Tuesday, June 19, 2012

Homes no longer yours for a steal

It’s not something that economists routinely track, but it provides a rough sense of what’s happening in local real estate markets. Call it the lowball index.
A year ago, according to researchers at the National Association of Realtors (NAR), one out of 10 members surveyed in a monthly poll complained about lowball offers on houses listed for sale. In the latest survey – conducted during March among a sample of 4,500 agents and brokers across the country and not yet released – there were hardly any. Instead, the focus of volunteered comments has shifted to declining inventory levels – fewer houses available to sell – and multiple offers on well-priced listings.

A lowball offer typically involves a contract submitted to a seller where the price proposed by the purchaser is 25 percent or more below list. Lowballs increase sharply when there’s a glut of properties available, asking prices are out of sync with local economic realities, and values are depressed or uncertain. Buyers figure: Hey, why not? Maybe I’ll get lucky.

Based on the latest survey results, that sort of strategy is not a winning move in many communities this spring. In fact, in local markets where inventories are tight and competition for homes rising, realty agents say that buyers looking to steal houses by lowballing their offers are ending up at the back of the line – their contracts either rejected out of hand or countered close to the original asking price.

In high-demand, high-cost markets that have rebounded from recession slumps, sellers are now firmly in control; they pay scant attention to lowballers. Jayne Esposito, an agent with Coldwell Banker Residential Brokerage in Los Gatos, Calif., says that multiple offers are “the rule, not the exception,” in her area, and many transactions end up with final contract prices higher than the listing. “Sure, I’ve had a few buyers try to lowball and they wouldn’t listen,” she said in an interview, “but that didn’t work out well for them.”

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