Today I had an unusual opportunity to speak with an investor who has had an investment- gone-bad listed for over one year. It came close to being sold at Trustee's Sale this month. Just in the nick of time, an offer came through and the Trustee's Sale was postponed to next month. Unfortunately, the buyer just backed out.
The reason I was speaking directly to the seller was because the listing agent seems to have disappeared (temporarily I hope). The office phone number is no longer working and the cell phone number is not accepting any calls nor does it have voice mail. Fortunately, the owner is also a broker so I felt safe in contacting him directly for information.
I was calling with some pretty normal questions about the property and to check to see if it made sense for the buyers I'm representing to make an offer. When I asked if there had been any offers, the seller said, "Yes, there had been seven offers so far." He went on to say that, "There were only two that we took seriously and presented to the bank. The rest were ‘bottom-feeders' just scavenging to see what they could get. Frankly, I'd rather let the bank foreclose than to deal with that type (of buyer)."
Ouch. I found his response interesting because this was a seasoned investor who had purchased the property as an investment. His reaction was one that I might expect from someone selling their personal residence. But generally speaking investors tend to take things less personally and just see it as a business transaction.
I thought it was an interesting opportunity to hear this investor's opinion of people who make numerous ridiculously low offers. In this case, they were not even countered they immediately hit the shredder because in the investor's opinion they were not even worthy of being presented to the bank for review.
The price of a property whether being set by the seller or by the buyer in making an offer needs to be supported by facts. Market trends, recent sales, pending sales, property condition, and current demand for similar properties are just a few of the factors that need to be considered. Property prices should never be picked out of thin air or based on feeling whether you are the buyer or the seller.
If you are a buyer who is looking for a "good deal" I'm happy to assist you in making an offer that will be low enough to make it a good deal for you and high enough that it will be taken seriously by the seller...and the bank in the case of a short sale. If you are considering buying or selling a home or condo, it's my pleasure to provide my clients with information to assist them in making informed decisions when contemplating buying and selling homes in Orange County, California. If you have questions and would like some honest answers or need more resources, please give me a call, text me or email me.
Marlene Bridges, REALTOR®
800 777-1775 - Toll Free ~ or ~ Text Me 714 745-2592
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Marlene is a highly experienced and respected South Orange County CA REALTOR® specializing in residential Real Estate and the sale of Homes and Condos in South Orange County, California and Saddleback Valley cities of: Laguna Woods, Laguna Hills, Laguna Niguel, Laguna Beach, Rancho Santa Margarita, Lake Forest, Dana Point, San Juan Capistrano, San Clemente, Aliso Viejo, Mission Viejo.
Marlene - interesting story, and some good advice. It seems that the data I have seen just do not support very low ball offers on any proeprty where the bank is either the seller, or the 3rd party having to approve the short sale. While that number varies from area to area, and property to property, at some point the very low offer is nothing but a waste of everyone's time. Given the buyer's marker, one can understand that buyers are loath to pay full price and wish to get a deal - who doesn't? - but one cannot dispute what the market conditions are telling us. A 50% offer will simply not fly. My feeling is that buyers need the market data so they can make an informed decision. And why not...the investors at the bank, and the appraisers who provide the info, will.
Jeff
In my experience, the lowest of the lowballs really only have a snowball's chance in Hades for properties that nobody else wants and are subsequently overpriced. Who cares if you knock 50% off of a property that is 100% overpriced and you wouldn't want to live in anyway? Give me the smoking hot property with the savings already built into the list price every day of the week, twice on Sundays, and triple on Easter Sunday. I just beat out 15, count them, 15 other offers. We paid over list because the property was priced about 100k below market by the bank. Some folks are simply blinded by the allure of winning the negotiation to the detriment of their recognition of actual value. Excellent post, Marlene.
Hi Marlene, I am with you in your impression of the conversation. The repsonse from the investor reminds of the many times we here on the listing side that "we don't want to give it away". I practically laugh out loud, though I do check that and don't actually do that. I think consumers don't get enough of the idea that the markets go up and they go down and any property is worth what it will fetch( given proper exposure). But his response is defensive and reflects more emotion that an intelligent response. One of our more difficult jobs is to "hear between the lines". Enjoyed reading this.
Hi Jeff - Thanks for your comments. I know you and I have discussed this very thing before. Fact is that if a property is priced well it already is a good deal.
Hi Paul - Congrats on beating out 15 ther offers. At the end of the day your client won because they got what they wanted. Value is value. If it's priced well, then it's a good deal and there's no need for a price-ectomy.
Hi William - You are so right. We have to hear between the lines. I agree that the response of the investor in my story was not an unemotional one. He was a nice person and I sure hope we can come to terms with the bank and keep him from having a foreclosure on his credit record.
Great point. You can get a great deal; but they are not yet giving homes away !
Hi James - You are absolutely right! Homes that are on the market are there because beople need to sell them. Many are well-priced and it's important to have a real estate professional to help each buyer evaluate what is a fair and reasonable offering price.
That is an interesting insight into an investors head. I understand his stance but letting it go into foreclosure, I just don't know. I guess a short sale does about the same amount of damage to your credit...
Hi Paul - Actually, it is my understanding that a Short Sale does not have the same damaging effect as a Foreclosure. Foreclosures can be as damaging as a Bankruptcy. Short Sales are typically recorded as "Settled" or some similar terminology. A Foreclosure should be avoided whether it's an investor or a homeowner. Foreclosures take a long time to dissipate and can cause lenders to offer higher interest rates for future purchases.