04/03/09 Tread carefully when making a low-ball offer
These days, it’s easier to make a low-ball offer than it used to be, but it’s still important to be smart. Here are some things that a real estate practitioner and would-be buyer should consider when contemplating such an offer:
** Use foreclosures as comps carefully. Look realistically at the prices foreclosures in the neighborhood brought. Foreclosures aren’t good comps if the homes were stripped of appliances, pipes, HVAC, etc.
** Examine details of short sales critically. How many liens were there against low-selling short sales? If there were no secondary liens, the lender had considerable flexibility.
** Establish realistic time frames. Even in the best circumstances, foreclosure takes a long time. Will the seller play the waiting game? How long have houses whose owners have equity stayed on the market? Is the buyer in a hurry?
If your buyer makes a low-ball offer, the bank probably won’t be in any rush to take it. They’ll probably keep soliciting offers without coming back with a counter. Ultimately, the property is likely to sell for a higher price and, chances are, you and your buyer won’t know it until the deal is done.
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