on the planet. They work for themselves ONLY - no you I find.


The real estate agents get paid to close. Some deals are easy, some are hard and some never close so you don't make any money on those deals.

Like any job, there are good ones and bad ones, just like lawyers, car salesman, doctors, mechanics, financial consults etc. Do any of those really work for you? Does anyone in any profession work for free?

 

[atikovi]

Originally Posted by LoneRanger
Turns out it's a "cash offer" but is more than 10% below asking price,


I would have offered 20% below asking price.

 

[Rmay635703]

Around here a house that would sell for $40,000 last year is now $100k plus

In such an environment "low balling" is inevitable

 

[hatt]

Originally Posted by Wolf359
Originally Posted by hatt
Counter or move on. People low ball offer every day. Sometimes the seller accepts the offer. 10% under asking isn't big time low ball territory either depending on the circumstances.


In the down market, we used to say that if you're not embarrassed to make the offer, you're offering too much.

Haha

 

[IveBeenRued]

What is the difference between the asking price and the offer? 10% below asking in my area is around $60-140K below asking but where my parents live in Central NY 10% below asking is more like $8-12K.

 

[JeffKeryk]

Why would someone take less than market?
Perhaps if they had to sell due to another contingency sale, but that is different.

Offer what you want, but it's all green whether it is buyer's cash or money from a bank.

 

[Wolf359]

Originally Posted by JeffKeryk
Why would someone take less than market?
Perhaps if they had to sell due to another contingency sale, but that is different.


I don't know what you're referring to or what point you were trying to make.

What is market price? The seller determines the sale price, the buyer is only willing to pay whatever they think it's worth. The market price is whatever the buyer and seller can agree to. You can go by comps, but at a certain point, the greater fool theory takes over and all the people willing to pay the previous prices are gone and you are left with just the ones that made the offers that you have in hand. You can either wait for others or accept the one you have. That's the seller determining the sale price. If the price is too high, there's no sale. A comp is a comp. There's no difference to an appraiser, it's a meeting of the minds. They just adjust for size, location and other tangibles. If they had to sell in a hurry or not isn't reflected in the MLS database so back we go to a comp is a comp. You can always get more or less than a comp, that's how the market moves up or down. So hence the unknown meaning of why you would take less than market. If you're going to take something, that IS market.

 

[PandaBear]

You have 3 options in negotiation:

1) Counter with a higher number. It is just business and a number. Tell him or her what you want and see what he will do.
2) Counter with another buyer and tell him or her to up the number.
3) Tell all bidders to up the bid against each other.

The point is, you need multiple bidders to get a "market" value. If you only have one offer you can decline, but you don't know if someone else will pay what you want or not.

 

[LoneRanger]

We counter offered couple percent below listed price. They only came up a few thousand off low ball and said final offer. Have til 1pm today to respond and I'm declining and leaving it in the market for the developing spring real estate rush which is about to come up to speed around here. They can pound sand. Take my chances on what happens when the flowers start a bloomin' and people start getting out to look at houses.

 

[JeffKeryk]

Originally Posted by Wolf359
Originally Posted by JeffKeryk
Why would someone take less than market?
Perhaps if they had to sell due to another contingency sale, but that is different.


I don't know what you're referring to or what point you were trying to make.

What is market price? The seller determines the sale price, the buyer is only willing to pay whatever they think it's worth. The market price is whatever the buyer and seller can agree to. You can go by comps, but at a certain point, the greater fool theory takes over and all the people willing to pay the previous prices are gone and you are left with just the ones that made the offers that you have in hand. You can either wait for others or accept the one you have. That's the seller determining the sale price. If the price is too high, there's no sale. A comp is a comp. There's no difference to an appraiser, it's a meeting of the minds. They just adjust for size, location and other tangibles. If they had to sell in a hurry or not isn't reflected in the MLS database so back we go to a comp is a comp. You can always get more or less than a comp, that's how the market moves up or down. So hence the unknown meaning of why you would take less than market. If you're going to take something, that IS market.

Easy answer. The OP states his property is in a seller's market location. He also states buyers do not think he is overpriced. Why should he take a low ball offer?

 

[CT8]

Originally Posted by JeffKeryk
Originally Posted by Wolf359
Originally Posted by JeffKeryk
Why would someone take less than market?
Perhaps if they had to sell due to another contingency sale, but that is different.


I don't know what you're referring to or what point you were trying to make.

What is market price? The seller determines the sale price, the buyer is only willing to pay whatever they think it's worth. The market price is whatever the buyer and seller can agree to. You can go by comps, but at a certain point, the greater fool theory takes over and all the people willing to pay the previous prices are gone and you are left with just the ones that made the offers that you have in hand. You can either wait for others or accept the one you have. That's the seller determining the sale price. If the price is too high, there's no sale. A comp is a comp. There's no difference to an appraiser, it's a meeting of the minds. They just adjust for size, location and other tangibles. If they had to sell in a hurry or not isn't reflected in the MLS database so back we go to a comp is a comp. You can always get more or less than a comp, that's how the market moves up or down. So hence the unknown meaning of why you would take less than market. If you're going to take something, that IS market.

Easy answer. The OP states his property is in a seller's market location. He also states buyers do not think he is overpriced. Why should he take a low ball offer?

The seller can choose accept the offer or not.

 

[MNgopher]

At the end of the day, since there is no "minimum offer price" or minimum bid (so to speak), anyone can throw whatever they want at a seller and see if it will stick.

Cash buyers can be a great thing - if you are looking for a sure deal, they are hard to beat. And typically part of the "sure deal" is taking a hit on the sales price.

Last time we sold a house, we took 8% below the asking price. Granted, it was not shortly after we had listed it (a different housing market too - not nearly as in demand for homes). For us it was a guaranteed sale with no contingencies, and we would be done with it. We did not even counter offer, and accepted. Everything else we had seen was not that much higher in price and had all sorts of wild contingencies built into the deal. No thanks...

Don't be offended, if its too low for you, that's OK. Just decline the offer and move on...

 

[Vuflanovsky]

Originally Posted by JeffKeryk
Originally Posted by Wolf359
Originally Posted by JeffKeryk
Why would someone take less than market?
Perhaps if they had to sell due to another contingency sale, but that is different.


I don't know what you're referring to or what point you were trying to make.

What is market price? The seller determines the sale price, the buyer is only willing to pay whatever they think it's worth. The market price is whatever the buyer and seller can agree to. You can go by comps, but at a certain point, the greater fool theory takes over and all the people willing to pay the previous prices are gone and you are left with just the ones that made the offers that you have in hand. You can either wait for others or accept the one you have. That's the seller determining the sale price. If the price is too high, there's no sale. A comp is a comp. There's no difference to an appraiser, it's a meeting of the minds. They just adjust for size, location and other tangibles. If they had to sell in a hurry or not isn't reflected in the MLS database so back we go to a comp is a comp. You can always get more or less than a comp, that's how the market moves up or down. So hence the unknown meaning of why you would take less than market. If you're going to take something, that IS market.


Easy answer. The OP states his property is in a seller's market location. He also states buyers do not think he is overpriced. Why should he take a low ball offer?


Yep. The overriding factor from the OP is that he's not in a critical situation where he needs to sell and this is a first offer in a still slow period. A 'low ball" offer is relative to several factors but accepting a first offer from demanding buyers to lock in a potential sliding scale ~5% loss if the home is priced correctly just deserves a polite NO and not much more in my opinion. Obviously, that's mainly true if this means 40K and not 4K as the amount of loss and homes typically sell close to asking price. IMO, any real estate clown that pushes this offer by asking to seriously consider this as a "bird in hand" given what the OP has stated should be summarily let go when their contract expires.

 

[hatt]

Originally Posted by LoneRanger
We counter offered couple percent below listed price. They only came up a few thousand off low ball and said final offer. Have til 1pm today to respond and I'm declining and leaving it in the market for the developing spring real estate rush which is about to come up to speed around here. They can pound sand. Take my chances on what happens when the flowers start a bloomin' and people start getting out to look at houses.



Don't take it personal when people make offers you don't like. It's just business.

 

[Triple_Se7en]

Originally Posted by LoneRanger
Realtor called. Excited to relay to me that I got an offer on my house that we just listed week or so ago. Wanted me to come to the office this evening. I told him to summarize first. Turns out it's a "cash offer" but is more than 10% below asking price, they want everything including full year of upcoming property taxes (which aren't cheap around here). I told him that while it's nice to get an offer, 1. the spring real estate rush hasn't even started yet here, 2. we just listed recently, 3. it's a clear deed (mortgage is paid off), so why would I get excited about this offer the house is not costing me much to sit there ,and 4. every single feedback we've received from showings so far have checked the box "at market price" among the choices for opinion on where we have it priced. So why would a low ball "cash" offer that also demands full yr of real estate taxes up front get me all hot and bothered?

Most houses sell for 96% of their asking price, and that's in a balanced market and usually after the home hasn't sold in the first few weeks. The market here is a sellers market for the last three months and not enough new listings have been brought onto the market yet to change that. So why would I get excited about giving my house away in a seller's market with the real estate busy season still approaching?

I know you're not supposed to let emotion get hold of you in these matters, but you guessed it-- the low ball offer made me mad. I am still meeting with realtor this evening at their office to write a counter-offer. But being only weeks into it, I'm not going below 97% of asking and could not give a shizzle if it's cash, FHA, conventional mortgage or even Bitcoin (LoL). Funds are funds, long as it's legit. This isn't a car, it's a house. Cash my butt.


None of us-here know if your house is worth the price you're asking. If you feel you can get more, than wait the process out. Be sure to tell your Realtor you only want calls on showing the home to potential buyers that are willing to pay your asking price, including taxes.

Maybe that is something you should have told the Realtor to begin with - that you are a hardliner on the asking price.

 

[ARCOgraphite]

Originally Posted by LoneRanger
We counter offered couple percent below listed price. They only came up a few thousand off low ball and said final offer. Have til 1pm today to respond and I'm declining and leaving it in the market for the developing spring real estate rush which is about to come up to speed around here. They can pound sand. Take my chances on what happens when the flowers start a bloomin' and people start getting out to look at houses.



Good move, LR. Sounds like the correct plan.

Don't take it personal - its just business. Not a reflection on you or your property. I used to laugh when the Agent would say the Seller was "offended" by the offer. The usual ploy for more $$$.

 

[PimTac]

Let's turn the question around. If you are willing to pay cash for a house, wouldn't you submit a lower offer?