Maybe it’s happened to somebody you know, maybe it’s happened to you. A prospective buyer makes plenty of offers, but doesn’t get any offers accepted! HGTV’s Frontdoor has some tips for you. Not only do they discuss market value, but they discuss how to deal with, not offend, and negotiate with a private seller. 

I do have a few little things I would like to add to their very good advice. First, in markets like we have right now in Las Vegas, you will not be just dealing with a private seller most of the time. Roughly a third of available inventory is bank owned (“REO”), and another 30% is short sale (there is a private seller, but the mortgage company still has to approve the sale because they will be “short” money at the end). The strategy for dealing with banks in these two situations is different.

In an REO sale, there are no feelings to be bruised, and you are unlikely to ever have any interaction with the owner whatsoever. However, don’t take this as an excuse to “low-ball”. Although that used to be a perfectly valid strategy for buying REO property, it just doesn’t work anymore 99% of the time. The bank has already lost money on the property, and has probably gotten multiple estimates of its value: Market Analysis (“CMA”); Broker’s Price Opinion (“BPO”); perhaps even an appraisal. Odds are they think the listed price is fair, so they are unlikely to take a big discount. 

By contrast, in the short sale, you have two parties to deal with.  First, you have the owner.  Since the owner is not going to get any money out of the deal, they don’t care what the offer is as long as it gets them out of the property.  On the other hand, the mortgage holder would like to limit their losses. They will insist on multiple estimates of the property’s value before agreeing to the sale (this is the listing agent’s responsibility, not yours). There is no sale unless both agree. You are less likely to get lucky with a low-ball offer than with bank-owned homes.

One final thing, don’t be afraid to walk away. Right now we have 17,133 single family houses, 3305 condos, and 1342 townhomes available in the GLVAR MLS — subject to change any minute. There are plenty of homes available, and no reason to pay more than you think something is worth. It’s one thing to get into a multiple offer situation and pay a couple grand over list. It’s another thing to pay tens of thousands more.

I know I have said this before, but it bears repeating: 

My advice on making offers is to a) know your budget; b) ask your Realtor to run some “comps” in the area; and c) find out if any comparable homes have sold in the last 6 months and for how much (don’t forget to compare that to the asking price).  This advice should still be good no matter what happens to the housing market in the future.

For professional assistance finding and placing a successful purchase offer on your next home, condo, or investment property, please click the “Contact Me!” link in the sidebar, or call me at the number at the top of the page.  Thank you for reading!