The Tells – Where to come in with an offer

The worst thing you can do to a little boy (as I was many years ago) is bring him to a ladies’ dress store. I do not think moms know how absolutely and boringly painful that is—or they just pretend at first not to know. But the “tells” start to show themselves rapidly. Shortly, arm-tugging restlessness begins, followed by herky-jerky, seizure-like body movements. Eventually, “Can we go?” takes place. Hence why kids get addicted to social media and iPhones at a young age. It’s the one thing that buys time.

If you walked into Nordstrom today, you might be approached by a friendly salesperson. They say, “How do you do?” You reply, “Just lookin’.” The good salespeople say, “Well, you have to look before you buy. Let me show you this weekend’s 50% sale rack before it hits the shelves.” And off you go!

It’s season. The lookers are here. All purchasers look before they buy, and January is the month for looking. That’s not to say that homes don’t go under contract in January. October–December was unusually active, with pendings up 20% in Palm Beach County in November, for example. But November sales, as well as January sales, are child’s play. February sales are when the engine starts to roar.

The relatives have left town. Thank goodness. The two-week albatross of the young’uns and their parents clogging up restaurant reservations, roundabouts, and community pools is over. The final remaining ones flew back last weekend toward their bitterly cold winter igloos. Let them suffer scraping windshield ice for the next thirty years. The only noise at the zero-lot-line community pool in Eagleton Lakes in PGA National will be the soft rustle of a senior on a floatie getting their morning exercise. Peace at last.

Snowbirds and the seasonal renters now dominate the landscape—two distinct species. Many seasonal renters, like the caterpillar, will become snowbirds. Snowbirds, like small snails, need to find a larger shell for visiting relatives who have just left.

The first part is looking. What area do you want to be in? Northern Palm Beach County? Southern Palm Beaches? Port St. Lucie? Stuart? Then it’s condo versus country club, or gated versus un-gated. The first month of season is all about looking at and understanding what you like and what you can afford. The house is rarely the first consideration. It’s more about which area and which neighborhoods are good fits. Comprehending what is important to you—such as activities, proximity to shopping, schools, restaurants, medical facilities, and the beach—all come into play.

The sooner you figure this out, the better. Because once you hit February 10–15, buying activity becomes frenzied. The reason is that season is nearing its halfway point, and people want to purchase before they go back home. So, to help you get in that frame of mind, here are 8 tips on price for writing offers once you figure out the neighborhood and start to zone in on the particular house.

Are There “Tells” That a Seller Will Accept a Low Price?

A good buyer’s agent is always a good detective. I always ask, “How did the seller come up with the listing price?” as my first key question—and then zip the lip. You never know what will come out of their mouth. Sometimes it’s, “They just wanted to test the market,” or “They will negotiate.” You learn by asking simple, short questions.

Another question is, “Where are they going?” or “What is an ideal closing date?” These are questions behind the question. I’m really trying to find motivation. If the seller needs to close fast because they just bought something for a job transfer, then bingo—they will probably accept a lower price.

Days on the Market and High Inventory

DOM and elevated supply are also key signs. However, high off-season DOM doesn’t mean as much. I’ve seen homes sit in the fall and then suddenly have bidding wars in January and February.

Seasonality

Time of year is another factor. Homes in South Florida in July that have been on the market for a while in a heavy-inventory market are prime for a lower price. July is off-season, and carry costs plus lost opportunity costs are sky-high. Read more about Seasonality here.

Vacant Homes

Empty homes without a tenant are more desperate—less so at the start of the season, but more as season gets cooking. Carry costs and lost opportunity costs become more crucial because it’s money flying out the window. Homes where someone needs to move and go somewhere else for the same shelter are less apt to take a low offer.

How They Are Priced

They could be appraised right but not in the right parking lot. Buyers search in rhythms of 25–50–100. Meaning a home priced at $605,000 is on the wrong aisle. Lower it to $599K and buyers shopping up to $600K show up. It’s unbelievable how many sellers price outside of a search parameter just because they think they need a few extra dollars of negotiation wiggle room. They don’t.

Subpar Homes

Your cherry homes are never going to sell on the cheap. Subpar—aka s#!t or crappy—homes, on the other hand, are where you see bigger opportunities. Much of that is you doing the work: bad floor plans, money pits, poor views. If it’s sitting, oftentimes it’s for a reason.

How Low Is Too Low?

Detective work again gives you some clues. Always take a measure from the buyer. I ask, “If you didn’t get this and I called to tell you that you lost out, how would you feel?” Finding out your buyer’s true feelings tells both you and them how much risk you want to play with.

Usually, more than 10% off and you can expect not to get a response. Five percent and under gets deals done. However, those are generalities. Sometimes going over the asking price is smart—it depends on where it’s priced. Sellers who have overpriced need to know it’s overpriced, and then they will lower it. They usually won’t accept a “lowball offer” if they think they have it priced right. If they are wrong, then time comes into play.

Where to Come in At?

How do you advise clients to make an under-ask offer? What makes sellers take a lower price seriously, and when should buyers walk away instead of pushing harder? Ahh, that is both art and science.

Come in too low and you are told to pound salt or hit the road, Jack. Figure out the replacement opportunity for that home. I recently had a client who dilly-dallied on a Spanish home that was unique. There was no replacement.

Once, in a golf community, a buyer wanted to be in a gated community with southern exposure, 3,000–3,500 square feet, and remodeled. There were 5,000 homes in the community. I took out a map with a Sharpie. By the time I went through everything, there were seven homes that fit the bill. My clients were older; this was the only one on the market, and if they passed on this property, they could be waiting a few more years. Losing the house wasn’t worth trying to save a few dollars.

And if you are the spouse who lost on that “must want home” for your partner, better go buy a diamond ring or new luxury car. The cost of buying the iPhone that worked on your kid, won’t work on your spouse!