Lowball offers fail buyers

Q: My wife and I are getting frustrated by sellers who seem like they don't really want to sell their homes -- even in this market!

This scenario has happened several times: We see a place we like listed at $499,000. We write an offer at $445,000. The seller doesn't even respond. Then, six weeks later, the place is still on the market and the price is reduced to $449,000 -- if they had issued us a counteroffer at $449,000, we'd have bought it back then. We're still interested, but we're not paying the full price, so we offer $425,000 -- and they still don't even respond. We've done this on several houses, over the last four months, and ALL of those houses are still on the market! We think these sellers are just crazy.

I wanted to find out about short sales or bank-owned properties, because those sellers might be more motivated, but our Realtor told us she doesn't know anything about them. Are we doing something wrong?

A: Well, friend, yes -- you are. You are operating in a bubble, without consideration for what your local market standard pricing and negotiating practices might be. When you say, "We're not paying the full price," you are expressing that you are entrenched in your own values and mindset about what you will and won't do, rather than trying to get inside the mind of those who make the decisions that impact whether you will or won't be successful at getting a home and writing an offer that speaks to their concerns. Is that allowed? Sure! Is it likely to be successful? Nope -- as you have already seen.

I often run into buyers who, like you, have firm rules of thumb about what price they will and won't pay, or what terms they will and won't agree to. After they lose a few homes, I remind them that the sense of one-upmanship, pride, or illusory hard-nosed bargaining that they are cultivating with those "rules" is pretty meaningless if they don't ever get any of the homes they are trying for! Keep in mind that any "discount" you were after a few months ago has probably been eaten up by the increases in interest rates in that same time period.

The seller's position might be ego-based; some sellers simply get a price stuck in their heads and refuse to budge, because they think their home is just that great. It might owe more to local standard practices; in some areas, sellers simply expect to get the asking price with no haggling, so for you to continually come in under asking -- no matter how low they drop the price -- might be perceived as insulting.

While the fact that the sellers are reducing their prices to virtually what you'd offered in the first case might seem baffling, they might be trying to hit the pricing sweet spot that generates multiple offers and bidding over the list price. Still other sellers might have a target they have to hit to pay off their mortgage and move on -- and be unwilling to sell if they can't get at least their bottom line.

And it is completely possible that you've just had bad luck with sellers -- ask your Realtor whether or not her other buyer clients are having this experience. ...CONTINUED

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