Monday, May 08, 2006

Agents Urged To Get Sellers To Drop Prices

I would like to share a very interesting story told to me by an New Jersey Real Estate Agent this afternoon. It's short, but it'll raise your eyebrows.

Seems that the mood has changed at the weekly sales meeting at this particular agency. Instead of being rewarded and congratulated for sales, agents are being rewarded and congratulated for getting their clients to drop their asking prices. That's right, the biggest price drops are even being rewarded with monetary bonuses. It seems that we're not the only ones looking at those big price reductions, the corporate offices are as well. With good reason, if homes don't sell, they don't get their cut of the commission, and let me tell you, from what I've heard the cut can be very deep, but more on that later.

Seems that Big-RE knows trouble is brewing.

Caveat Emptor!
Grim

30 Comments:

Anonymous Anonymous said...

Interesting..

is this a big agency or a small local one?

If this is not a particular incident, then it is truly good news for the patient buyers..

5/08/2006 07:39:00 PM  
Blogger Metroplexual said...

Glad to hear it grim. Thanks for the anectdote.

5/08/2006 07:43:00 PM  
Anonymous Anonymous said...

Why can't I get lowball?

I was interested in a house priced at 699K and planned to put in an offer of 620K (which is incrediblely high in you guys view, since I really liked that house). However, the seller's agent is very firm on their asking price and told me "any offer under 685K will not be interested".

Could people here share some stratagies about how to lowball (The Art & Science of Lowball)? I am not even shooting for 30-40% lowballs, 15% lowball should be good enough for me for now.

5/08/2006 08:03:00 PM  
Blogger Carbozo said...

Perhaps your best option at this point is to let the house sit on the market for a while. I mean, the market's only gonna get worse. if you really liked the house, call the agent six month's from now and say your offer (minus 10 or 20K) is still open.

5/08/2006 08:10:00 PM  
Anonymous Anonymous said...

If you are ready to pay 620K, why not pay another 65K? You should be able to make up the difference in a year. Is this property close to NYC?

5/08/2006 08:11:00 PM  
Anonymous Anonymous said...

did you suggest it verbally to the agent or submit it in writting?

by law an agent must submit every offer in writting to the seller

5/08/2006 08:12:00 PM  
Anonymous Anonymous said...

Here's 2 ways you can "loosen their purse"

1. I’ve done this before on 3 homes and it wasn’t even a full blown buyers’ market. I got a 22% break. The key is to find at least 3 homes that you would be comfortable owning. Then it’s like fishing. I got a counter from one and went to #2. Got a counter from #2 from an insulted seller’s agent and, once I indicated I was about to submit another offer on #1, #2 capitulated. I got the best home. Works like a charm. But, once a full blown buyers’ market turns straight south and defaults become widespread then anything goes.

2. Two people work together to soften up homeowners. Person A makes a truly absurd offer (70 % below asking), “shocking” the owner into a new reality, then person B makes a somewhat absurd offer (40% below) which now looks great. ;-)

5/08/2006 08:12:00 PM  
Blogger Carbozo said...

Regarding strategy #1, it'd work particularly well if the houses in question were all near each other, to magnify the "neighbors pitted against each other in a race to the bottom" effect.

Re strategy #2, perhaps you should increase the number of "co-conspirators" to 5 or 6 to really scare the seller.

5/08/2006 08:20:00 PM  
Anonymous Anonymous said...

that only has the possibility of working if you have two buyers qualified to purchase a 700k home. A home owner shouldn't even entertain an offer without a mortgage pre-qual or pre- approval to back it.

5/08/2006 08:22:00 PM  
Anonymous Anonymous said...

lol 5 or 6 people qualified to purchase a 700k home to enact this strategy.. have you guys that are giving this advice ever even bought a home?

5/08/2006 08:25:00 PM  
Anonymous Anonymous said...

Both of the tactics I stated above for lowballing work, and they work well in a buyers market. Don't listen to the RE agents that try to make you think otherwise.

Personally I'm still waiting for a while. Because the longer houses stay on the market. The more desperate sellers get and the more RE agents line up in the soup kitchen.

5/08/2006 08:36:00 PM  
Blogger chicagofinance said...

I am all for lowball, but please play the game ethically. Not everyone who wants to sell a home is a greedy SOB. Treat sellers with respect, just get the price you deserve.

The crap you suggest puts you in bad company.

5/08/2006 09:25:00 PM  
Anonymous UnRealtor said...

No one should even be making offers until 2007.

Don't even get your hopes up today.

Keep banking savings, and tough it out until next year.

5/08/2006 10:11:00 PM  
Blogger Richard said...

was talking to a family member today who lives in plainview on long island. desirable town. she said the # of houses normally on the market are 35-40. today there are over 200. homes in the prime areas are still moving fairly well but most others the sellers are saying bring us offers we're negotiable.

i don't know what's going to happen with this market but one thing is clear. prices aren't going up from where we are today.

5/08/2006 10:19:00 PM  
Anonymous UnRealtor said...

Another Warren Buffet story, only an hour old:



Buffett: Real estate slowdown ahead

The Oracle of Omaha expects the housing market to see "significant downward adjustments," and warns on mortgage financing.

Money Magazine

By Jason Zweig, MONEY Magazine senior editor

May 8, 2006: 9:58 PM EDT

http://money.cnn.com/2006/05/05/news/newsmakers/buffett_050606/

5/08/2006 10:24:00 PM  
Anonymous UnRealtor said...

From Fortune magazine:


If you're a speculator ... get out now

In 2005, investors accounted for 28 percent of the housing market, up from 23 percent in 2004, according to the National Association of Realtors. But the game of buying a home - or two or three or 17 - holding it for a bit, and then flipping it for a handsome profit has pretty much played itself out.

"Get out as fast as possible," says Mark Zandi, chief economist with Moody's Economy.com. "The market is moving away from the investor, and even when it stabilizes, I don't think it's going to come back anytime soon."

http://money.cnn.com/2006/05/04/real_estate/realestatetips_selling

5/08/2006 10:27:00 PM  
Anonymous UnRealtor said...

$250,000 price drop in Ridgewood:

MLS 2230395
Original Price: $1,250,000
Current Price: $999,000
Days on Market: 121

5/08/2006 11:33:00 PM  
Anonymous UnRealtor said...

$800,000 price drop in Short Hills:


MLS 2223612
Original Price: $3,995,000
Current Price: $3,195,000
Days on Market: 146

5/08/2006 11:44:00 PM  
Anonymous Anonymous said...

Well said - ChicagoFinance !

CNS

5/08/2006 11:57:00 PM  
Anonymous Anonymous said...

Ba ba ba ba ba ba BOYCOTT HOUSES!

When the main cheerleaders start starving watch out. Every person for themselves.

Watchout below!!!

Boooooooyaaaaaaa

Bob

5/09/2006 07:25:00 AM  
Anonymous Anonymous said...

DO NOT WASTE YOUR TIME LOOKING AT HOUSES.

LET REALTORS AND SELLERS SIT AND TWIDDLE THEIR THUMBS.
REALITY IS SLAPPPING THEM IN THE FACE.
A FEW MORE MONTHS OF THIS WILL MAKE THEM MUCH MORE FLEXIBLE.
TAKE 25% OFF THE TOP AND THEN BID.
THEY TURN IT DOWN AND COME BACK AT A LATER DATE DROP IT ANOTHER 5%.

THIS IS ALL BUSINESS NOTHING ELSE. YOU NEED TO GET THE BEST DEAL FOR YOU AND YOUR FAMILY TO PROTECT THEIR FUTURE NOT LOSE YOUR @$$ ON A HOUSE.

THESE GREEDY SELLERS DON'T MIND THAT YOU SIGN UP FOR A HUG MORTGAGE WHEN MANY BARELTY PAID SQUAT FOR THE HOUSE 15 -30 YEARS AGO. MAYBE 3 TIMES INCOME NOW AT 7-8 TIMES INCOME PRICES ARE RIDICULOUS.

5/09/2006 07:33:00 AM  
Blogger grim said...

It was a well-known franchise.

5/09/2006 11:21:00 AM  
Anonymous UnRealtor said...

Is bidding on multiple houses, if all parties involved know you'll be doing such, unethical?

How is that any different from a seller taking multiple bids?

Simply tell each seller "I'll be bidding on 3 similar houses today, so give your best and final price."

How else to deal with insulting asking prices?

Most realtors (buyers agent) wouldn't take part, but that's just another example of why they're a hindrance to gettng the best deal.

5/09/2006 01:14:00 PM  
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5/09/2006 02:22:00 PM  
Anonymous Anonymous said...

I received the below email from a person who lives in New Milford:

"Is it possible that the original prices on the list of houses were primarily high speculation prices?
I don't disagree that the drop in prices are and reflecting higher mortgage interest rates.
The statistics on employment recently sent the stock market up.
Comparative price drops on homes in the 350's and lower 400's from what I see locally in the Bergen Record
have not taken the substantial price reduction.
Cash is not king just yet!"

Immunityto price reductions in Bergen county. I doubt it.

Prices have escalated there as much as anywhere else, maybe even more so. I really would like to see original price, the current prices, and what a property finally closes at for communities in Bergen County.

Can you get access to comp's like that?

I doubt there is any difference between Bergen County and the rest on NJ.

5/09/2006 05:52:00 PM  
Anonymous Anonymous said...

Regarding the strategies 1 and 2:
Why do I get this feeling that the reverse of those strategies were played rampantly in the white-hot seller's market in the last several years?

Brokers telling the prospective buyers, "We have another offer coming in tonight."

Sounds familiar?

5/09/2006 09:00:00 PM  
Anonymous UnRealtor said...

"We have another offer coming in tonight."


Yes, that was played out to me several times, and for houses sitting for 60+ days.

Trust no one, do your research, and make your offer. If a "bidding war" starts, walk away (though the days of "bidding wars" are over).

5/09/2006 11:20:00 PM  
Blogger Pat Rioux said...

If the listing agents signed listing agreements with sellers that promised to market their homes to get the best price and terms then they have a fiduciary duty to do just that for sellers.

If the company is giving rewards to agents for getting sellers to drop prices I would question the company's understanding of what it means to have clients and to serve their interests.

I wonder how much disclosure and informed consent is involved?

Perhaps it is time for real estate companies to reward the sellers who prepare their homes well, stage and price right by charging them less and stop subsidizing the sellers who don't do what they are supposed to do to get their homes ready for market.

Pat Rioux, www.ListForLess.com

5/11/2006 02:55:00 PM  
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