I’ve been showing lots of houses lately because in many cases buyers have much to choose from and they’re a little bit more hesitant about the market. The current financial situation is freaking people out, and rightly so in some cases.
When we do eventually find “the one,” there is much more hand wringing about what to initially offer than there used to be. Some of my buyers take a low ball strategy, no matter what the situation. They look at Zillow and do not listen to me. It can be frustrating, as it is difficult for me to properly support their offer when presenting it to the seller’s agent. My various buyers have yet to be successful with a true low ball offer.
Some of my buyers feel that a house is correctly priced (based on my market analysis and recommendation), but still can’t rationalize offering anywhere near full price. They say to themselves, “It’s a buyer’s market, I should be able to get “X” percent off,” even though it’s not always the case and they’ve already agreed the house is reasonably priced. In some cases we eventually reach an agreement with the sellers, but sometimes my buyers end up losing the house because another buyer will come in with a more attractive offer to the seller. Buyers eventually get tired of “losing” houses and will eventually become a bit more realistic in their offer prices. At that point they typically end up with a successful contract.
I’ve also noticed that we are going through many more rounds of negotiations with sellers, even more so than the Spring market. Before we might only go back and forth on price 2 or 3 times, now going back and forth 5 or 6 times is not uncommon. Buyers are being increasingly wary that they not overpay, even though the purchase price is always supported by an appraisal that says the house is worth the contracted amount. It’s the unknown of what the market will be doing in 3-5 years that worries people. They are trying to hedge their bets.
The right offer price is one that you’re comfortable offering and hopefully reflects the fair value of the home. Sometimes it gets you the house, sometimes it doesn’t. It all depends on a meeting of the minds which usually only happens when each party sees the other as rational.