Why Don’t They Just Make An Offer?

Why don’t they just make an offer? Because they don’t! We can’t exactly explain why, but I do have a few ideas about why buyers will pass on a property, even if they like it, rather than making a low offer. Buyers USED to make low offers. But nowadays they prefer not to. They just move on. Here are a few of the factors which I believe influence their decision:
• They have lived through or witnessed too many skyrocketing markets. Over much of the past 15 years, most of the time properties were receiving multiple offers and selling quickly. If buyers observe such markets for long enough, they develop a self-protective attitude towards low bids. To them, watching as they have so many instances in which even the asking price could not secure the property, the idea that a seller might really entertain a bid 12% or 15% below the asking price seems impossible.
• They dismiss the seller as unrealistic. Buying a home is an emotional decision. An inappropriately priced property seems insulting to the buyer’s intelligence. “Are they dreaming?” the buyer might say, or “That pricing is totally unrealistic.” When we suggest the possibility of making a low offer, the most frequent retort has become “Get back to me after they lower the price!”
• They do not want to set themselves up for disappointment. There is a good deal of inventory in most submarkets, and an increasing amount of that inventory (often having taken a number of interim price reductions) seems to offer better value than any overpriced unit. Buyers prefer to move on to something the asking price of which makes them feel more confident of success.
• Urgency has left the marketplace. Most buyers today don’t mind waiting. My agents report to me that week after week, people attend their Sunday Open Houses and seemed filled with enthusiasm for the unit. Then Monday comes and the silence is deafening. No call, no e-mail. When we follow up, their broker tends to say the buyer liked the property, but they are waiting to see what happens next in the market. Or that they’re in no hurry. Or that it isn’t exactly what they want. Or that the price seems a little high. And when we respond to THAT remark by saying “Why don’t they make an offer?” the answer is almost always negative. No, the buyer isn’t ready. Or no, they fear their bid would insult the seller. Maybe they will come back to it if the price comes down.

For whatever the reason, perhaps one of those listed above or perhaps another, the deals we are making (and May has been a very good month for us) all feature well-priced units. None of them depended on buyers taking the initiative to offer 15% below an excessive asking price. And for very few was there more than one bidder. These days, listings get sold when the right person finds them. It’s not a lot of people fighting over a property. Usually it’s a lone bidder. And he or she is NOT bidding when the price is wrong. So sellers take note: aspirational pricing leads to months on the market without a sale. In today’s environment, price it right if you want to sell it. It’s the only way.