What is low-balling and why do people do it?

Low-balling can happen during any type of market but typically occurs more frequently in a Buyer’s market. A Buyer finds a home they would like to buy and then offers a much lower price than would usually be acceptable, simply because they believe that the Seller is only selling at this point in time because they must be desperate. The “why people do it” is obvious: they hope to get a smoking deal on their dream home/second home/investment, etc.

This sometimes works for Buyers, in the right time and place, but not always. Many times, this technique of offering can be an insult to the Seller, if not handled carefully.

I’m not totally convinced that this method works in the Durango real estate market. I’ve been hearing from other Realtors in the area that their numbers of Buyers who are looking and offering have gone up recently (which typically happens at this time of the year)–but many Buyers are making low-ball offers only. Durango real estate is somewhat immune to the current “necessity” to sell, mainly because many people invest in second homes here and have plenty of money to keep rolling along until they get the price they want. The “DOM” or Days on Market, can sometimes be a good indicator of how ready a Seller is to sell, but this can also be tricky.

I have dealt with a number of Sellers who say they’re in no hurry and will wait until the right Buyer comes along (and of course, by “right Buyer, they mean the right price). Their DOM may be high, but there is no pressure to hurry and settle for less.

One thing your Realtor can help you research, that may clue you in to a Seller’s “need” to sell is the original listing price in comparison to where it’s currently listed. For example, if a home goes on the market in January at $699,900 and was lowered to $650,000 in February and then to $615,000 in March, you may be looking at a situation where the Seller is needing to get out from under this house ASAP.

Of course, as with anything, this may not always be the case, which is why it’s always a good idea to have a Realtor who can help determine, tactfully, a Seller’s motivation to sell. In many cases, Listing Agents are authorized by their Sellers to advertise the Seller’s willingness to “look at any offer”, and they will do so within their real estate community. More importantly, your Realtor can help you analyze the current market data to determine whether that home you’re itching to buy is really worth what the Seller is asking, or if a lowball offer would be appropriate.

See you online!

Claudia

I’m here to help you (once I figure it all out for myself that is). I’ve been told that MLS rules prevent me from publishing links on my blog, unfortunately, that would be the easiest way, although our MLS is undergoing technical difficulties today… Soooo, I will publish PDF summary files as soon as I have the pdf uploader in place, hopefully in the next day or two, so keep checking back.

In the meantim, you can get sold statistics for the previous years at durangorealtor.com website: here’s the link

I will give you a quick overview of in town Durango home sales since Jan 2009 (as of today, 4-5-09). I will post the pdf shortly. This info is based on Durango MLS, is deemed accurate but not guaranteed.

In town Durango – Sold 13 homes and condos, priced $159,000 to $469,000, avg days on market 164.

In town Durango – Sale Pending – 20 homes and condos, priced $ 159,000 to $589,000 (this indicates the market is picking up and we should see more sales in March and April)

In town Durango – Currently Listed – 332 listings priced from $135,000 to $2,200,000, with an average days on market of 248 (this indicates to me that only about one in about 8 houses only will sell this year)

I’m working on getting you more information and analysis, bookmark this site and check back often. Watch for email subscription feature coming up soon too. Thanks for checking this out. Feel free to leave comments (anonymous is ok) and questions and I will do my best to answer them.

Claudia

Claudia Williams
970 247 8388

P.S. Search the MLS at http://www.blueribbondurango.com/mls.php