I pick up my phone a few days ago in an effort to keep myself on task. I see my next call is a listing agent that I am waiting to hear from about an offer I have submitted for my client.
Here is the backdrop...we submitted an offer for a home in South Corona last Monday. The home is owned by GMAC and they required their own lender to approve the buyer. My client calls the lender, sends their documentation and we wait. On Friday we receive the pre-approval letter and notice that our offer has finally been submitted to the bank. Monday I left the listing agent a message attempting to find out the status of our offer. On Tuesday, they call me back.
"We have a counter for your buyer," the agent says. They rattle off the terms of the counter and tell us to get back to them.
The next morning I call the agent (after discussing things with my client) accepting the terms.
Now, we are caught up to this morning. I call the agent. "Do we have addendum's for the property," is my question to them. "Oh, your client didn't get the house," is their response.
At the end of the day the other agent negotiates with more than one buyer without telling anyone that there are multiple offers in on the property. They sit on our offer for 10 days before they get back to us with a rejection.
Obviously, my clients are very disappointed...you get a counter offer in this market that isn't "highest and best" and you feel good about your chances. You agree to the terms that the bank sets out for you and you like your chances.
The only problem is unethical agents who do not know how to negotiate in good faith! Good luck to this particular agent once the REO market dries up...I predict he is going to have a VERY hard time finding agents who will work with him.
Showing posts with label offers. Show all posts
Showing posts with label offers. Show all posts
Saturday, November 8, 2008
Wednesday, July 2, 2008
Wait...why didn't we get it???
"Tim, what am I supposed to do?," my client exclaimed this afternoon.
We were standing on the dead grass in the front lawn of plan G for this particular client. I could sense the frustration in her voice, I could see it in her eyes and her body language as we stood looking at this "new" home. I felt it too. You knew there is a story coming...
My client is a lovely woman who is trying to get her family a new home. She is a single mom who works hard to provide for her family. Last week we fell in love with a beautiful home in Moreno Valley. The home was a little more than she could afford. We made a very reasonable offer...but we just couldn't reach an agreement.
So we met late last Wednesday night. The house was perfect. It boasted a big back yard, 3 bedrooms, a den, and it was perfectly in her budget. We got to work on submitting an offer.
The listing price was $145,000. The seller was offering $5,100 in closing costs. This nets the bank (the seller) $139,900. Our offer was $155,000 with $10,000 in closing costs. This offer nets the bank $145,000. A difference of 3.645% above the banks net.
I begin calling the listing agent daily...multiple times a day. I speak with the agent on Saturday and he tells me that they have received 2 offers. He told me to call his assistant to determine if we were "competitive" with our offer. I called her on Monday, Tuesday...finally chatting with her late yesterday afternoon. She said she was unaware of the other offer price and that she would call me back. I am still waiting for that call.
My client wanted this home very bad. So, I called again this morning, and was informed that they had accepted another offer. I called the listing agent and asked him how far we were from being accepted. His response...
We had the higher offer!!!!
Why would this be? How could the bank accept less? Who makes these decisions?
The only logical explanation I can come up with is that the bank (sellers) are in the business of closing deals. Therefore, someone had to have a stronger offer. What constitutes a stronger offer (more downpayment, better pre-qual letter, higher credit scores, etc...)?
Either way...the ebbs and flows of this market continue to change. Summer is typically a very competitive time of year for buying a home. This year proves to be more challenging...because there is no rhyme or reason to which offer the banks are going to accept.
We were standing on the dead grass in the front lawn of plan G for this particular client. I could sense the frustration in her voice, I could see it in her eyes and her body language as we stood looking at this "new" home. I felt it too. You knew there is a story coming...
My client is a lovely woman who is trying to get her family a new home. She is a single mom who works hard to provide for her family. Last week we fell in love with a beautiful home in Moreno Valley. The home was a little more than she could afford. We made a very reasonable offer...but we just couldn't reach an agreement.
So we met late last Wednesday night. The house was perfect. It boasted a big back yard, 3 bedrooms, a den, and it was perfectly in her budget. We got to work on submitting an offer.
The listing price was $145,000. The seller was offering $5,100 in closing costs. This nets the bank (the seller) $139,900. Our offer was $155,000 with $10,000 in closing costs. This offer nets the bank $145,000. A difference of 3.645% above the banks net.
I begin calling the listing agent daily...multiple times a day. I speak with the agent on Saturday and he tells me that they have received 2 offers. He told me to call his assistant to determine if we were "competitive" with our offer. I called her on Monday, Tuesday...finally chatting with her late yesterday afternoon. She said she was unaware of the other offer price and that she would call me back. I am still waiting for that call.
My client wanted this home very bad. So, I called again this morning, and was informed that they had accepted another offer. I called the listing agent and asked him how far we were from being accepted. His response...
We had the higher offer!!!!
Why would this be? How could the bank accept less? Who makes these decisions?
The only logical explanation I can come up with is that the bank (sellers) are in the business of closing deals. Therefore, someone had to have a stronger offer. What constitutes a stronger offer (more downpayment, better pre-qual letter, higher credit scores, etc...)?
Either way...the ebbs and flows of this market continue to change. Summer is typically a very competitive time of year for buying a home. This year proves to be more challenging...because there is no rhyme or reason to which offer the banks are going to accept.
Monday, June 9, 2008
How much is too much?
"How much should we offer?" exclaimed my client as we enjoyed our vanilla lattes at the Coffee Bean.
It is an interesting question. It implies that the bank will accept less than the listing price. Also, most buyers are under the misconception that banks "always" counter-offer. I am not sure where this myth has come from... It also implies that the bank will accept "less" than the listing price. I say this because I hardly hear, "I know they are asking $300,000, but I think it is worth $350,000, therefore offer that."
I have a couple of clients looking in the same area of Corona. So, I thought I would go back and look at the homes that we have made offers on (and not gotten accepted). All of the offers were written between 30-60 days ago...and most of the homes closed escrow in the past 10 days.
The statistics are a little surprising. On average homes sold for 5% ABOVE list price - please remember these are closed statistics on homes that I have written offers on. The lowest below the average was 1.1% below the asking price. This was on the second highest priced home in the data. The highest above was 7.9% above the asking price. This was the highest priced home in the data.
As we continue to look at this numbers we see that a total of 10 homes were in the field and only 2 of them sold for less than the asking price. And as we saw above...this was not that far below asking price it was just over 1% below asking price. Last bit of information of the 10 homes, 9 were REOs and 1 was a short sale...there was NO resales in the data.
A couple of suggestions for why this is: 1.) the listing agents have lowered the prices to make "virtual auction". By lower the price below market value, they get people to perceive it as a "bargain". 2.) the buyers are frustrated at writing low offers and not getting a home so they reverse course and begin to offer MORE than asking to "just get a home."
How then do we go forward?
We base our offers on the "market value" of the property. We don't decide before we walk through the doors how much we want to pay for the home.
My usual response to the question I got that morning at the Coffee Bean - "I think they will accept 10% below market value" - just isn't accurate anymore. My boss always says, "I know they will accept the listing price" - this might not be the case either!
It is an interesting question. It implies that the bank will accept less than the listing price. Also, most buyers are under the misconception that banks "always" counter-offer. I am not sure where this myth has come from... It also implies that the bank will accept "less" than the listing price. I say this because I hardly hear, "I know they are asking $300,000, but I think it is worth $350,000, therefore offer that."
I have a couple of clients looking in the same area of Corona. So, I thought I would go back and look at the homes that we have made offers on (and not gotten accepted). All of the offers were written between 30-60 days ago...and most of the homes closed escrow in the past 10 days.
The statistics are a little surprising. On average homes sold for 5% ABOVE list price - please remember these are closed statistics on homes that I have written offers on. The lowest below the average was 1.1% below the asking price. This was on the second highest priced home in the data. The highest above was 7.9% above the asking price. This was the highest priced home in the data.
As we continue to look at this numbers we see that a total of 10 homes were in the field and only 2 of them sold for less than the asking price. And as we saw above...this was not that far below asking price it was just over 1% below asking price. Last bit of information of the 10 homes, 9 were REOs and 1 was a short sale...there was NO resales in the data.
A couple of suggestions for why this is: 1.) the listing agents have lowered the prices to make "virtual auction". By lower the price below market value, they get people to perceive it as a "bargain". 2.) the buyers are frustrated at writing low offers and not getting a home so they reverse course and begin to offer MORE than asking to "just get a home."
How then do we go forward?
We base our offers on the "market value" of the property. We don't decide before we walk through the doors how much we want to pay for the home.
My usual response to the question I got that morning at the Coffee Bean - "I think they will accept 10% below market value" - just isn't accurate anymore. My boss always says, "I know they will accept the listing price" - this might not be the case either!
Thursday, June 5, 2008
Not quite prepared
We are sitting in the kitchen of a lovely home in Murrieta. My client is taken by the upgrades all over the place. Granite counter-tops in the kitchen and the bathrooms. Tile floors throughout the downstairs. Nice carpet with a decidedly upgraded pad.
"We want this one," the wife boldly proclaims!
"Who are you qualified with?" (shame on me for not asking this question sooner), I ask.
"We haven't looked into financing yet," she says.
"Banks will not look at offers without a pre-qualification letter," I say.
"That is ok, we will call our lender today and get that ball rolling," he says.
We part company that day with a promise to chat the following day. I sit and wait as they confer with the mortgage officer. He requires documents in order to qualify them (bank statements, income verification, credit scores, etc...). It takes them all day to get those documents together.
The next day (day 3) they get all of the information to the lender. I get the pre-qual a little after noon. I was prepared and had the documents ready. I send the contracts and the pre-qual to the listing agent.
Now, we are both waiting. My phone rings off the hook...literally. I get calls every 3 hours from my clietns, wondering if there is any news. And of course there is not. I call the listing agent. Message after message is left, emails are left...NO RESPONSE! The listing agents are so busy that they do not care about good service.
Finally, on day 10 we get the call. "We accepted an offer 5-6 days ago," they say.
Two weeks have gone by, and somehow we are just barely to step 2. We sat in the kitchen of a beautiful home, unfortunately, we just weren't ready to buy.
"We want this one," the wife boldly proclaims!
"Who are you qualified with?" (shame on me for not asking this question sooner), I ask.
"We haven't looked into financing yet," she says.
"Banks will not look at offers without a pre-qualification letter," I say.
"That is ok, we will call our lender today and get that ball rolling," he says.
We part company that day with a promise to chat the following day. I sit and wait as they confer with the mortgage officer. He requires documents in order to qualify them (bank statements, income verification, credit scores, etc...). It takes them all day to get those documents together.
The next day (day 3) they get all of the information to the lender. I get the pre-qual a little after noon. I was prepared and had the documents ready. I send the contracts and the pre-qual to the listing agent.
Now, we are both waiting. My phone rings off the hook...literally. I get calls every 3 hours from my clietns, wondering if there is any news. And of course there is not. I call the listing agent. Message after message is left, emails are left...NO RESPONSE! The listing agents are so busy that they do not care about good service.
Finally, on day 10 we get the call. "We accepted an offer 5-6 days ago," they say.
Two weeks have gone by, and somehow we are just barely to step 2. We sat in the kitchen of a beautiful home, unfortunately, we just weren't ready to buy.
Saturday, May 17, 2008
How hot is the market?
The sun is blazing as we arrive at our first home to tour. It is a spring day in Southern California, it feels like we are in the middle of summer. I glance down on my dashboard and catch a glimpse of the outside temp...106 degrees. My client climbs out of their truck, "I bet it is over a 100 degrees today," she says. We are about to tour our first home of the day and it is already after 2pm...with 10 more to follow. My day is really busy, with a 4:30pm and a 7pm appointment still ahead of me, so there is a little spring in my step. All of the homes on our list today are bank owned.
The first home is beat up. The carpeting is destroyed, the paint leaves a little to be desired, the house is covered in dirt because of the broken out windows. There is an empty pool in the backyard and the back fence is falling down. Not a great start to the day. Second and third home...more of the same. By the time we peer into our fourth home, we have no idea what to expect. The lot is huge. The house is a lot bigger than the previous homes. There is a lot of potential. "This one goes down as a yes," my client says as we depart for the next house.
We are standing across the street from the last house. She is huge...2,500 square feet. But, as usual with a bank repo...she is in need of some love (new carpet - the owners ripped most of it out, new paint, holes in a lot of the walls, etc...). "We want to offer on 3 of the homes that we have seen today," my client says as we are about to part company. Last week we found a home that they liked...but it was gone before we could get our offer submitted. They understand the sting of being so close. As do scores of my other clients. A few of them have resorted to writing offers in bulk, and hoping that one sticks.
I hear all the news about tighter lending restrictions...I hear all of the news about more bank repos coming on the market...I hear all of the news about the doom and gloom of the economy. BUT, in my little corner of the world...the real estate market is as hot as that Southern California sun!
The first home is beat up. The carpeting is destroyed, the paint leaves a little to be desired, the house is covered in dirt because of the broken out windows. There is an empty pool in the backyard and the back fence is falling down. Not a great start to the day. Second and third home...more of the same. By the time we peer into our fourth home, we have no idea what to expect. The lot is huge. The house is a lot bigger than the previous homes. There is a lot of potential. "This one goes down as a yes," my client says as we depart for the next house.
We are standing across the street from the last house. She is huge...2,500 square feet. But, as usual with a bank repo...she is in need of some love (new carpet - the owners ripped most of it out, new paint, holes in a lot of the walls, etc...). "We want to offer on 3 of the homes that we have seen today," my client says as we are about to part company. Last week we found a home that they liked...but it was gone before we could get our offer submitted. They understand the sting of being so close. As do scores of my other clients. A few of them have resorted to writing offers in bulk, and hoping that one sticks.
I hear all the news about tighter lending restrictions...I hear all of the news about more bank repos coming on the market...I hear all of the news about the doom and gloom of the economy. BUT, in my little corner of the world...the real estate market is as hot as that Southern California sun!
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