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Sellers Are Laughing at Lowball Offers

I think by now most consumers realize we are in a very strong seller’s market here in Kansas City. Many home sellers are getting multiple offers and driving the sales price higher and higher. As long as there is a shortage of inventory and high demand for new homes, prices will continue to rise. This is definitely not the real estate market to lowball a seller and assume they will meet you in the middle.

When one of my team members sits down to meet with a client during the initial buyer’s consultation, we have a discussion about current market conditions. Of course, we discuss their needs and desires for their new home, but we also want to make sure they understand the reality of the strong seller’s market we are currently in, and how they will be affected by that. As an example, let me describe what happened recently on one of our listings.

We received an offer on one of our homes within 3 days of putting it on the market. The offer was 82% of the seller’s asking price. The average home in Clay County sells for 98.2% of the asking price, Platte County is 97.7%, Johnson County is 98.3%. Unless the home is blatantly overpriced, there is no reason to believe the sellers would accept a lowball offer like this, especially in the first few days that home is on the market.

Trust me, I understand a buyer wanting to get a good deal on their home, but it’s completely unrealistic to think my seller would even consider this offer. In this case, it made the seller mad and he wouldn’t even respond with a counter-offer. Within a few days, that home ended up getting multiple offers and drove the price up another $10,000. Had the original buyers placed a full-priced offer or even something realistic, they would probably be living in that home right now. I found out later it was their agent that suggested the lowball offer in the first place. I wonder if they ended up firing their agent over that?

I know some people think it’s crazy to offer more than the seller’s asking price, but then they start looking at homes and find one they fall in love with. I just look at it differently I guess. If I plan to live in that home for 10-20 years, what’s $5,000 more upfront if it’s the home my wife and I love? I can live with that and be happy because over the next 10 years that home will increase another $50,000 to $75,000.

Now, having said that, I never try to talk someone into something they don’t feel comfortable with. This summer I sat down with a first time home buyer who said, “I’m not going to get in a bidding war on any house. I don’t care how nice it is.” I told him, “That’s perfectly fine and I completely understand, but I want you to know that I can’t control that. All I can do is show you the houses and let you decide whether you want to make an offer or pass. I might suggest we not look at any homes that just came on the market in the last 7 days though. This will lessen the chances of you having to compete to get the house you want.”

We did actually find this buyer a really nice home that was on the market for 23 days when he made the offer. He made an offer that was 95% of the seller’s asking price ($12,000 off the price) and the sellers countered with $10,000 off the price if he was willing to take the home “as is” and not ask for any repairs during the inspection period. He was fine with that and we got him a great home at a good price.

Yesterday I was speaking with one of our past clients that bought a home 4 years ago. I was showing them their home has increased by almost $40,000 in value since they bought it in 2015. It’s now worth around $190,000. He said to me, “You know Ron, when we bought this home we got in a bidding war. My dad thought we were crazy for offering $5,000 over the seller’s asking price. Looking back now, I’m so glad we did that.”

This can be a challenging real estate market, but that’s why it’s so important to have a very skilled and experienced REALTOR® working for you. I’ve been in the real estate business for 15 years now and on January 30th of 2020, my team will sell our 1,000th home. If you know anyone who needs to buy or sell this year, I hope you’ll ask them to call me. Ron Henderson 816-651-9001.

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