The latest MLS statistics reveal that homes listed for sale sell for 99% of the list price. Only two of the 13 MLS districts report list to sale prices of less than 99% and those are the outlying areas of Chugiak and Girdwood where the average list to sale price is more like 98%. So why buyers make low ball offers in this market is a mystery to me, especially since residential inventory hasn’t been this low since 2005. Frankly, low ball offers simply end up disappointing potential buyers, insult and make angry sellers and frustrate the realtors working on the potential transaction. Buyers need to make an informed offer and understand where their offer is in relationship to recent sales and current information. It is the realtor’s responsibility to provide that information to the buyer before making an offer. Detailed list to sale information within the 13 districts, time on the market in each district and other pertinent information is only available to members of Multiple Listing Service, but the information provided to its members can and should be shared with buyers prior to them making an offer. Buyers should understand and appreciate where their offer is in relationship to current market statistics. If your realtor is not providing you with this type of information, you should look elsewhere for representation.
Having said all that, even a low ball offer deserves a counteroffer because they are sometimes from a well-qualified buyer who’s just trying to get the best deal for him and his/her family. However, sometimes emotion gets in the way of the seller making an appropriate response. A low ball offer doesn’t necessarily mean the buyer is not qualified to purchase at the listed price. This real estate community, at least for residential purchases, is not much for negotiating. But, even a low ball offer deserves a legitimate response and the buyer should take it as such. Sometimes, the counter goes back one more time but usually it is not for more than a small amount.
TV and the internet connect us to markets in the lower 48 which are still in recovery. But what happens in Las Vegas stays in Las Vegas and buying and selling real estate is a very local matter. It’s district by district, subdivision by subdivision and sometimes, even street by street. Buyers should not be swayed by a good deal in Florida, Arizona, Nevada or California. They are their own markets and not relevant to our lowest residential inventory in eight years which places a premium on homes for sale, even ones that are thirty years old.
Today’s still low interest rates should make it difficult for a buyer to walk away from a counteroffer over a couple thousand dollars. However, that one or two thousand dollars is hard earned equity for a pre-owned home seller and for a builder, whose profit at the end of the year nationally ranges at 6%, it is a considerable difference.
All legitimate offers should be accompanied by a buyer’s 90% letter which identifies whether or not the buyer has a home to sell or other significant financial contingencies that are required to be removed before approving a loan. Additionally, the selling licensee needs to present a copy of the buyer’s check for his earnest money deposit. If the buyer does not want to write a check until his offer has been accepted, the offer should clearly state “Due upon Acceptance”. Finally, negotiate in good faith. Survey your market by getting the latest market statistics relevant to your price point and geographic location and make a fair and reasonable offer.