I believe it's good practice to insist that home buyers choose an offering price because it's their money and their investment, whether the property is a home or a 500-unit apartment building. I give buyers enough information about the neighborhoods we tour, the market trends and facts for the area, coupled with comparable sale data to help them make a decision. Yet almost every buyer pushes that issue and says, "But that's why I hired you as my agent -- I want you to tell me what to offer."
It's human nature. I take that to mean they want my opinion, so I will eventually spit out a suggested price, making it clear that the price I am tossing into the mix is what I would offer, not what they should offer. Because I often know the listing agent, I may have other reasons for naming a certain figure. Much depends on the type of property, how long it has been on the market, the terms under which it is listed, competing offers from other buyers and so on.
Earlier this week, I showed a bank-owned home to a buyer. A bunch of bank-owned homes, actually. But one stuck in his mind. Let's say it was listed at $200,000, to protect the identity of the parties involved. It was on the market zero days. I explained to the buyer that it made no sense to call the listing agent because the listing agent does not answer his phone. I've been in other deals with this agent and know how he works. Still, after touring homes all morning, the buyer singled out this particular Sacramento home. His plans are to buy, fix-up and sell several homes in Sacramento, so it would be an investment for him.
We discussed the price at great length. He asked me again to call the listing agent. I explained that the agent has warnings plastered all over his web site and attached to each listing that says the standard, "Don't ask us how much the bank will accept because we do not know; don't ask us how many offers we have received because we will not tell you. MLS is current."
He pressed the issue on price, insisting I give him a figure. OK, I suspect a few offers will come in under list price, a few at list price, and quite a few above list price because that home was definitely priced way under market value. By at least a $100,000. That's a big spread. And the profit margin upon resale would be enormous because fixed up it would be worth $500,000.
Finally I told him I would offer $230,000.
"I'd like to offer $250,000," he replied.
"Are you sure? I don't think you have to go that high," I cautioned.
"Let me think about it and call you back."
An hour went by and the buyer called again. "Yes, I want to offer $250,000."
OK, I submitted the offer to the listing agent.
Couple of hours later, the buyer called back. "I would like to change that offer to $230,000."
Well, he could do that, but it would weaken his negotiations because the offer was already emailed to the bank. He decided to stick with his original price.
Fortunately, the bank accepted his offer among the highest and best. He's excited. And I guess that's all that really matters.
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Certified HAFA Specialist
My Sacramento Real Estate Listings
Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com.
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The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate.
Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice. It could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.
