Author Topic: Not accepting offers at asking price should be illegal  (Read 5439 times)

Villanelle

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Re: Not accepting offers at asking price should be illegal
« Reply #100 on: May 26, 2021, 12:20:24 PM »
We pick the offer most likely to close.

I'm in several FB groups for military families moving to our area.  So many military families *only* look at VA loans.  I can only ASSume that's because they have very little money to put down (a disaster waiting to happen for people who move every few years!), but it's almost as though they think they must use a VA loan, when in fact there are better deals if you are a well-positioned buyer.

But sellers know VA loans are a PITA, they require extra inspections (which can't be waived), and are just messier.  So you have people who have put in 2 dozen offers with competitive pricing, escalation clauses, waived everything that can be waived, offers to cover huge amounts if there's an appraisal gap, and they can't get anything accepted.  Why would a buyer take a VA loan with the extra hoops to jump through when they have 20 other offers from which to choose?  People don't seem to get that, and many of them seems to feel it is "discrimination" against military families.  When I point out that I'm sure they'd happily accept an offer from that same military family without a VA loan so no, it isn't discrimination against military families (which I'm not sure would be illegal anyway, as 'military' isn't a protected class), it goes over like a Trump flag at a Pride rally. 

They just don't get that, as a seller, you really want an offer that is going to make it to closing and in some cases, that worth a few thousand less on the sale even.

jeromedawg

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Re: Not accepting offers at asking price should be illegal
« Reply #101 on: May 26, 2021, 01:10:48 PM »
Everyone hears about the low-interest rates and the high cost of lumber being part of the housing supply problem.  But nobody mentions what shutting down the Southern border has done to create the labor shortage.  Building housing requires a lot of hard-working low skilled labor. 


ICE shut down immigration under Trump and it seems Biden has continued to keep immigrants out. 




Getting back to the crazy RE market conditions, I don't understand why the demand doesn't wane.  Why do so many people want to subject themselves to such a cruel market?  Where are the sellers planning to go?  Don't they realize that by selling they will become buyers?  The gains from their sale will just evaporate when they go shopping for a replacement.  So, my question is "Who's actually winning?" in this market?

In CA prop 19 passed last year, which allows those 55 and older to transfer the tax base of their primary home to a replacement anywhere in the state. So I think a number of people in that age range are capitalizing on it and upgrading to their dream homes, taking full advantage of their tax basis. I mean, in a place like CA, who *wouldn't* to retire early in the most desirable places (especially the coastal cities). I think this might be what's happening in my immediate area and part of what's contributing to the madness (aside from a lot of younger rich folk scooping up homes fast too). Folks who are well off in the 55+ range probably have TONS of money laying around for huge down payments or all cash and are willing to overpay well over asking especially because of the huge tax savings upgrading to a significantly nicer property in a nicer area.
« Last Edit: May 26, 2021, 01:15:25 PM by jeromedawg »

JetBlast

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Re: Not accepting offers at asking price should be illegal
« Reply #102 on: May 26, 2021, 09:13:30 PM »
We pick the offer most likely to close.

I'm in several FB groups for military families moving to our area.  So many military families *only* look at VA loans.  I can only ASSume that's because they have very little money to put down (a disaster waiting to happen for people who move every few years!), but it's almost as though they think they must use a VA loan, when in fact there are better deals if you are a well-positioned buyer.

But sellers know VA loans are a PITA, they require extra inspections (which can't be waived), and are just messier.  So you have people who have put in 2 dozen offers with competitive pricing, escalation clauses, waived everything that can be waived, offers to cover huge amounts if there's an appraisal gap, and they can't get anything accepted.  Why would a buyer take a VA loan with the extra hoops to jump through when they have 20 other offers from which to choose?  People don't seem to get that, and many of them seems to feel it is "discrimination" against military families.  When I point out that I'm sure they'd happily accept an offer from that same military family without a VA loan so no, it isn't discrimination against military families (which I'm not sure would be illegal anyway, as 'military' isn't a protected class), it goes over like a Trump flag at a Pride rally. 

They just don't get that, as a seller, you really want an offer that is going to make it to closing and in some cases, that worth a few thousand less on the sale even.

This was a concern we had with FHA and VA loans when listing our townhouse.  With a buyer wanting to put 3.5% down we had no idea if they would be able and willing to cover the gap if the house didn't appraise by even a small amount.  Needless to say we were relieved that the high bid was also a cash offer.

Cassie

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Re: Not accepting offers at asking price should be illegal
« Reply #103 on: May 27, 2021, 11:52:47 AM »
I didnít even consider the offers that were VA or FHA. We have a hot market and I would have lost the condo I wanted if I didnít close timely.  We never used a VA loan although we could have. People need to look at all the circumstances to decide.

SndcxxJ

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Re: Not accepting offers at asking price should be illegal
« Reply #104 on: May 29, 2021, 09:51:34 PM »
I tend to agree with the notion that I wish list price had some sort of relevance.  It would be a much more clear market for all involved if the list price was the hopeful price the seller wants to get, but would entertain all offers above or below list price.
However, here are two local practices that's hate:
1. A somewhat common practice of extremely large multifamily properties is to list the property with no price.  The list price will sometimes be referred to as "market derived".  It drives me crazy.  I have to do a bunch of research into a property to even determine if it is a property to even consider.
2. A very active realtor team seems like they list all of their new listings on Thursdays.  They list everything for $895,000, but they operate in an area where properties are commonly going for $1.2-$1.5M.  The list price has no relationship to the value of the properties listed, not even close.  They are smart, experienced, and know what they are doing but I find it annoying.

List price has no relevance.  The only thing that matters is to determine what you feel the property can sell for and offer that if you think it is a good buy for that price.

secondcor521

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Re: Not accepting offers at asking price should be illegal
« Reply #105 on: May 29, 2021, 10:13:22 PM »
As a parenthetical comment, I've often wondered why it isn't more common practice for the sellers to get an appraisal and then use the appraised value as the list price.  Kinda like I've done with cars - look it up on KBB and then list it for that price.  Perhaps with some adjustments for how desperate one is as a seller, or if there are some things that the appraisal doesn't include (a new school being built nearby next year or something like that).

I'm sure there are reasons, but it's something I've thought of doing as a seller myself before for various reasons.

omachi

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Re: Not accepting offers at asking price should be illegal
« Reply #106 on: May 30, 2021, 10:55:50 AM »
As a parenthetical comment, I've often wondered why it isn't more common practice for the sellers to get an appraisal and then use the appraised value as the list price.  Kinda like I've done with cars - look it up on KBB and then list it for that price.  Perhaps with some adjustments for how desperate one is as a seller, or if there are some things that the appraisal doesn't include (a new school being built nearby next year or something like that).

I'm sure there are reasons, but it's something I've thought of doing as a seller myself before for various reasons.
Where is the value in an appraisal for the seller? In a normal market, what you describe is basically what happens. The listing realtor is going to do some comps, which is effectively the KBB look up, and things go fine from there. No sane buyer is going to trust the seller's appraisal anyway, so why pay for it? Maybe if you're desperate to attract attention quickly, and so give the buyer a little help?

In an overheated market, it seems like an even worse value proposition. I don't quite understand why people are behaving the way they are now, but it's clear they are. The realtors are still doing comps, know how to list at a price low enough that it attracts a bidding war, and the end result is an eye watering price that buyers are eager to pay. If buyers are paying cash and waiving inspections and appraisals, it seems to make even less sense for the seller to pay for that information and hand it to the buyer. No appraisal is clearly working for the seller, so why would they pay for one?

I'm curious. What are the reasons you've considered doing it for?

jeromedawg

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Re: Not accepting offers at asking price should be illegal
« Reply #107 on: May 30, 2021, 11:02:59 AM »
As a parenthetical comment, I've often wondered why it isn't more common practice for the sellers to get an appraisal and then use the appraised value as the list price.  Kinda like I've done with cars - look it up on KBB and then list it for that price.  Perhaps with some adjustments for how desperate one is as a seller, or if there are some things that the appraisal doesn't include (a new school being built nearby next year or something like that).

I'm sure there are reasons, but it's something I've thought of doing as a seller myself before for various reasons.
Where is the value in an appraisal for the seller? In a normal market, what you describe is basically what happens. The listing realtor is going to do some comps, which is effectively the KBB look up, and things go fine from there. No sane buyer is going to trust the seller's appraisal anyway, so why pay for it? Maybe if you're desperate to attract attention quickly, and so give the buyer a little help?

In an overheated market, it seems like an even worse value proposition. I don't quite understand why people are behaving the way they are now, but it's clear they are. The realtors are still doing comps, know how to list at a price low enough that it attracts a bidding war, and the end result is an eye watering price that buyers are eager to pay. If buyers are paying cash and waiving inspections and appraisals, it seems to make even less sense for the seller to pay for that information and hand it to the buyer. No appraisal is clearly working for the seller, so why would they pay for one?

I'm curious. What are the reasons you've considered doing it for?

Agreed - basing listing price on the appraisal seems like giving greater way to potentially 'under-pricing' your place according to market value and what people are willing to pay. If you under-list too much you may not be able to maximize on that and could end up potentially selling for less than you could have gotten. I could see how an appraisal might make more sense when it's a buyer's market (since the seller might be more motivated to do more to make their place more appealing/marketable and thus might want to get an appraisal to 'justify' everything they did to update/upgrade their home) but not in a market like this. "Comps" are often just based on what other homes of similar size have been listing for by location and condition (and maybe Zillow/Redfin estimates) and if you slightly under-list you attract even more buyers who will drive the prices up more if your place is in great condition.  I haven't really heard of people (at least these days) getting their places appraised so they can list according to the appraised value.
« Last Edit: May 30, 2021, 11:11:33 AM by jeromedawg »

secondcor521

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Re: Not accepting offers at asking price should be illegal
« Reply #108 on: May 30, 2021, 11:09:28 AM »
As a parenthetical comment, I've often wondered why it isn't more common practice for the sellers to get an appraisal and then use the appraised value as the list price.  Kinda like I've done with cars - look it up on KBB and then list it for that price.  Perhaps with some adjustments for how desperate one is as a seller, or if there are some things that the appraisal doesn't include (a new school being built nearby next year or something like that).

I'm sure there are reasons, but it's something I've thought of doing as a seller myself before for various reasons.
Where is the value in an appraisal for the seller? In a normal market, what you describe is basically what happens. The listing realtor is going to do some comps, which is effectively the KBB look up, and things go fine from there. No sane buyer is going to trust the seller's appraisal anyway, so why pay for it? Maybe if you're desperate to attract attention quickly, and so give the buyer a little help?

In an overheated market, it seems like an even worse value proposition. I don't quite understand why people are behaving the way they are now, but it's clear they are. The realtors are still doing comps, know how to list at a price low enough that it attracts a bidding war, and the end result is an eye watering price that buyers are eager to pay. If buyers are paying cash and waiving inspections and appraisals, it seems to make even less sense for the seller to pay for that information and hand it to the buyer. No appraisal is clearly working for the seller, so why would they pay for one?

I'm curious. What are the reasons you've considered doing it for?

It was in a market a long long time ago and far far away from the here and now, and was to prevent the seller (me) from accepting an early low ball offer.  There are obviously other ways to avoid that error, and it's obviously not a problem in today's market.

omachi

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Re: Not accepting offers at asking price should be illegal
« Reply #109 on: May 30, 2021, 01:24:48 PM »
It was in a market a long long time ago and far far away from the here and now, and was to prevent the seller (me) from accepting an early low ball offer.  There are obviously other ways to avoid that error, and it's obviously not a problem in today's market.
Makes sense, and probably a rather good use of the money it took to get the appraisal. Being able to say that you know the value according to at least one appraiser sounds like a reasonable bargaining point when the market isn't great for sellers.

Michael in ABQ

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Re: Not accepting offers at asking price should be illegal
« Reply #110 on: May 31, 2021, 06:47:13 PM »
As a parenthetical comment, I've often wondered why it isn't more common practice for the sellers to get an appraisal and then use the appraised value as the list price.  Kinda like I've done with cars - look it up on KBB and then list it for that price.  Perhaps with some adjustments for how desperate one is as a seller, or if there are some things that the appraisal doesn't include (a new school being built nearby next year or something like that).

I'm sure there are reasons, but it's something I've thought of doing as a seller myself before for various reasons.

Considering a typical appraisal might be $400-500 it seems like a worthwhile investment when you're about to pay a realtor thousands or tens of thousands of dollars. I used to be a commercial real estate appraiser and was active in a forum with mostly residential appraisers and the anecdotal evidence was very few buyers were will to spend a few hundred dollars for an unbiased opinion.

My guess is that the thousands of dollars a realtors 6% commissions represents isn't "real" money they have to pay out. It just comes out of the proceeds of the sale. Whereas writing a checking for ~$400 is an actual cost.

Aegishjalmur

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Re: Not accepting offers at asking price should be illegal
« Reply #111 on: June 01, 2021, 03:23:06 PM »
As a parenthetical comment, I've often wondered why it isn't more common practice for the sellers to get an appraisal and then use the appraised value as the list price.  Kinda like I've done with cars - look it up on KBB and then list it for that price.  Perhaps with some adjustments for how desperate one is as a seller, or if there are some things that the appraisal doesn't include (a new school being built nearby next year or something like that).

I'm sure there are reasons, but it's something I've thought of doing as a seller myself before for various reasons.

Considering a typical appraisal might be $400-500 it seems like a worthwhile investment when you're about to pay a realtor thousands or tens of thousands of dollars. I used to be a commercial real estate appraiser and was active in a forum with mostly residential appraisers and the anecdotal evidence was very few buyers were will to spend a few hundred dollars for an unbiased opinion.

My guess is that the thousands of dollars a realtors 6% commissions represents isn't "real" money they have to pay out. It just comes out of the proceeds of the sale. Whereas writing a checking for ~$400 is an actual cost.

I don't see much point for the seller getting one done. When the purchaser applies for a mortgage, all the appraiser does is state the value is supported. 95% of all the purchase appraisals I reviewed had the value as equal to the sales price, rounded up to nearest hundred dollars. 4.99% showed less, and the rest showed a higher value. You can't convince me that all the houses were priced at their exact worth, the appraiser is only stating it's supported.

Michael in ABQ

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Re: Not accepting offers at asking price should be illegal
« Reply #112 on: June 01, 2021, 07:51:40 PM »
As a parenthetical comment, I've often wondered why it isn't more common practice for the sellers to get an appraisal and then use the appraised value as the list price.  Kinda like I've done with cars - look it up on KBB and then list it for that price.  Perhaps with some adjustments for how desperate one is as a seller, or if there are some things that the appraisal doesn't include (a new school being built nearby next year or something like that).

I'm sure there are reasons, but it's something I've thought of doing as a seller myself before for various reasons.

Considering a typical appraisal might be $400-500 it seems like a worthwhile investment when you're about to pay a realtor thousands or tens of thousands of dollars. I used to be a commercial real estate appraiser and was active in a forum with mostly residential appraisers and the anecdotal evidence was very few buyers were will to spend a few hundred dollars for an unbiased opinion.

My guess is that the thousands of dollars a realtors 6% commissions represents isn't "real" money they have to pay out. It just comes out of the proceeds of the sale. Whereas writing a checking for ~$400 is an actual cost.

I don't see much point for the seller getting one done. When the purchaser applies for a mortgage, all the appraiser does is state the value is supported. 95% of all the purchase appraisals I reviewed had the value as equal to the sales price, rounded up to nearest hundred dollars. 4.99% showed less, and the rest showed a higher value. You can't convince me that all the houses were priced at their exact worth, the appraiser is only stating it's supported.

If you have a range of values and the purchase price is in that range, then yes, most appraisers will conclude to that price. I had some appraisals for purchases come in above the purchase price and some come in below. I knew in the case of the latter I would potentially get some push back from the client (usually a lender) or some other party to the transaction. But at the end of the day if my value was supported then that was it. I had some clients that would not disclose the purchase price because they wanted to ensure there was no anchor bias in play. However, with commercial appraisals there's generally a lot wider range of values due to fewer transactions. With suburban homes there may be a dozen sales in the last six months with multiple exact model matches.