Just wanted to rant! What are people thinking?

Just recieved an offer on one of my short sale listings.  Property hit the market last Friday.  GREAT condition, GREAT location, just an all around GREAT house!  Did I say this was a fantastic house?

The comparables were really easy, there have been a solid amount of sales in the area recently so pricing was fairly simple.  The comparables showed anywhere from $300,000 to $350,000 for similar homes.  Our pricing stategy was to price it in the middle and make regular reductions until we get an offer.  So far there has been alot of activity and an offer coming in the first month is pretty much a certainty.  I believe that the number that we need to hit in order to get an approval is $300,000 or more or it will be very difficult to get the sale approved.

I get an offer today for $225,000.  The only homes that have sold in that price range were either 1/2 the size or they were in need of renovation and did not have a heated, inground pool or spillover jacuzzi.  They also didnt have 2 master suites and they did not have anywhere near the amenities or details of this home.

What are people thinking when they make an offer like that? Moreso, what is the agent thinking and what expectations are they setting for their buyers other than disappointment?

I know there will be some who will say submit it and let the bank decide but I am not in that camp. Maybe that is why I close 97% or more of my short sales.  I counsel  my sellers to get offers that will be approved, not take low ball offers that make no sense and have no chance of getting approved.

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Permalink Reply by Bryant Tutas on June 22, 2011 at 4:38am
Come on Jeff. It's a distressed sale!! The sellers will accept anything. And of course we know the lender doesn't care about value. Maybe that buyer just wants to waste several months of everybody's time. Agents should know better.
Permalink Reply by Jeff Payne on June 22, 2011 at 5:00am

You would think that we have enough short sales here and have been doing them for 5 years in our area that the agents would have a clue.  Offers close to or lower than market value are one thing, stupid low ball offers are another. 

Harry, it is the sellers decision for sure but I would be doing him a disservice if I were to have him accept the offer when I know it has little chance to get approved.  our jobs are to help the sellers and encouraging him to accept the offer would be wrong to do.

As far as buyers, why do buyers agents think it is OK to set an expectation by submitting offers like this?  What is wrong with saying NO, I will not submit an offer like that unless we can justify why we are making that offer!

Permalink Reply by Jeff Payne on June 22, 2011 at 5:12am
Amen to that!

Harry Clay said:
Hey! I wouldn't touch that offer with your ten foot pole. Sheesh! lol
Permalink Reply by Neddie B. on June 22, 2011 at 6:34am

Jeff, how about countering at asking price and see where it goes? Of course get your proof of funds and pre-approval letter to make sure they can swing it!

 

Permalink Reply by Eric Mieles on June 23, 2011 at 3:01am
I wish more agents would do this. First off I don't understand why so many agents just either let there clients barrel over them with crazy numbers, valuations and offers.

The problem is that many agents are just "COMPLIANT" rather than decently bold or even professional.

If more would stand up and reject this way of thinking buyers can just make up a number I truly believe we would have a more stability, respect and well educated buyers who will be our next generation of sellers.

Way to go Jeff. Also this solidifies the need for you guys to create a buyers agent certification!
Permalink Reply by Jeff Payne on June 23, 2011 at 5:08am
Thanks for the replies.  Seller countered at FULL PRICE and buyer disappeared into the sunset :)
Permalink Reply by Jeff Payne on June 23, 2011 at 8:52am
yes so close :)
Permalink Reply by Wendy Rulnick on June 23, 2011 at 12:59pm

Jeff - This very topic got under my skin recently, too! I hope you don't mind the link to: Do You Just Write Any Old Offer To See If It Sticks?

Permalink Reply by Jeff Payne on June 24, 2011 at 4:40am

Hi Wendy,

I just left a comment on that blog. The thing that bothers me the most is that the success rate for short sales is very poor because agents dont take the time to figure this stuff out, instead they just throw offers out there because that can be the easy thing to do.  They can send me low ball offers but my sellers are educated enough (BY ME) to know that short sales are not 1/2 price sales, they are typically fair market value sales. 

Too many people dont stop to wonder why most short sales never close.

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