Posted by Daniel Ripper on February 6, 2009 at 1:42pm
In the last couple of weeks, I've had a number of choice listings enter the market at what I figured was a good market price based on my evaluation. Within hours of some of these listings, I had multiple offers, competing buyers, higest and best, etc.. Some of these offers went above asking by as high as 25%!1st scenario: The sellers didn't take the strongest offer with the bottom line (yes they were well qualified with an 80% downpayment) They took the second best which was all-cash but 25K less!2nd scenario: Countered the best well rounded offer, but in the counter was an offer amount reduction! Good for the buyer and their agent.I had to confirm with the AM making sure that the reduction wasn't a typo before moving forward. Apparently the reason why banks are doing this is many buyers overbid and then when it comes time for loan approval, can't make value/work the price down for whatever reasons. Thoughts on this? Is it healthy for our market to keep things lower, even if somebody is willing to pay a higher premium?
This is becoming a huge problem for us in So. Cal. Buyers are over bidding to ensure they get the property, knowing that the appraisal won't support value. They then ask the bank for a price reduction. I have had 4 in the last 2.5 weeks....and each time to bank agreed and lowered the price. Even worse, we had a property that appraised at value but the buyers lender disagreed and over road the appraiser. Talk about killing an already bad market.
One of my buyers waited 6.5 months to get his Short Sale offer approved because the Seller/Lender took too long. Now we are in escrow and his offer is $25K more than the value of the property according to the appraiser! We had to go back to the negotiator and reduce the price of the original offer! This delays the whole process as now the bank/seller has do another appraisal or BPO to validate the buyer's appraiser's value! We should have closed 2 months ago...
I agree, it the buyer is willing to pay X amount, then thats what dictates the market value. Gee, if only the other owners in that neighborhood knew...
Well, this is funny.....I never saw this one coming.
Personally, I think this is a terrible idea. Most of the time, the "premium" really isn't a premium at all, it's Fair Market Value. In other words, is the "premium" really a premium at all?
Comments
Personally, I think this is a terrible idea. Most of the time, the "premium" really isn't a premium at all, it's Fair Market Value. In other words, is the "premium" really a premium at all?