Is it a Low Ball Offer?
Posted by Bill True on
Low Ball Offers
When it comes time to make an offer on a home, we go into research mode to determine what a home is really worth based on recent sales in the area. Unfortunately, in the current Sarasota real estate market, there are usually a few distress sales no matter what price range you are in. When a home was sold significantly under market, it drags the comparable value of the other homes down around it.
Less dramatic is simply the continued drop in values in some areas of Sarasota real estate. Where there is alot of property available for sale, the prices are driven lower. It is simple supply and demand. At some point, someone who can afford to may sell their home at an exceptionally low price.
For our part, we advise our clients on the recent sales, and therefore the current market value, of a given home. In this market, it is not uncommon for that number to be well under the asking price of the home. In the past, I would think the seller was unrealistic. Now, I have to admit I feel for a homeowner who has already seen their property values drop, only to have their neighbor sell their home for 70% of even current value.
Conservative Home Appraisals
Buyers, even those looking for a steal, are often concerned that the offer may be too low if comps are 30% under list price. But is it a low ball offer, if the recent sales support it?
The unfortunate fact for sellers is that in a tight lending market, the home appraisals are conservative. In order for the home to sell, it has to appraise. And appraisal value is based on the same numbers I am looking at - recent neighborhood sales.
It may be a few months yet before some of these issues work out. In the meantime, I maintain that the only way I can sleep at night, is to counsel my buyers to the recent sales, and therefore the current market value of the home, regardless of the list price.