Author Topic: "Insulting" a seller...  (Read 12334 times)

EMP

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"Insulting" a seller...
« on: July 23, 2014, 11:04:22 PM »
I've got my eye on a house. We (me, hubby, baby and dog) have decided we like where we're at and will stay here for the next 2 years at least.

Considering our needs (basement for the hubs to make music in and someone who will accept a pet) buying is where the smart money's at.

I've found a house listed at $90k that would suit our needs pretty well. I'd tear outnasty old carpet and hope hardwood floors weren't beyond repair and finish the fence. The rest, ugly trim, general smallness and lack of garage  and off street parking annoying but doable.

I don't know where to start with an offer. The house was originally listed at $110k almost 8 months ago. This is a college town and they love to write tickets so the parking thing is really hurting. Now it has alley access and space fora garage (probably, depending on what the utility says about an inconvenient light pole).

I feel like it's currently priced pretty fairly, but I don't want to have to sell in three years and take a huge loss b/c the onky sucker willing to buy a house without a garage is me. My inclination is to open negotiations at 82, but my real estate agent is saying they might be too insulted to bother responding. Is that even a thing after 8 months on the market.?

ETA House has been vacant for several months
« Last Edit: July 23, 2014, 11:08:08 PM by EMP »

windypig

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Re: "Insulting" a seller...
« Reply #1 on: July 23, 2014, 11:45:34 PM »
Your realtor is a pussy. Offer lower than what you want to pay... Id say start lower than 82.

windypig

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Re: "Insulting" a seller...
« Reply #2 on: July 23, 2014, 11:47:19 PM »
If its a college town im sure there are plenty of car-less people. The no garage thing shouldnt be a deal breaker.

msilenus

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Re: "Insulting" a seller...
« Reply #3 on: July 24, 2014, 12:04:04 AM »
Your agent's job is to represent you.  (Except they don't get paid if a sale doesn't happen.)

If you really want the transaction to happen, listen to your Realtor(r).  They'll have a good sense of what sort of price range will almost certainly entice at least a counter.  If you want a good deal, but are prepared to keep fishing, then have them write the offer.  You could also write the offer, then write another one if they don't respond.

I wouldn't worry too much about the seller's feelings --managing those is part of the seller's agent's job.  (Seller's agent wants to get paid, too.)

Fishingmn

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Re: "Insulting" a seller...
« Reply #4 on: July 24, 2014, 07:57:50 AM »
You said it started at $110k and is not $90k but a big question I would want to know is how long has it been on the market at $90k? If it's only been a few weeks then maybe $82k is an okay offer.

On the other hand, if it's been there for 1+ month then in reality the market is telling the seller that their price is too high and they need to do a price reduction. In that case, your $82k is probably too high. Seller probably needs to drop the price to at least $85k to get an offer - maybe more. I'd probably offer a $70k or something in that area.

Personally, I like to pick a target price and then make an offer $1-2k less. Then have a little room to negotiate but tell them you've run numbers as an investment and that's the best you can do. Be apologetic and say you know that the offer is low and totally understand if they don't accept but that your spreadsheet says this is the best you can offer to make the numbers work as an investment. This strategy worked on my last purchase (close tomorrow). Think I'm buying $3-5k below fair market value on at $67k purchase because seller got anxious. I stuck to my guns on price but was willing to change closing date to suit their needs better.


sammybiker

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Re: "Insulting" a seller...
« Reply #5 on: July 24, 2014, 07:59:29 AM »
/\ what they said.

I'd kick a 60k offer out there and see where they come back yet.  The only question would be if I sent that offer before or after I fired my realtor.

aj_yooper

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Re: "Insulting" a seller...
« Reply #6 on: July 24, 2014, 08:36:19 AM »
Buying a house for only 2+ years does not sound like a great move, assuming the market is not booming there.  Besides, that house's parking issue is a problem.  I have lowballed property before and sometimes it works, but usually not.

Another Reader

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Re: "Insulting" a seller...
« Reply #7 on: July 24, 2014, 09:07:04 AM »
A buyer's agent is supposed to represent you.  If she thinks the house is worth more than $82k, she should provide you the comparable sales that show her opinion is accurate.  It sounds like she is more worried about what the seller and the seller's agent will think about her if she makes a low offer on your behalf than she is about your interests.  She is probably also worried about putting in a lot of work and not earning a commission.  In your shoes, I would sit her down and tell her that you are going to be making low offers, and if she is not comfortable with that, you need to find another agent.

The property is probably difficult to comp out, but you need to have a good idea of what it's worth before you make any offer.  You may have an unrealistic seller that wants or needs a certain price to sell and won't yield.  Or, there may be a very small set of buyers for a house with no garage and no one has stepped up yet.  Once you have more information, you will be able to make a reasonable decision about what if anything to offer for the house.

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Re: "Insulting" a seller...
« Reply #8 on: July 24, 2014, 10:10:54 AM »
A buyer's agent is supposed to represent you.  If she thinks the house is worth more than $82k, she should provide you the comparable sales that show her opinion is accurate.  It sounds like she is more worried about what the seller and the seller's agent will think about her if she makes a low offer on your behalf than she is about your interests.  She is probably also worried about putting in a lot of work and not earning a commission.  In your shoes, I would sit her down and tell her that you are going to be making low offers, and if she is not comfortable with that, you need to find another agent.

The property is probably difficult to comp out, but you need to have a good idea of what it's worth before you make any offer.  You may have an unrealistic seller that wants or needs a certain price to sell and won't yield.  Or, there may be a very small set of buyers for a house with no garage and no one has stepped up yet.  Once you have more information, you will be able to make a reasonable decision about what if anything to offer for the house.

^ Ditto

sol

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Re: "Insulting" a seller...
« Reply #9 on: July 24, 2014, 11:20:21 AM »
Real estate agents are essentially parasites, leaching off of private transactions between individuals.  Their professional motivation is ALWAYS to screw the buyer, even if you're using a buyer's agent.  It's just the nature of the commission-based business model.  I wouldn't accept that from a financial advisor and it pains me that there are no good alternatives for RE buyers.

Someone here needs to start a fee-only RE agency.  The paperwork involved in buying a $50k house and a $500k house are not appreciably different, so why should it cost ten times as much in agent fees?  An agent who charged a flat fee to mediate a RE transaction could at least theoretically have  his interests aligned with his clients, unlike the current system which all but guarantees conflicts of interest.

In this particular case, remember that your agent works for you.  You are the boss.  Buyers set market conditions and bring all funds to the table, and the agent's only job is to try to sway your decisions in ways that are bad for you.  So tell her if she's not comfortable with the offer you'll find somebody else who is.  RE agency is a competitive business, don't tolerate anything less than stellar service because there are lots of other people dying to represent you.

msilenus

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Re: "Insulting" a seller...
« Reply #10 on: July 24, 2014, 12:32:09 PM »
Someone here needs to start a fee-only RE agency.  The paperwork involved in buying a $50k house and a $500k house are not appreciably different, so why should it cost ten times as much in agent fees?  An agent who charged a flat fee to mediate a RE transaction could at least theoretically have  his interests aligned with his clients, unlike the current system which all but guarantees conflicts of interest.

Any real estate lawyer is fine for this.

As I understand things, the problem is that you aren't represented by an agent if you're flat-fee, so MLS will list you as an FSBO --a crazy old coot who's not serious about selling, basically.  MLS rules will keep your FSBO listing from appearing alongside normal listings, so you're simply locked out of most of the market.

So you might create a network like MLS from scratch to compete.  (Hah.)  Or you might get MLS to change its rules.  Who sets MLS rules?  Commission-based homesalespeople, essentially.  The only way this nut cracks, IMO, is antitrust cases.  There was one a few years ago, but I don't think it addressed the FSBO problem, and was more about data access.  It was a step in the right direction, but nowhere near enough to create a serious disruption:

http://www.nytimes.com/2008/05/28/business/28realty.html?em&ex=1212120000&en=d24b1bd8549a7dd4&ei=5087%0A&_r=0

I'm not really an expert on this stuff, but I suspect that for the market is to be reformed into a truly competitive one, the Feds would need to take on the trade groups at the local level.  If that's the case, then it could be a while.

Meanwhile, I think the best policy is to buy and sell very few homes, so you can amortize the transaction costs over more years.  I've never bought a home that I wasn't willing to own for multiple decades.  I'm not an investor, which means that I've bought one home, and may never buy another.

MikeBear

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Re: "Insulting" a seller...
« Reply #11 on: July 24, 2014, 03:42:21 PM »
/\ what they said.

I'd kick a 60k offer out there and see where they come back yet.  The only question would be if I sent that offer before or after I fired my realtor.

You can "fire" your Realtor anytime you want. Unfortunately, IF they already showed you the house, they WILL still get a percentage of the sales commission IF you subsequently buy that house.

Fishingmn

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Re: "Insulting" a seller...
« Reply #12 on: July 24, 2014, 05:10:37 PM »
Real estate agents are essentially parasites, leaching off of private transactions between individuals.  Their professional motivation is ALWAYS to screw the buyer, even if you're using a buyer's agent.  It's just the nature of the commission-based business model.  I wouldn't accept that from a financial advisor and it pains me that there are no good alternatives for RE buyers.

Someone here needs to start a fee-only RE agency.  The paperwork involved in buying a $50k house and a $500k house are not appreciably different, so why should it cost ten times as much in agent fees?  An agent who charged a flat fee to mediate a RE transaction could at least theoretically have  his interests aligned with his clients, unlike the current system which all but guarantees conflicts of interest.

In this particular case, remember that your agent works for you.  You are the boss.  Buyers set market conditions and bring all funds to the table, and the agent's only job is to try to sway your decisions in ways that are bad for you.  So tell her if she's not comfortable with the offer you'll find somebody else who is.  RE agency is a competitive business, don't tolerate anything less than stellar service because there are lots of other people dying to represent you.

Don't know where to start with this ridiculous comment.

Realtors are parasites - besides the inflammatory part a Realtor offers professional services and expertise just like an insurance agent, lawyer or accountant. You pay for their expertise but if you don't need it then don't use it. Doesn't an insurance company facilitate transactions between a patient and hospital? Are they parasites too then?

Realtor's motivation is to screw the buyer - patently false statement. I'm sorry you had a bad experience but after 5 years in the business I've never seen this happen. All Realtors are bound by a fiduciary duty and can lose their license for not withholding agency responsibilities. Buyer's who have signed a Buyer's Representation Agreement have an agent acting on their behalf. Are their agents that don't do a good job? Yes - but I think it's because they just aren't competent and has nothing to do with actively looking to screw over their clients. Sure the headlines show that there are a few bad apples but that's possible in every type of career.

Having a fee only relationship for the buyer based on a flat fee is certainly something that could be done. There are real estate brokerages that offer a rebate to the buyer now. But you seem to think that the world would be better off with no Realtors. That somehow the average agent (who is according to NAR making $42k with no benefits) is soaking all of their clients. Have you thought of the alternative? No Realtors means no MLS (since Realtors pay fees every quarter to keep it running) which means no national database that has any merit. How to you value houses in a world where anyone can claim any square feet they want or any number of bedrooms or any sales price that it sold for? Guess we'll all just go off the county appraiser's number since that's accurate right?

Finally, as Sammybiker states, once the Realtor showed you the house they can now claim procuring cause and get the buy side commission so just firing them may not work.

solon

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Re: "Insulting" a seller...
« Reply #13 on: July 24, 2014, 05:20:14 PM »
I'll just add that you don't need to worry about insulting the seller. All you're doing is making an offer, and they have the option to reject or counter if they don't like the offer.

msilenus

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Re: "Insulting" a seller...
« Reply #14 on: July 24, 2014, 06:10:54 PM »
Have you thought of the alternative? No Realtors means no MLS (since Realtors pay fees every quarter to keep it running) which means no national database that has any merit.

It's 2014.  A vacuum like that would fill almost immediately.

sol

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Re: "Insulting" a seller...
« Reply #15 on: July 24, 2014, 06:26:07 PM »
Don't know where to start with this ridiculous comment.

I figured that comment would wad up somebody's undies.  Not an accident.

Quote
a Realtor offers professional services and expertise just like an insurance agent, lawyer or accountant. You pay for their expertise but if you don't need it then don't use it. Doesn't an insurance company facilitate transactions between a patient and hospital? Are they parasites too then?

Lawyers and accountants work for flat rates.  You pay them a set fee in return for a set service.  Insurance agents are parasites too, yes.  They exist only to get you to buy more insurance than you are legally required to carry.  I would prefer a world where consumers get to decide what level of insurance they want, and they could buy it directly from insurers.  Insurance agents are just middle men who take the buyer's money without providing any tangible benefit.  Parasites.

Now I can get a forum member who's an insurance agent all riled up, too.

Quote
Realtor's motivation is to screw the buyer - patently false statement.

A realtor makes more money if he can convince the buyer to overpay for the house.  How is that not screwing the buyer?  Fiduciary duty is clearly a joke in cases where the agent is working on commission, because by the very definition of the contract the agent's financial incentives are at odds with the buyer's incentives. 

Quote
But you seem to think that the world would be better off with no Realtors.

Yes, I do.  I think most business transactions would be improved by reducing the number of middle men.  Ideally, a property sale would be shepherded by a single RE professional, preferably a lawyer since the obligation is primarily a legal one, who provides that service for a flat fee (like most lawyers) and thus has no incentive to defraud either party.

As for the MLS, there are a number of websites that already do a better job than the MLS without charging exorbitant fees to realtors.  In addition to being free to use they are also better designed, more comprehensive, faster to use, and provide a ton of services that the MLS does not.  There is absolutely no reason for the MLS to exist anymore, except that it is making somebody money (by taking it from buyers the agents is supposedly representing with that hilarious fiduciary responsibility).

In a real estate transaction, the agent makes money.  The appraiser makes money, the inspector makes money, the title insurance company makes money, the escrow company makes money, the lending institution makes money, even the home insurer makes money.  Of all of these people, only the agent has such an obvious conflict of interest because only the agent gets paid more by convincing the buyer to overpay.  The buyer is the source of all funds in the transaction, so essentially all of those people are making money off of the buyer.  I'm fine with that if their fees are commensurate with their services.

But like I said before, buying a $50k house and a $500k house are essentially equal amounts of paperwork.  Why should an agent make ten times as much for one as for the other?

Paul der Krake

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Re: "Insulting" a seller...
« Reply #16 on: July 24, 2014, 06:33:40 PM »
Doesn't an insurance company facilitate transactions between a patient and hospital? Are they parasites too then?
The whole insurance system is parasitic and should never exist in its current form. Recently a local hospital moved 800 staff over to a new building, and that just just the billing department. Any industry that requires their business partners to waste this many man hours just to push paper around to simply accomodate their business needs and leaves consumers essentially no choice but to buy into the system, hm yes, that's pretty parasitic. Real estate commissions are a complete joke too, and again consumers are almost forced into buying in (to a lesser degree than the insurance scenario). What kind of expertise do they really bring to the table that can warrant thousands of dollars of expenses aside from MLS access?

Another Reader

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Re: "Insulting" a seller...
« Reply #17 on: July 24, 2014, 07:15:14 PM »
The word "agent" is key.  Agents are retained to negotiate on behalf of their clients and to facilitate the transaction so that is completed timely.  Insurance agents wade through companies and policies to find the best fit for their customer.  Attorneys do this as well.  Some accept a fee based on hours spent, some take on the risk of losing a case by accepting a percentage of the settlement or award instead.

Do you want to take on the work of an attorney or an insurance agent?  Probably not.  On the surface, a real estate transaction appears simpler, but you are dealing with clients that are emotional, have hidden agendas, and have little to no knowledge of the process.  Agents earn at least some of their fee by bringing the parties to the table and getting agreement.

If you think individuals should represent themselves, consider that most FSBO's fail because the seller does not understand the process or is emotionally wedded to an unreasonable price.  A good agent educates the seller and then lets them decide how to proceed.  It's all about "agency."

Right now, the MLS co-ops are the best source of information out there, at least if you are a licensed subscriber.  Not so much if you are a consumer looking at Realtor.com.  Zillow would like to make themselves the Microsoft of the real estate industry.  They want all the eyeballs, and they proved it today by going after Trulia.  Once they establish themselves as the font of real estate information for the consumer, they will start dictating terms to the brokers and agents.  That's when you will see real change in the agent/broker compensation model. 

Daisy

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Re: "Insulting" a seller...
« Reply #18 on: July 24, 2014, 07:39:10 PM »
As a recent seller of a house (closes in two weeks!), my perspective:

I did use this term "insulted". I'm not sure if I told my agent or just my family and friends. Two days after I put the house up for sale, I received an offer I thought was way too low. It also came with my name mispelled and had a name "and assigns" as the buyer, so it looked like an investor to me, and the offer came in a jumbled mess of three different PDF files - they just looked unprofessional to me. So I just assumed they were bottom fishing. My agent told me that usually the first offer comes from someone who has been looking for a while and the price is usually pretty accurate to what it eventually sells for (she was wrong).

Well, I thought it was so low that I didn't even counter-offer. So that's how you insult a seller. They may not want to deal with you because it's not worth their effort. However, this particular place you are looking at has been on the market for a while already. But consider they have already lowered the price.

Then I hit a dry spell. Well actually another offer that was even way lower but even my agent said to ignore it as that one was definitely a bottom fisher. I had the luxury of being in a good economic situation so I could wait it out.

The eventual offer I counteroffered came about a month later (so just two months on the market), and it was really close to the appraised value. So I counteroffered and in the meantime a new offer came in at a similar low price as the original offer (which I was insulted by). My agent told them to come with their best offer but it was low. Well after I had a signed contract with the person close to the appraised value, she renegotiated with the low-ballers to have a backup offer just in case and they agreed to the appraised value about $45k higher. So I guess they had been trying to low-ball too.

Your buyer's agent may have some insight because the two agents feel each other out before the offer is made and your agent may have heard from the other agent that certain offers had already been rejected...it's a possibility.
« Last Edit: July 24, 2014, 07:41:24 PM by Daisy »

sol

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Re: "Insulting" a seller...
« Reply #19 on: July 24, 2014, 07:47:30 PM »
I did use this term "insulted".

I think it's pretty normal for a seller to feel insulted.  I didn't mean to suggest that it doesn't happen, just that a buyer shouldn't care.  You're conducting a business transaction, not asking them out on a date.  Why should I care if they're insulted?  I give my best offer, if they don't like it then we don't do business.  End of story. 

waltworks

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Re: "Insulting" a seller...
« Reply #20 on: July 24, 2014, 10:04:09 PM »
Here's the thing: you need to decide what you are willing to pay for the house FIRST. If it's only $60k, offer that and see what happens (or offer less). If you'd actually be willing to pay $90k, you need to make an initial offer that will simultaneously start the negotiation from as low as possible AND persuade the seller that you are serious enough to negotiate with.

Yes, you can ultra-lowball and they won't even bother countering. That would be a waste of your time, though, so sit down and figure out a coherent strategy. It sounds like you just want a bargain and don't actually know what you're willing to pay - just that you want to pay as little as possible. It's going to be hard to pursue a negotiation in that situation.

Look: I've sold houses. I have never been "insulted" by a low offer but I've rejected stuff out of hand and decided a potential buyer isn't serious if their offer is ridiculously low. In most cases even if those lowball offers eventually can be negotiated to an acceptable price, that kind of buyer will just make the rest of the process a living hell and demand crazy repairs and concessions after the initial contract is signed. So if I get a crazy low offer, my instinct is that it's pointless to even counter. If you're the buyer, you want the seller to think you're a serious person who negotiates hard, not a lunatic who will waste weeks and weeks of everyone's time and never end up closing.

_W

BlueHouse

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Re: "Insulting" a seller...
« Reply #21 on: July 24, 2014, 10:24:47 PM »
I did use this term "insulted".

I think it's pretty normal for a seller to feel insulted.  I didn't mean to suggest that it doesn't happen, just that a buyer shouldn't care.  You're conducting a business transaction, not asking them out on a date.  Why should I care if they're insulted?  I give my best offer, if they don't like it then we don't do business.  End of story.
People get very emotional about their homes and they tend to like and feel better about people who have similar likes. I would absolutely suggest that if you meet the seller or can get some type of note to them about something of theirs that you really like, do it because it warms them up to you and you're likely to get better negotiating terms.  I had a decorative paint job done on a house I sold and when a prospective buyer asked if I had any more of the paint, I wanted him to get the house.  Why?  I don't know. But if someone came in and said. "Oh I can't wait to paint over these dreadful walls
"  I would have to charge them the $10k assshole fee.   No idea whether that guy was blowing smoke up my skirt but he got a good deal and when a bidding war almost started, I stuck to my word and let him have it. (I made a great profit on that house just because of luck for when I bought and sold).
Agree with previous poster. Apologize that the offer is low   Tell them you love the house but can't offer anything higher. Then negotiate by dropping the agents fees. I do agree with the parasite statements too

malacca

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Re: "Insulting" a seller...
« Reply #22 on: July 24, 2014, 11:22:51 PM »
Have a friend make a low ball offer and see what the response is.

MikeBear

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Re: "Insulting" a seller...
« Reply #23 on: July 24, 2014, 11:30:22 PM »
Have a friend make a low ball offer and see what the response is.

Could be dangerous. What if the seller takes it as written? You now have a legally binding contract.

If you entertain ideas of doing this, make sure your friend add's a weasel clause.

Daisy

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Re: "Insulting" a seller...
« Reply #24 on: July 24, 2014, 11:59:49 PM »
Look: I've sold houses. I have never been "insulted" by a low offer but I've rejected stuff out of hand and decided a potential buyer isn't serious if their offer is ridiculously low. In most cases even if those lowball offers eventually can be negotiated to an acceptable price, that kind of buyer will just make the rest of the process a living hell and demand crazy repairs and concessions after the initial contract is signed. So if I get a crazy low offer, my instinct is that it's pointless to even counter. If you're the buyer, you want the seller to think you're a serious person who negotiates hard, not a lunatic who will waste weeks and weeks of everyone's time and never end up closing.

Yes! That's exactly what I was worried about with the low-ball offer. Plus, their un-professionalism worried me too. I thought even if we eventually agreed on a price then the closing may be troublesome.

I was also trying to distinguish between an investor and a buyer that was actually moving in. An investor is just looking at the numbers and would be harder to negotiate with. A buyer moving in usually has an emotional attachment to the house and will be more likely to settle on a price to close the deal. My agent thought I was thinking too much about this.

Also, I lived there for ten years and liked my neighbors so I preferred a move-in buyer for them. I think they were worried who they'd have as a neighbor. My agent didn't think I should think of that...but I did.

I had two loans to pay off, so I knew what my breakeven point was. The sellers in the OP case might have that going on too.

SnackDog

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Re: "Insulting" a seller...
« Reply #25 on: July 25, 2014, 02:45:07 AM »
The vast majority of homes sell for over 90% of asking both because sellers won't accept less and buyers won't offer less. This is one reason why an overpriced house may receive no offers. You are offering over 90%, so your offer is not a low ball. If you think it is fair based on comps, offer and see what happens. If the seller has no other action they should counter. If not, you can always offer more if you want. But I would instruct your realtor, who sounds like a small twin operator afraid to upset another realtor, it is a very firm offer.

Fishingmn

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Re: "Insulting" a seller...
« Reply #26 on: July 25, 2014, 05:22:59 AM »
A realtor makes more money if he can convince the buyer to overpay for the house.  How is that not screwing the buyer?  Fiduciary duty is clearly a joke in cases where the agent is working on commission, because by the very definition of the contract the agent's financial incentives are at odds with the buyer's incentives. 

As for the MLS, there are a number of websites that already do a better job than the MLS without charging exorbitant fees to realtors.  In addition to being free to use they are also better designed, more comprehensive, faster to use, and provide a ton of services that the MLS does not.  There is absolutely no reason for the MLS to exist anymore, except that it is making somebody money (by taking it from buyers the agents is supposedly representing with that hilarious fiduciary responsibility).

You either believe that everyone in life is out to screw over their fellow man or not. If a Realtor is out to screw over every buyer for another $100 in commission then you must believe the following too -

- Every doctor is out to charge for additional tests to make more money
- Every software consultant tries to bill more hours than they need to screw over their clients
- Every accountant would rather take a short cut and do a tax return that charges the most to clients while not really trying to reduce the clients taxes

In your world every person is out to make as much money as possible at someone else's expense. Personally, I've not once felt that another Realtor was selling out their client in their own interest.

And I don't think you understand how MLS works. What websites work better than MLS? Zillow? Every real estate website is dependent upon MLS to syndicate data.

And every real estate website (like Zillow) make their most money by charging exorbitant fees to Realtors. I pay Zillow $2,500 per year to get buyer leads from 1 zip code (and they sell that zip code to 3 agents at a time). In essence, Realtors let the cat out of the bag by allowing Zillow free access to our data and then they market it well and sell all of the buyer contacts back to Realtors. But the key is MLS requires strict compliance to a set of standards with fines to any agent who enters data incorrectly. If there's no body that enforces standards then the data sucks and trying to base comparable sales on crappy data means sales data is useless.

BlueHouse

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Re: "Insulting" a seller...
« Reply #27 on: July 25, 2014, 05:57:18 AM »
(Snip)

And every real estate website (like Zillow) make their most money by charging exorbitant fees to Realtors. I pay Zillow $2,500 per year to get buyer leads from 1 zip code (and they sell that zip code to 3 agents at a time). In essence, Realtors let the cat out of the bag by allowing Zillow free access to our data and then they market it well and sell all of the buyer contacts back to Realtors. But the key is MLS requires strict compliance to a set of standards with fines to any agent who enters data incorrectly. If there's no body that enforces standards then the data sucks and trying to base comparable sales on crappy data means sales data is useless.
1. MLS has terrible "standards". The silly agents usually can't even get the type of listing right. Try searching for a condo or apartment in a multi-unit building. You have to include SFH and multi unit buildings in the same search bc agents don't even know what category they are working with, or worse. Don't care.
2. MLS has had years of a protected system to get their database right and they didn't. Probably because they want to keep it difficult so buyers need an agent. As soon as zillow and others got in, the quality of the tools as well as the quality of the data increased five fold.
3.  Buyers agents are extortionists. Do a good job and you'll get a commission, but don't force me to promise to pay you if you cannot do a good job. I can do a much better job searching listings on my own and narrowing down choices than any realtor. I won't even work with the ones that don't allow open access to MLS without contract. Never sign a buyers agent contract!!
4.  I am a woman, so it is particularly difficult to write this statement, but I'm going there:  I'll never again work with a woman real estate agent. Too many do it as a part time secondary gig between soccer games and their primary housewifery job. Those have made a bad rep for all females in my experience. They don't care about your home search, they're doing it to keep themselves occupied and to justify the massive Tahoe that they want to drive around.

PloddingInsight

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Re: "Insulting" a seller...
« Reply #28 on: July 25, 2014, 06:07:42 AM »
But you seem to think that the world would be better off with no Realtors. That somehow the average agent (who is according to NAR making $42k with no benefits) is soaking all of their clients. Have you thought of the alternative? No Realtors means no MLS (since Realtors pay fees every quarter to keep it running) which means no national database that has any merit. How to you value houses in a world where anyone can claim any square feet they want or any number of bedrooms or any sales price that it sold for? Guess we'll all just go off the county appraiser's number since that's accurate right?

It's really too bad we don't have something called the "information superhighway", the "world wide web", or, if you will, the "internet".  If we could just get something like that up and running, it would be easy to do without realtors.  Imagine no mls fees.  It's easy if you try.  We could give the solution some goofy name like "zillow" or "trulia", or maybe just "forsalebyowner.com".  Ah well, it's only a dream...

(btw I just sold my house using only forsalebyowner.com.  Very happy with the price.)

usmarine1975

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Re: "Insulting" a seller...
« Reply #29 on: July 25, 2014, 08:02:22 AM »
I have purchased all of my homes through a Realtor.  The first 4 I would say went ok, but I did get some misinformation.  I bought my first home that had been on the market for a long time.  I should have offered less for the property. (I still got a good price) But I could have offered less.  Once I settled the 2nd property came along the agent offered it to me and wondered if I would consider owner financing.  I did and it worked great.  Point is I wouldn't have gotten the 2nd property without the agent doing the job she did.

Subsequently shortly after I looked at a commercial property and made an offer.  It was quite a bit less then asking.  The seller dropped immediately to my offer.  I didn't end up going through with this property the seller dropping so fast scared me.  They were asking more then double what my offer was.  My intent was to get them to drop.  Today I regret not buying it was a 4 unit building with a restaurant on the first level.  My offer was for $80k.  A few years later it was listed for over $300k but I don't believe it sold.  It had some issues that needed addressed and as stated the huge drop in a matter of a day scared me and at that point I don't know that I could have actually closed on the property.

My 3rd purchase I paid too much.  Top of the market Agent told me it would sell and seller wouldn't take less.  She was representing the seller as well.  It has worked out as I lived in it for 2 years and now have had it rented since.

4th property was listed at just over $300k 3 unit building and almost didn't make the looking at list.  We walked through and really liked the property.  We decided to make an offer of $205k, my agent didn't think we could make the offer but because of my experience I knew that we could.  In 2 days we got a call from the agent letting us know that the seller had dropped to $215k.  Had we not made the lower offer we wouldn't own that building today.  Interestingly the purchase price ended up being $210k because the appraisal didn't work out well for the seller.  We lived in this property for 7 years with 2 units being rented.  We now have all three units rented.  Selling Agent did a lot to make this deal happen even with offering to lower fee's etc...  Without her we may not have moved in.  We literally were packed for 4 months not knowing if the mortgage would go through or not.

Our next home we offered a lower offer and it worked out very well.  Cash flowing from day 1 with no real amount of work to get it ready.  It sit's beside home number 3 and for me it helps offset the amount I paid for number 3.

Our last property was bought from a bank after a foreclosure.  We waited until the price got in the range we wanted and then moved forward.  The agent we worked with is not someone I would use again.  He kept trying to up sell us on a more expensive property.  I essentially looked for the property found it and when we were having inspections the realtor gave me the keypad code to get in the home.  He didn't want to drive to the property because in his words "I am not making enough money on this deal"  He also added an extra charge on the process and yes we read it but didn't catch it till the end.

I think a Realtor can add a lot of value for someone that doesn't buy or sell a lot of real estate over time.  If you are an active investor and understand the process AND have a good lawyer a Realtor in my opinion is not necessary.  And pretty much moving forward I will not use a Realtor.

I had a conversation with a Realtor that I have used for 4 properties and a comment was made that my last purchase was not an "income" earner for her.  Basically telling me she didn't make a living selling homes to me. 

I have found 2 replacement realtors if I decide I need to use a realtor in the future.  But my approach will be to have a letter drafted by my attorney explaining to the selling agent that I am acting as my own agent and I will not pay a buyers commission to him.  He can collect his selling commission but that's it.  I will have my attorney draw up all forms needed and do the escrow etc... He pretty much did all of that for the last few sales anyway.

usmarine1975

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Re: "Insulting" a seller...
« Reply #30 on: July 25, 2014, 08:05:26 AM »
If you offend the seller by making a low offer, they need to get thicker skin.  Yes you can and so what.  Make your offer and adjust.  In my opinion home prices are still over priced in most area's.  And I believe mainly because Realtor's continue to push to raise the values to increase commissions.  The only way to keep that in check is to make lower offers and lower those prices.  Granted as I say this I realize doing so decreases the value of my own property.  But do I want inflated prices or accurate prices when evaluating my own investments?

If your Realtor won't make the offer make a complaint.  I believe they are required too. (I want to say by law but not positive)

thedayisbrave

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Re: "Insulting" a seller...
« Reply #31 on: July 25, 2014, 08:33:03 AM »
Worrying about offending the seller is usually the last thing on my mind when approaching a real estate transaction.  I mean, the property has been on the market for 8+ months, they should be happy for offers coming their way, even if hypothetically it might be lower than what they want.  There's ALWAYS negotiation.  It's business. 

However, if the sellers don't even negotiate back, then be prepared to walk away.  The worst thing is letting your emotions get involved & then end up over paying.  The seller's "feelings" are not your problem.

Numbers Man

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Re: "Insulting" a seller...
« Reply #32 on: July 25, 2014, 09:44:00 AM »
I was low balled twice in 2010 when I had my house up for sale due to relocation. I told the buyer's agent that perhaps their clients can't afford this area and should look elsewhere. The eventual buyers of my house paid cash at 93% of asking. The low ball offers were about 60% of the asking price. Sellers are insulted when they get low ball offers when their properties are priced reasonably to the market. I googled one of the low ball buyers and they ended up buying a property at market in another community at about 60% of my asking price with much higher taxes.

escolegrove

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Re: "Insulting" a seller...
« Reply #33 on: July 25, 2014, 10:29:56 PM »
There are awful realtors and great ones! We have worked hard to find great ones. Yes we might not make them tons of money but we have a great relationship. Our California realtor has had 7 referrals from us in the last year. There is definitely a fine line to insulting and getting a great deal. You need a realtor who know the line and is not a pansy.

My husband is active duty military so we are transient. We buy houses at every duty station. That being said our "exit" plan is renting not selling. Buying personal you can put 5% or less down depending on what mortgage programs are available to you! Your interest rate is lower too. Our houses is our FIRE plan!

I would highly recommend you think about renting out your house. My website/blog is in my signature and its all about renting out your house. If I can help let me know.

mooreprop

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Re: "Insulting" a seller...
« Reply #34 on: July 26, 2014, 05:38:33 AM »
Sometimes, "insulting" the seller pays off.  This is especially true when the house has been on the market for a long time with no offers.  We offered $34,000 on a house that had been on the market for $92,000 for 18 months and they accepted.  Our realtor said, "Wow, I would have purchased it myself if I had known they would accept that low of a price".  Just goes to show that a realtor does not know everything and should never be afraid of insulting a seller.  I usually give my realtor instructions that give them ammunition to use when presenting my offer.  For example, I made a lowball offer this week with the comment that this house needs a bulldozer to remove the rotting front porch and that I just purchased a house 3 blocks away last month that had more space, a new kitchen, a 2-car garage, and a new bath for $10,000 more than I am offering on this house so I believe this offer is fair.
She said that she thinks they are considering lowering the price.  Not sure when/if they will lower it enough to be a good investment, but it is progress.  Have you asked your realtor for comps on the house you are looking at?  Ask for the 3 highest and the 3 lowest with no garages and you will get a pretty good idea if your offer is reasonable.  Personally, I would prefer to insult the seller than to overpay.

marty998

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Re: "Insulting" a seller...
« Reply #35 on: July 26, 2014, 06:16:01 AM »
Sometimes, "insulting" the seller pays off.  This is especially true when the house has been on the market for a long time with no offers.  We offered $34,000 on a house that had been on the market for $92,000 for 18 months and they accepted.  Our realtor said, "Wow, I would have purchased it myself if I had known they would accept that low of a price".  Just goes to show that a realtor does not know everything and should never be afraid of insulting a seller.  I usually give my realtor instructions that give them ammunition to use when presenting my offer.  For example, I made a lowball offer this week with the comment that this house needs a bulldozer to remove the rotting front porch and that I just purchased a house 3 blocks away last month that had more space, a new kitchen, a 2-car garage, and a new bath for $10,000 more than I am offering on this house so I believe this offer is fair.
She said that she thinks they are considering lowering the price.  Not sure when/if they will lower it enough to be a good investment, but it is progress.  Have you asked your realtor for comps on the house you are looking at?  Ask for the 3 highest and the 3 lowest with no garages and you will get a pretty good idea if your offer is reasonable.  Personally, I would prefer to insult the seller than to overpay.

I don't understand how a house can sell for less than a car

waltworks

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Re: "Insulting" a seller...
« Reply #36 on: July 26, 2014, 09:23:19 AM »
Read some of Mooreprop's older posts...

-W

Sometimes, "insulting" the seller pays off.  This is especially true when the house has been on the market for a long time with no offers.  We offered $34,000 on a house that had been on the market for $92,000 for 18 months and they accepted.  Our realtor said, "Wow, I would have purchased it myself if I had known they would accept that low of a price".  Just goes to show that a realtor does not know everything and should never be afraid of insulting a seller.  I usually give my realtor instructions that give them ammunition to use when presenting my offer.  For example, I made a lowball offer this week with the comment that this house needs a bulldozer to remove the rotting front porch and that I just purchased a house 3 blocks away last month that had more space, a new kitchen, a 2-car garage, and a new bath for $10,000 more than I am offering on this house so I believe this offer is fair.
She said that she thinks they are considering lowering the price.  Not sure when/if they will lower it enough to be a good investment, but it is progress.  Have you asked your realtor for comps on the house you are looking at?  Ask for the 3 highest and the 3 lowest with no garages and you will get a pretty good idea if your offer is reasonable.  Personally, I would prefer to insult the seller than to overpay.

I don't understand how a house can sell for less than a car

DarinC

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Re: "Insulting" a seller...
« Reply #37 on: July 26, 2014, 02:10:48 PM »
Lawyers and accountants work for flat rates.  You pay them a set fee in return for a set service.  Insurance agents are parasites too, yes.  They exist only to get you to buy more insurance than you are legally required to carry.  I would prefer a world where consumers get to decide what level of insurance they want, and they could buy it directly from insurers.  Insurance agents are just middle men who take the buyer's money without providing any tangible benefit.  Parasites.

Now I can get a forum member who's an insurance agent all riled up, too.
Well, for one you already have that world. You can buy insurance online directly from an insurance company these days.

I think parasites is a bit strong of a word. They're middle men just like virtually everyone is in a modern economy because of specialization. There are a few instances where you can buy directly from a seller, and that goes more for services these days, but in most cases some other party is included in the transaction.

Btw, if you want to look at a really profitable industry acting as an intermediary, I wouldn't look at car insurance. There are other kinds that I think have much higher margins considering what they do.

prof61820

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Re: "Insulting" a seller...
« Reply #38 on: July 26, 2014, 02:28:34 PM »
I asked this question to a very experienced and successful real estate attorney and investor and he suggested that the best approach is to apologize to the seller first by saying that "you wish you could do better" and also let the buyer know that your "insulting" offer is all you can afford and you understand if he/she rejects it but they should know that it will be there for them if they change their mind later on. 

He did not advise raising the price of the "insulting" offer.

I think this is a wise approach in dealing with differences in valuation by the buyer and seller.

Don't let your realtor make you become impatient or make an offer you cannot afford or will regret.

nushagak

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Re: "Insulting" a seller...
« Reply #39 on: July 26, 2014, 02:35:28 PM »
OP your realtor has $$$ incentive for you to pay more than you want to pay. Never forget that.

Our first home was listed for $119; we opened at $85.

The counter was $89 - the listing realtor immediately regretted that counter and asked to withdraw it, but the paperwork was already done. (+1 for inexperienced listing agents on the other side of the transaction!!)

We settled on $92k with a 3k seller assist.

TL;DR - there's a 20% window for most listings. So long as you are within 20% of the asking price, almost everyone will counter your offer. Since this listing is 1) vacant, 2) in a college town and 3) on the market over 180 days... most sellers in this situation would be very motivated to just get rid of the property already. You have a lot of negotiation room to lowball the snot out of this.

clarkfan1979

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Re: "Insulting" a seller...
« Reply #40 on: July 26, 2014, 06:55:27 PM »
If you want to break even on this deal you need to plan on owning the house for at least 5 years. If you are going to make a really low offer, I think it's fine if you write a letter justifying the price. Having supporting comps would be nice. Personal sellers are not always rational so you never know how it's going to go. I always enjoyed buying houses from banks because there tends to be less emotion involved.

My father-in-law wouldn't include the refrigerator in the sale of his house because he really like it. He let one deal fall through because he didn't want to give up the fridge. My mother refused to give minor credits to a seller in the contract to fix a few things. She thought the buyers were spoiled and she wanted them to spend their own money to fix it. She was willing to let the deal fall through but it didn't. People can be very weird sometimes.

Because it is empty, I think you have reason to give a low offer. There is a good chance that the seller is currently paying for two houses. I think I told this story before, but my parents were carrying two residences for a while. They could afford it when they were both working full-time but could no longer afford it once they retired. They were selling a trailer for 45K. They owned it outright but it still cost them $900/month is taxes, insurance and utilities. The seller was nervous to offer $900 less than asking price. My dad told me that they would have taken $9000 less than asking price.

 

clifp

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Re: "Insulting" a seller...
« Reply #41 on: July 26, 2014, 07:31:28 PM »
Insulting the buyer is complete BS.  The only time I've had agents talk like this were awful agents.  My first agent who was my boss wife, sold naive 23 year old me, my first house and ripped me off good.   Also a total sleaze bag realtor that worked briefly here in Hawaii talked about not insulting the seller.    The realtor who I bought this house mostly earned his commission by urged  us to put  in a offer 22% below asking instead of us just passing.  I've had good Realtor tell me the offer was unlikely to be accepted but they never told me don't insult the seller.  It is really time to find a new agent.

I recently listed a condo for $90K  same price as the house.  After a week we got an offer for $82K the same price you want to offer.  Not only was I not at all insulted but I was prepared to counter down to 88K with hopes of getting to $86K.  Fortunately, another offer came in the next day at $95K cash, which I accepted.

Mr Mark

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Re: "Insulting" a seller...
« Reply #42 on: August 02, 2014, 03:46:33 PM »
http://www.google.com/imgres?imgurl=http%3A%2F%2Fwww.globalpropertyguide.com%2Ftemplate%2Fassets%2Fimg%2Finv_housing_4.jpg&imgrefurl=http%3A%2F%2Fwww.globalpropertyguide.com%2Ffaq%2Ftransaction-costs&h=621&w=441&tbnid=pUCzI0_1bAk0nM%3A&zoom=1&q=real%20estate%20transaction%20charges%20international%20comparison&docid=M88VPAOzqEKMAM&hl=en&ei=uVvdU7_GAsWvyATqt4LgDw&tbm=isch&ved=0CCAQMygCMAI&iact=rc&uact=3&page=1&start=0&ndsp=16


I had a different take on their comment. It may be more of a tactics issue.

Once you make a 'low ball' offer, how do you justify making a significantly higher one? Ie if they don't even respond, and you really want the place and are willing to in reality pay more, how do you explain coming back with a bigger offer?

"Oh, yeah, I was just trying to sucker you with a lousy low ball offer in case you're desperate.... but I really want it, so here is my real offer, honest..."

time for what I would call an adult conversation with the realtor. Table your concerns, and discuss with them. They should be basing their stuff on market comps, adjusted as necessary due to sq ft, extras, condition,   with a perhaps a few % down to look and feel, trends, recent big news etc.

Plus, part may be the agent has a reputation as well. Agents must deal with each other all the time. If your bid really is a total waste of time, they wont look good presenting it, and it of course won't help you if that really is the case.


And Sol, ' parasites' is a bit strong.they do bring expertise and services, albeit done cheaper in other countries...




sol

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Re: "Insulting" a seller...
« Reply #43 on: August 02, 2014, 05:38:19 PM »
Once you make a 'low ball' offer, how do you justify making a significantly higher one? Ie if they don't even respond, and you really want the place and are willing to in reality pay more, how do you explain coming back with a bigger offer?

Why do you need to "justify" it?  I don't see the difference between this and any other negotiation.  Make an offer.  If they say no, you make another one.  If you can't agree on a price, you move on.  This scene plays out millions of times per day in marketplaces around the world, and nobody gets all wadded up over opening bids.

I think all of this talk of offending and justifying and apologizing and reputations is complete BS.  This is a business transaction, not group therapy.

waltworks

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Re: "Insulting" a seller...
« Reply #44 on: August 02, 2014, 06:04:41 PM »
Sol, what you're saying is true. It's also not a great way to think about a real estate transaction because if your goal is to get the house for price X or less, your best negotiating strategy is not always to start at zero/super low. Sellers are emotional people and you CAN upset them with your $30k offer, then never manage to get the house for the $60k that would be agreeable to everyone involved.

You also have to remember that getting the place under contract (at least in the US, at least with normal contingency clauses) puts you in the drivers seat. You can ask for price concessions as much as you want after that for a variety of reasons and the worst the seller can do is say no. You can easily back out, and the seller can't. In many cases it's best to get something under contract, even if it's more than you want to spend, and then do some hard negotiating over repairs and such.

People aren't 100% rational. Suck it up and realize that you have to strategize around this.

-W

Once you make a 'low ball' offer, how do you justify making a significantly higher one? Ie if they don't even respond, and you really want the place and are willing to in reality pay more, how do you explain coming back with a bigger offer?

Why do you need to "justify" it?  I don't see the difference between this and any other negotiation.  Make an offer.  If they say no, you make another one.  If you can't agree on a price, you move on.  This scene plays out millions of times per day in marketplaces around the world, and nobody gets all wadded up over opening bids.

I think all of this talk of offending and justifying and apologizing and reputations is complete BS.  This is a business transaction, not group therapy.

clifp

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Re: "Insulting" a seller...
« Reply #45 on: August 03, 2014, 04:19:27 AM »
Sol, what you're saying is true. It's also not a great way to think about a real estate transaction because if your goal is to get the house for price X or less, your best negotiating strategy is not always to start at zero/super low. Sellers are emotional people and you CAN upset them with your $30k offer, then never manage to get the house for the $60k that would be agreeable to everyone involved.

people aren't 100% rational. Suck it up and realize that you have to strategize around this.

-W




This is all true but there is a world difference between offering somebody less than 1/2 of what they are asking 30K on property that you hope to get for 60K and offering 82K on 90K ask. That maybe insulting 10% below is not.  The one thing I learned from my 1st real estate agent, which was reinforced by Freakonomics is that most Realtor have a much higher vested interest in seeing the sells close, getting the maximum price for the seller is pretty low priority, and getting he lowest price for the house buy is of almost no priority for the buyers realtors.  A buyer realtor makes and additional $240 if the house sells for 90K as opposed to 82k.

Rural

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Re: "Insulting" a seller...
« Reply #46 on: August 03, 2014, 07:26:50 AM »
Sol, what you're saying is true. It's also not a great way to think about a real estate transaction because if your goal is to get the house for price X or less, your best negotiating strategy is not always to start at zero/super low. Sellers are emotional people and you CAN upset them with your $30k offer, then never manage to get the house for the $60k that would be agreeable to everyone involved.

You also have to remember that getting the place under contract (at least in the US, at least with normal contingency clauses) puts you in the drivers seat. You can ask for price concessions as much as you want after that for a variety of reasons and the worst the seller can do is say no. You can easily back out, and the seller can't. In many cases it's best to get something under contract, even if it's more than you want to spend, and then do some hard negotiating over repairs and such.

People aren't 100% rational. Suck it up and realize that you have to strategize around this.

-W


You are forgetting, though, the real advantage to being the buyer. Unless the buyer has made a real mistake by becoming emotionally attached to a house they don't even own, the goal is not "to get the house for X price" but "to get a house for X price" (or a bargain price). At the most, a buyer may need to buy some house or other. The seller, on the other hand, has to sell that particular house, not any other.

usmarine1975

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Re: "Insulting" a seller...
« Reply #47 on: August 05, 2014, 07:06:34 AM »
Sol, what you're saying is true. It's also not a great way to think about a real estate transaction because if your goal is to get the house for price X or less, your best negotiating strategy is not always to start at zero/super low. Sellers are emotional people and you CAN upset them with your $30k offer, then never manage to get the house for the $60k that would be agreeable to everyone involved.

people aren't 100% rational. Suck it up and realize that you have to strategize around this.

-W




This is all true but there is a world difference between offering somebody less than 1/2 of what they are asking 30K on property that you hope to get for 60K and offering 82K on 90K ask. That maybe insulting 10% below is not.  The one thing I learned from my 1st real estate agent, which was reinforced by Freakonomics is that most Realtor have a much higher vested interest in seeing the sells close, getting the maximum price for the seller is pretty low priority, and getting he lowest price for the house buy is of almost no priority for the buyers realtors. A buyer realtor makes and additional $240 if the house sells for 90K as opposed to 82k.

I found this interesting.  Yea they make $240 extra only on your home but what do they make as a whole on the whole portfolio of properties they sell in a year.  $240 for one transaction is and can make a significant difference in their income as a whole.

My wife and I have come to the conclusion that we will no longer need a Realtor.  We can find our own properties, we have a really good real estate attorney.  And we have all the other connections.  We simply would draft a letter to the selling agent explaining that we will only pay the one side of commission meaning he or she can not double dip.  Our attorney will draw up this letter as well as any offers etc... That we would need.  It may be a little more difficult but honestly the last 2 purchases we had the Realtor really didn't do much for us.  Our attorney could have done all that they had, and sadly both made comments to the effect of how little their commission on our purchases were.  Both were under 50k, mind you the one agent has been involved in 4 home purchases with me all of which she was the selling and listing agent.  If you are a Realtor and your reading this you never tell your client that you are not making enough off their purchase.  Nor do you try to push them to a house that is more then triple the price of what they have told you they want to pay.

They benefit by pushing home values up in that commissions will rise with the price.  I wouldn't say that everyone can buy without an agent but this guy will be from now on.