Real Estate Experts: 5 Reasons You’re Getting Lowball Offers and How To Fix This
The frenzied bidding wars of the pandemic-era real estate market are long gone. Home loans cost 7% today, and cautious buyers must make every dollar count. While there are still plenty of hot markets, expensive mortgages equal reduced purchasing power, and sellers are slashing their asking prices as costly loans force buyers to lower their offers.
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But other times, sellers make mistakes that attract lowball bids. According to experts we spoke with, here are some reasons you may be getting disappointing offers for a house you know is worth more.
Your Expectations Might Exceed the Realities of the Market
If you’re receiving underwhelming offers, reassess your list price before you blame unreasonable buyers.
“One common cause is overpricing, where sellers set an unrealistic asking price for their property, prompting buyers to negotiate with lower offers to reach a more reasonable value,” said Mike Qiu, a licensed real estate agent and owner of Good as Sold Home Buyers in Seattle.
Often, sellers list too high based on emotion. It’s hard to detach from the sentiment you feel toward a house that was your home, but buyers don’t care about your memories or your love of the property. They care only about the neighborhood comps.
“Researching the current real estate market in their area is crucial, allowing them to set a competitive asking price based on recent sales and comparable properties,” said Qiu.
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Even if you leave emotion out of it and set the price analytically, you might be selling in an environment with too many houses and too few buyers, which is why it’s so crucial to work with an agent who has hyper-local expertise.
“Market conditions can play a significant role,” said Qiu. “Particularly in a buyer’s market with high inventory and low demand, leading to increased competition among sellers and lower bids.”
You Can’t List Fixer-Uppers at Turnkey Prices
If you’re asking price is on par with the neighborhood comps and you’re still getting low bids, it might be because buyers can see that the house needs work and are factoring those costs into their offers.
“Some home sellers might be receiving lowball offers due to the condition of the property,” said George Ng, real estate expert at Oxford Property Group, whose team provides real estate updates at New York Suburban Homes. “A home in poor condition or in need of significant repairs may receive lowball offers. In this situation, the seller needs to improve the property’s appeal by investing in necessary repairs, renovations, and maintenance before listing it for sale.”
Poor Aesthetics Repel Buyers Even If the House Is Structurally Sound
Jim Fredo, founder of Spring Capital Partners, owns 97 rental properties in the Pittsburgh area. As someone who makes his living buying real estate at a discount, he has a nose for why sellers often settle for low offers on properties that could have commanded more.
“When I walk into a house and smell strong cat urine or mold smells, I say to my associates, ‘Do you smell that? I smell money,'” he said.
Even if the property doesn’t require renovations or repairs, you can’t expect top dollar if it’s gross, messy and unkempt.
“Cluttered houses are a turnoff,” said Fredo. “We buy hoarder houses at a discount. It’s expensive to clean out a house filled with clutter. Often issues are hidden by the clutter. We have to discount the offer price to account for hidden issues that no inspection can uncover.”
But aesthetic appeal is essential before the buyer even walks through the door.
“Starting with the outside, the first impression is essential,” said Mark Severino, a real estate investor in Dallas and owner of Best Texas House Buyers. “Does the property have curb appeal? Do the property and the front yard look well-maintained, clean and free of clutter? Is the property painted in an appealing color and well-maintained? Does the roof look like it is in good condition?”
Your Home Is Only as Good as Its Presentation
Even if your home is in tip-top shape and priced accurately according to the market, you might get low offers if you represent it poorly online and at showings.
“Improving their presentation can help increase bidding activity and secure higher bids,” said Devon Wayne, founder and owner of ASAP Cash Offer. “This could include staging furniture for showings of your home and taking professional photos of the property from different angles that section off individual rooms and highlight standout features.”
Financial Straits Attract the Wrong Kind of Attention
Real estate can be an unforgiving business, and some especially aggressive buyers look for sellers who they believe are selling not because they want to, but because they have to. If you’re in financial trouble, you can bet the sharks will smell blood in the water.
“To understand why sellers get lowball offers, we need to understand why a seller would even accept such an offer if presented to them,” said Severino. “The answer is that they are in a situation where they would rather receive a smaller check from an immediate sale than put in the time, effort, and money to renovate a property for a potentially higher sale price.”
But who would settle for less when a little time and effort could bring them top dollar?
“Sellers get lowball offers when they appear on a list that might indicate they are under some sort of financial stress,” said Severino. “The sale of property and the finances around it are generally publicly accessible knowledge. Therefore when issues are recorded by the government — code violations, pending foreclosure, liens — it can signal to house buyers that the owner might want to sell the property at a discount rather than take the time and money needed to fix the issue.”
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This article originally appeared on GOBankingRates.com: Real Estate Experts: 5 Reasons You’re Getting Lowball Offers and How To Fix This
