The home buyer sign calls I get in Sacramento start out like this:
"I was driving by your listing and would like to find out how much the seller is asking."
First, when you're an agent like me who is managing a couple dozen listings all over Sacramento, it helps to define which particular home the caller is inquiring about. Then I question whether the caller is a home buyer or an agent. Lots of agents don't identify themselves, for some reason.
After describing the property, I feel it is necessary to level with callers. I tell them upfront:
"The price this home is listed for and what it will sell for are two different things."
I realize they immediately jump to the conclusion that it's priced too high, but I point out that it is actually priced too low. I also explain that I have multiple offers but it doesn't mean they can't write a better offer. Then I refer them to one of my buyer's agents for follow up -- it's often not a dual agency situation that I want to jump into.
My sellers deliberately price their short sales below market value to attract multiple offers. So do other agents' sellers, btw. These lower-priced short sale listings -- and listings for Sacramento bank-owned homes -- get attention and do sell for much higher prices.
A buyer emailed me from Trulia yesterday asking me to let him know when the price of a certain short sale listing is reduced. It made me chuckle because I have 18 offers on that listing, all more than list price, some at 20% to 25% more than list price.
Another buyer called me on Mother's Day to ask if I'd write an offer for her on a home in Elk Grove. It was listed at $200,000. I ran the comps, which showed similar homes were selling between $330,000 and $350,000. She offered $305,000. The listing agent called me the following day to say he had received almost 50 offers and none but my buyer's offer had a chance in a blue moon of acceptance.
What I wonder is how is it that I was the only agent in that group to look at the comparable sales?
The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com
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Elizabeth Weintraub is an author, 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 Sacramento. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you.
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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.
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Elizabeth - Your post is so indicative of what is also happening down here in LA and Ventura Counties too. While I understand why agents do that (intentionally price low), it is very frustrating and discouraging to buyers. I actually wrote a post this weekend (not yet posted - a little later though) about this exact practice.
Once again, it's great for you short sale and REO LA's to get all these bidding wars going for your properties but it's extremely annoying to buyers who have been out there searching and competing for months. It's actually driving many of these buyers back onto the fence where they came from months ago.
It's the difference between experience and education and just throwing stuff against the wall and hoping it sticks. There is a reason many agents are thriving (like yourself) in this market and why many others are starving.
I love HGTV and watch it a lot. The other night in a flip house the seller listed for $599,900. yet needed to sell for closer to $700,000. His agent told him this was "risky" He got multiple offers and sold it for $705,000. Makes me wonder about his agent too.
50 offers ????
... sounds fishy to me !! ...what a shame some are not being realistic.
Actually 50 offers doesn't sound fishy to me at all. We're seeing some of the same thing down here in SoCA as well. NoCA is just as competitive.
Brilliant, Elizabeth. Basically your offer came in at 92% of market value. Makes sense to me. You have a wise buyer. And she has an even wiser Realtor(R)!
Elizabeth - I'm glad we are beginning to see the SOLD prices on those short sale and REO properties hit the MLS. For awhile it was taking forever to get the short-sales closed, so we could even determine how much they actually sold for. You have written an excellent post here, which helps educate the public about the real deal relating to short-sales and REOs. Heck, it'll likely help educate some agents too!
Elizabeth, I spoke to a buyer recently whose strategy was to offer 20% below list price. Well Ok then!! The list price means nothing in this market. All BAs need to be pulling comps and making offers based on value not the asking price. If they don't their buyers will NEVER get a property.
Elizabeth
These are trying times we are in, and some how we see all kinds. Hope life is good for you my friend.
Elizabeth: The pie-in-the-sky listings drive me nuts. I had a conversation with a buyer tonight about homes she keeps seeing listed for so much lower than market. Why can't she buy one of those?--she asks. You can...as soon as you are willing to pay the market price.
I totally feel your pain Chris. Just today, I had a similar conversation with a client who is so pissed because he too is so frustrated with seeing these great properties listed in his price range and then as soon as his Realtor runs the comps and he's told that the comps are 100k higher.
Like many of us (buyer's agents and buyer's LO's), he feels that the REO LA's that play this game of listing low to generate bidding wars is so frustrating and annoying. While I understand why REO LA's play this game, it can be extremely aggravating to those of us on the other side of the table working with buyers.
It seems like going to far when 50 offers come in doesn't it seem more realistic to get a bit closer to the real price and only have a few offers?
Elizabeth,
But why put the house for $200K, while then you get 50 offers? For me a situation when there are many offers is a sign that the agent did not do a right job pricing it right.
I understand that wondeful notion of checking the comps, but in my experience it works differently.
Not with short sales, though, as we tried this strategy with REOs. We try to submit the offer within the first 2 hours of listing, and insist that it is submitted to the Lender for approval, and we often get them approved BEFORE there are other offers.
Our offers are coming extremely low compared with sales, and low compared with the asking price. We usually get a counter, and we counter with $500 more and we get it accepted by the Lender. Well, a gorgeous direct oceanfront studio for $47K while they are in the $60s and $70s and up. Not once, not twice, I have 6 of them under contract.
It is just how different our markets are
You can price to sell or price to sit...hard to feed the dog, cat, mortgage, yourself on sitting....and what good does that do anyone....have a great day !
Hi Elizabeth... I think that the problem is that despite shifting markets, there has not been a corresponding shift in mindset and buyers still expect to bargain off of the listed price... even if a property is genuinely priced too low. For some reason the words "too low" do not seem to part of most buyers' (or buyer agents') vocabulary!
Hi Donne: Well, I hate to say this but some buyers belong back on the fence.
If buyers don't want to make a reasonable offer by looking at the comps, or as BB says, offer 20% under list on those desirable homes, they just won't buy anything at all. Because there are going be agents like me and buyers like mine who will wipe those offers off the slate and still get the home under market.
You said girlfriend. For many buyers, this is a lesson learned the hard way when they lose a property they really wanted because they didn't listen to their Realtor and make a fair market offer and a smarter and more motivated buyer made a better offer and got the house.
It's unfortunate that it has to get to that before many of them learn to quit screwing around with low ball offers and get serious. This is my life but I love it.
I wish more sellers understood that pricing to sell works. We have multiple offers on many of our bank-owneds and short sales. Sometimes the buyer's agents understand the process. Other times, they allow their buyers to underbid a property that they really want. I hate to see inexperienced agents write all these low-ball offers on short sales and bank-owneds, but it's their ink.....and time.
This seems like a great idea-how have you dealt with the bank if you only get one offer? Do you feel that the disclosures on the MLS about it being a Short Sale are sufficient for a buyer/buyer's agent to know the final decision is the bank's and that the bank might want the seller to counter?
Thanks for sharing more great info.