Is my realtor giving me the best advice?

Question

I am using a realtor for the expertise they bring to the table. Currently shopping for a house that needs a little work (203k). I wanted to put in a lowball offer, but my realtor said it was not a serious offer and I shouldn't do it. I guess maybe I've been listening to too many podcasts where people have had low offers accepted. My thinking on the offer was that this is a rental and the company's other rentals (and business) is in another state. They are "motivated" sellers.

My question is this: does my realtor always know best?

Nik Moushon · Answer

One of the things I have issue with BP, and their logic of thinking, of always go in with an offer of 80% of the asking price. In a lot of markets thats a slap in the face. Not only will they not take you seriously they will never call you back.

You need to know your local market and the accept price ranges. Its a hot market and everybody knows it. Everyone is trying to make top dollar so going below asking price can be a bad choice depending on your market. If you dont know the market well enough to make a reasonable low offer and that you have to rely on your realtor completely then you need to do just that.

Make sure you do your numbers right and be prepared to walk away. Plus if you ask a bit higher and get it you always have you inspections and contingencies to get or ask for a reduction in price if you find things that hurt your numbers.

Russell Brazil · Answer

Are the lowball offers you want to make realistic for the property and the market?  That should answer your question as to how to proceed...if you have unrealistic expectations, then listen to your agent. If your expectations are realistic, then find an agent who knows the market better.

Amy Innocenti · Answer

Thanks @Doug Shapiro.

It is a bit of a hot market here in FL as well.  You look at a property. Next thing you know,  it's pending. On the flipside, you do see properties going for much less. It's hard to know what is an actual good price. I certainly don't want to hurt my realtor's reputation, but I sure would like to know how low that property owner would sell it for.  It seems the only way to know for sure is to make an offer.

Russell Brazil · Answer

That still doesnt speak to whether they are realistic or not.  I just had a client who wanted to bid the list price on a property that was going to go $100k over list. In that case his list price offer would be unrealistic.  I listed a property last year where we wouldn't even bother responding to offers that wernt at least $200k over list. I had another property we bought earlier this year that we started our offer $400k under list and purchased it for $250k under list.

I use these dramatic examples to illustrate that it doesnt matter what the list price is....what matters is what is realistic for the market. A full price offer could still be unrealistic, and offers significantly under can be realistic.

Amy Innocenti · Answer

@ Russell Brazil

Thanks for your reply.  The first offer was very low, the second was low, but reasonable. It was a full price offer with some concessions.

Amy Innocenti · Answer

ok. For a second time my realtor is talking me down from making a different lowball offer on a different property.  Add to this that we found yet another property that doesn't work with realtors. I'm having a real moral dilemma here.  This person has spent a significant amount of time working with us and I don't know how I feel about cutting ties with him.  I work in sales and I know what it feels like when someone you work with buys from someone else.  I don't know that I want to invite that type of karma into my life. Any thoughts?

Amy Innocenti · Answer

@ Michele B.

Thanks for your advice.  I hear a lot of stories on the podcasts and blogs where people have had the same success you did on a lower offer.  It's looking like we might end up waiting a year anyway,  so maybe things will be different next year.

Amy Innocenti · Answer

@Joel Owens

It looks like I am about to be waiting a year anyway by default.  (It's time to renew my lease). It is a hot market now and there is a scarcity. Prices were a good bit lower last year. We'll see what happens.  Thank you for your advice.

Michele B. · Answer

Here is the deal.  I am sorry realtors buy there is no such thing as a buyers agent.  They all work for sellers. They get paid based on the selling price.  I know some realtors are really as honest as the day is long but, some aren't. I would go to a different agent and ask if I offer x what do you think and see what they say. An offer is an offer, i was told do not offer that little and guess what i bought at the price i wanted.  I was shocked it went through.  SO each person should go with what they feel.

Joel Owens · Answer

List price could be above market, at, or below. When I put in offers for my commercial clients on larger properties (millions to tens of millions in price) I look past just the asking price. I want to talk to the seller directly if not listed or the listing brokerage and see WHAT is the motivation to sell? Is it purely price or something else? It could be a syndicate has ran it's course, a bad partnership, a divorce and a split of assets, investor is bringing investments closer to home, needs money for another project, etc.

Sounds like you are competing with home buyers who will pay a premium and are fine with just a little built in equity. Right now for houses some reports show most markets peaking for pricing. The sentiment is to wait a year when the markets could possibly shift more to buyers. Problem with that is in 1 year even if prices went down some or stayed the same the interest rates might have gone up, lenders might be requiring more down by then, etc.

There is no perfect property. Sounds like this is a live in first, and investment second situation. What would the mortgage payment be with taxes and insurance included versus your current rent payment?

Is my realtor giving me the best advice?

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