I regularly talk to a lot of different agents: in my office, throughout Coldwell Banker, and other brokerages. It’s interesting to hear what people say, and to see what buyers are doing. While I haven’t gotten any crazy low offers on my listings lately, I have been hearing some stories about people buyers coming in unrealistically low. If a buyer really wants a property, they shouldn’t be bidding $600,000 on a $1 million listing in a multiple-offer situation. This actually happened recently to one of my colleagues.
Those buyers may not realize it, but when they make an offer, the listing agent can then tell other interested agents that they have an offer in hand. The listing agent doesn’t need to tell other agents what the offer is, and in a situation like this it can only help the seller because buyers will be speculating on how much more they need to offer in light of other buyer interest. The only time a buyer should be making a crazy low offer is when there are no other offers. Otherwise, they will accomplish the opposite of their goal by driving up prices with their low offer.
There is no question that there are some buyers in the market who are frothing at the mouth right now with all-cash offers at the ready, hoping the high interest rates and questionable economy will create the perfect opportunity for them. While being a cash buyer provides some leverage and is an advantage when going against buyers who need loans, making a cash offer is not the ‘end all, be all’. Of course, a seller would rather accept an all-cash offer over an offer with a loan contingency, all other things being equal. But buyers need to remember when escrow closes, ultimately it’s all cash to the seller anyway.
Way back in the aftermath of the Great Recession, I helped a really nice couple buy five condos to set up their retirement. When we started making their all-cash offers, we were nowhere near the numbers we needed to be. It took us 16 tries before we got our first offer accepted. Even in a historically down market there was still considerable competition. Sometimes buyers need to be active in the market for a while before they learn what it takes to get an offer accepted. Once we got that first condo and my buyers learned their lessons, the next four came relatively easily.
There is no question the market has slowed a bit. A sharp increase in interest rates, historic inflation, and the stock market tanking this year have all taken a toll. Meanwhile, the housing market has not plummeted. We still have low enough inventories to support attractive pricing for sellers. Unless and until the housing stock rises dramatically in Marin County, buyers expecting bargain basement deals are going to need to look elsewhere.