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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