Real Estate

Low ball in luxury real estate market?

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  • Jul 7th, 2020 11:57 am
[OP]
Jr. Member
Nov 23, 2014
167 posts
38 upvotes
East York, ON

Low ball in luxury real estate market?

Anyone have any insight in to luxury detached homes in gta, mainly north york area. Homes for 2M-5M.

Do you think you can low ball an offer in with no conditions?

Anyone have a sense of this market?

How much of a low ball do you think can be done if any?
25 replies
Deal Addict
Dec 21, 2010
1715 posts
986 upvotes
GTA
No point. The only thing you will do is become blacklisted.

Why not get the best comparables and go in slightly lower than asking IF you truly want the home. If you plan on going super low, your best approach would be to wait until the house has been on the market for a long period of time and/or is vacant.
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[OP]
Jr. Member
Nov 23, 2014
167 posts
38 upvotes
East York, ON
loriblum wrote: No point. The only thing you will do is become blacklisted.

Why not get the best comparables and go in slightly lower than asking IF you truly want the home. If you plan on going super low, your best approach would be to wait until the house has been on the market for a long period of time and/or is vacant.
Thanks, I was thinking of coming in super fast with a low offer, which may put some pressure. But I guess the way to find those that would be willing budge would be those that have it listed for a long time.
Deal Addict
Jul 3, 2007
4033 posts
4515 upvotes
Toronto
oldspice wrote: Anyone have any insight in to luxury detached homes in gta, mainly north york area. Homes for 2M-5M.

Do you think you can low ball an offer in with no conditions?

Anyone have a sense of this market?

How much of a low ball do you think can be done if any?
there is nothing wrong with low balling.... I hear sellers bitch about it and I laugh when a seller is asking a ridiculous price compared to recent sales of comparables

happens all the time....

I put an offer on a $900k listing which was obscenely overpriced recently, I came in at $810k ..... we are now at $845k signback and im not paying more than $820k

there was a $4.25 million house in my hood listed for 3 years....yes 3 years... it was so obviously over priced it was laughable.... maybe $3 million was the fair price at best
Deal Guru
User avatar
Sep 14, 2003
10847 posts
912 upvotes
Mississauga
oldspice wrote: Thanks, I was thinking of coming in super fast with a low offer, which may put some pressure. But I guess the way to find those that would be willing budge would be those that have it listed for a long time.
You lose on that strategy. If you come in super fast, there is still hope in the seller's mind. Why should I settle day-one for an offer far below my asking price? That's a non-sensical strategy.

Either you come in super early with a slightly-less-than-asking approach - to try to get them to shift based on convenience ("Let's just accept and get it done"), or you come in super-late with a lowball to get the people who are afraid and pinched.
4chan melts your brain.
Member
Jan 27, 2018
203 posts
198 upvotes
You can try, you never know. You can always up your offer afterwards. Sometimes the seller agent will just pressure the seller to sell, and/or maybe seller needs liquidity (immediate sale).
[OP]
Jr. Member
Nov 23, 2014
167 posts
38 upvotes
East York, ON
What about going directly to the listing agent and saying here is a low ball offer, but you can be the buyers agent too and take the 2.5%? What's the best way to communicate that?
Member
Jan 27, 2018
203 posts
198 upvotes
oldspice wrote: What about going directly to the listing agent and saying here is a low ball offer, but you can be the buyers agent too and take the 2.5%? What's the best way to communicate that?
Just literally directly communicate that to the seller agent.
Deal Fanatic
Mar 27, 2004
7351 posts
5305 upvotes
Toronto
oldspice wrote: What about going directly to the listing agent and saying here is a low ball offer, but you can be the buyers agent too and take the 2.5%? What's the best way to communicate that?
That's not how the listing agreement works.
Full-time Realtor
Deal Guru
User avatar
Sep 14, 2003
10847 posts
912 upvotes
Mississauga
oldspice wrote: What about going directly to the listing agent and saying here is a low ball offer, but you can be the buyers agent too and take the 2.5%? What's the best way to communicate that?
Just to be clear here - you want to put the listing agent in a conflict of interest to go against the best interests of their client?

Any realtor that does that, you don't want. Supremely unethical - and I suspect you are as well.
4chan melts your brain.
Deal Addict
May 9, 2017
1214 posts
1302 upvotes
oldspice wrote: Anyone have any insight in to luxury detached homes in gta, mainly north york area. Homes for 2M-5M.

Do you think you can low ball an offer in with no conditions?

Anyone have a sense of this market?

How much of a low ball do you think can be done if any?
There are a lot of houses in Willowdale East that have been on the market for a long time.
Some of these are new builds and I imagine some of the builders are sitting on expensive private construction loans. What people want in this area and what they get are two different things?
How low ball do you want to go?
[OP]
Jr. Member
Nov 23, 2014
167 posts
38 upvotes
East York, ON
NotRobot wrote: There are a lot of houses in Willowdale East that have been on the market for a long time.
Some of these are new builds and I imagine some of the builders are sitting on expensive private construction loans. What people want in this area and what they get are two different things?
How low ball do you want to go?
Maybe 20-30%. Was really curious if anyone was seeing this happening yet. Maybe in Sept. when deferrals start? Maybe its just a dream and prices will remain firm, seems to be the case for now.
Member
Jan 27, 2018
203 posts
198 upvotes
oldspice wrote: Maybe 20-30%. Was really curious if anyone was seeing this happening yet. Maybe in Sept. when deferrals start? Maybe its just a dream and prices will remain firm, seems to be the case for now.
i doubt you'll snag the place at 20-30% below fmv, figure out fmv and subtract 10%, u might have a chance. if not, u can increase it or walk away.

it really depends on the mindset of the seller is, some need the liquidity, some can wait it out.

for example, if seller bought another place and needs to close in 1wk time, they'll be desperate and willing to part ways -10% below fmv. but if seller is just fishing, they wont take anything less than fmv + 10%

there's no harm in low-balling, so what if they say no? you learn from the experience and you can up your offer or try other properties. don't let agents pressure you.
Deal Addict
Jan 28, 2017
1067 posts
1182 upvotes
oldspice wrote: What about going directly to the listing agent and saying here is a low ball offer, but you can be the buyers agent too and take the 2.5%? What's the best way to communicate that?
Few years ago, tried doing that (not the lowballing part, but approaching seller agent directly) on a couple of condo units I liked. Just like the other resident RE agents have said, they won't budge or "cut a deal". But I was 25 at that time and thought I could talk my way into saving the commission since the listing agent would double end it anyway...

Lowballing on a multimillion dollar home, sellers know right away you aren't serious. This isn't like offering $500 on a winter beater off kijiji...Sure you can make the argument that worst outcome is getting "no", but you're just wasting everyone's time, including your own. What if you were in the seller's shoes and someone came up to you with 30% below ask, how would you react?

You just need to do your homework and collect data on the comps in the neighbourhood to make the most informed decision. If that number is below ask then so be it. If not, then you know the true market.
Deal Fanatic
Jul 3, 2011
6517 posts
3788 upvotes
Thornhill
Unless you are absolutely certain the property is well over-priced, Loriblum has given you great advice. You'll not only be blacklisted you'll be viewed as someone who can't afford the property, will not be taken seriously and will be fodder for seller and listing rep.
Member
Jul 19, 2018
274 posts
168 upvotes
Mississauga
oldspice wrote: Anyone have any insight in to luxury detached homes in gta, mainly north york area. Homes for 2M-5M.

Do you think you can low ball an offer in with no conditions?

Anyone have a sense of this market?

How much of a low ball do you think can be done if any?
You really think people would put crazy conditions for such properties? most offers are without conditions.
Someone who is putting an offer for a 3m-5m home usually puts more than 50% down on a mortgage. They rarely get declined. So most offers that are received for such properties are without conditions.
You will find a hard time finding a realtor who will be ready to submit a lowball offer on such properties. People in this price range are not desperate to sell they can afford to hold these properties for as long as they want to get the fair price for their property.
Member
Jul 19, 2018
274 posts
168 upvotes
Mississauga
NotRobot wrote: There are a lot of houses in Willowdale East that have been on the market for a long time.
Some of these are new builds and I imagine some of the builders are sitting on expensive private construction loans. What people want in this area and what they get are two different things?
How low ball do you want to go?
Most builders refinance the house through the banks right after they finish construction to pay off the construction loans right away.
Deal Expert
Mar 23, 2009
21002 posts
7348 upvotes
Toronto
Each case is different. And it really depends on what you mean by low ball. I agree that if the place is listed anywhere near fair market value, you are probably just going to be ignored (or even blacklisted) if you offer 20-30% below list. But say 10% below asking may often be reasonable as an initial offer IMO, esp. if the luxury house is slightly overpriced.

For a house that had sat on the market for a few weeks, my real estate agent said that after talking with the seller's agent, he got an idea of what the seller would accept, so at his recommendation I put an offer at 6%+ below asking, conditional on inspection. My offer was immediately accepted. Had I known they were gonna accept that right away, I would have offered 10% below asking instead. While I don't think the house was significantly overpriced, in retrospect I realized that there were other factors outside of usual market forces that had made the sellers more motivated. BTW, after the inspection, I got them to drop the price another few thousand bucks, due to deficiencies that were found.

My sis got her luxury condo for close to 10% below asking, and I do think she paid well under fair market value based on comps, in a sellers' market. It's a great condo but the problem was that it had renter that was an ass. The renter (who was a minor celebrity) sometimes refused to vacate the premises for a viewing and never cleaned up, which of course turned off potential buyers. My sister didn't care though and used that to her advantage. Knowing it had been on the market for a while she lowballed as a firm offer, but without conditions. They initially balked but eventually they accepted that price without negotiation, because my sis refused to negotiate. It was a take it or leave it offer, and I honestly thought they were going to leave it, but they didn't. Re: Bad renters, I can relate. I was looking for a condo for my mom and one place we looked at was a mess, but the weirdest part was we pulled open a drape and found the two renters lying there in their messy bed. We were like, WTF? We just left and scratched that off her list. Something similar probably happened for months for my sis's place before my sister put an offer on it.

BTW, a house on the next street over went for a really low price. Why? Because it was an estate sale, and the family just wanted to sell the damn thing asap with no fuss.

So yeah, while you definitely can't count on it, low balling does work to an extent. It really depends on the situation though.

IrfanP53614 wrote: You really think people would put crazy conditions for such properties? most offers are without conditions.
Someone who is putting an offer for a 3m-5m home usually puts more than 50% down on a mortgage. They rarely get declined. So most offers that are received for such properties are without conditions.
You will find a hard time finding a realtor who will be ready to submit a lowball offer on such properties. People in this price range are not desperate to sell they can afford to hold these properties for as long as they want to get the fair price for their property.
Well, one might argue that luxury homes might be easier to lowball in many cases.

With $300000 condos that are fairly priced, a lowball offer won't work because there are a bazillion buyers that can pay that. In contrast, for a $3 million home that is fairly priced, offering say $2.7 million might be a reasonable starting point if the house has been on the market for a while. The number of people that can pay $2.7 or $2.8 million just aren't as many. In that context, I think the seller would be foolish to just decline the offer. A smart seller would negotiate from there. It's a mistake to think that everyone in a $3 million house can just sit around waiting to sell an asset of that value. Think of it this way. Let's say it's a family with young kids and dad, and a housewife. Then the dad dies in a car accident but has no life insurance. And the house has only 30% equity on it, and the wife has no income and just a 3-month emergency fund and some RRSPs from her husband. All of a sudden she has to deal with huge mortgage payments as well as everything else, so she would be highly motivated to sell. Would you be a nice person lowballing in that situation? Maybe not, but this is not about being nice. It's about getting a house for the amount you want to pay.

P.S. On the flip side... There was a house down the street that was on the market for $1.5 million. They were offered something like $1.4 million, or close to 7% below asking. I saw the house and while it was a decent lot and a new reno with decent quality finishes, it just wasn't my taste as it was designed by someone who IMO needed some design courses. I think s/he should have hired an interior designer to help because s/he could have spent the same amount of money in the end and it would have looked cooler inside. By comps, probably $1.5 million might have been in the right ballpark, but the somewhat unusual design choices turned some people off. Anyhow, the seller just flat out said no to the $1.4 million, and didn't negotiate. Fast forward 1 year later, and it finally sold... for $1.3 million. In that year, I think average home prices had gone up about 6% IIRC, making that $1.3 million value even worse.
Last edited by EugW on Jul 6th, 2020 10:43 pm, edited 2 times in total.
Member
Jan 27, 2018
203 posts
198 upvotes
EugW wrote: Each case is different. And it really depends on what you mean by low ball. I agree that if the place is listed anywhere near fair market value, you are probably just going to be ignored (or even blacklisted) if you offer 20-30% below list. But say 10% below asking may often be reasonable as an initial offer IMO, esp. if the luxury house is slightly overpriced.

For a house that had sat on the market for a few weeks, my real estate agent said that after talking with the seller's agent, he got an idea of what the seller would accept, so at his recommendation I put an offer at 6%+ below asking, conditional on inspection. My offer was immediately accepted. Had I known they were gonna accept that right away, I would have offered 10% below asking instead. While I don't think the house was significantly overpriced, in retrospect I realized that there were other factors outside of usual market forces that had made the sellers more motivated. BTW, after the inspection, I got them to drop the price another few thousand bucks, due to deficiencies that were found.

My sis got her luxury condo for close to 10% below asking, and I do think she paid well under fair market value based on comps. It's a great condo but the problem was that it had renter that was an ass. The renter (who was a minor celebrity) sometimes refused to vacate the premises for a viewing and never cleaned up, which of course turned off potential buyers. My sister didn't care though and used that to her advantage. Knowing it had been on the market for a while she lowballed as a firm offer, but without conditions. They initially balked but eventually they accepted that price without negotiation, because my sis refused to negotiate. It was a take it or leave it offer, and I honestly thought they were going to leave it, but they didn't. Re: Bad renters, I can relate. I was looking for a condo for my mom and one place we looked at was a mess, but the weirdest part was we pulled open a drape and found the two renters lying there in their messy bed. We were like, WTF? We just left and scratched that off her list. Something similar probably happened for months for my sis's place before my sister put an offer on it.

BTW, a house on the next street over went for a really low price. Why? Because it was an estate sale, and the family just wanted to sell the damn thing asap with no fuss.

So yeah, while you definitely can't count on it, low balling does work to an extent. It really depends on the situation though.



Well, one might argue that luxury homes might be easier to lowball in many cases.

With $300000 condos that are fairly priced, a lowball offer won't work because there are a bazillion buyers that can pay that. In contrast, for a $3 million home that is fairly priced, offering say $2.7 million might be a reasonable starting point if the house has been on the market for a while. The number of people that can pay $2.7 or $2.8 million just aren't as many. In that context, I think the seller would be foolish to just decline the offer. A smart seller would negotiate from there. It's a mistake to think that everyone in a $3 million house can just sit around waiting to sell an asset of that value. Think of it this way. Let's say it's a family with young kids and dad, and a housewife. Then the dad dies in a car accident but has no life insurance. And the house has only 30% equity on it, and the wife has no income and just a 3-month emergency fund and some RRSPs from her husband. All of a sudden she has to deal with huge mortgage payments as well as everything else, so she would be highly motivated to sell. Would you be a nice person lowballing in that situation? Maybe nice, but this is not about being nice. It's about getting a house for the amount you want to pay.

P.S. On the flip side... There was a house down the street that was on the market for $1.5 million. They were offered something like $1.4 million, or close to 7% below asking. I saw the house and while it was a decent lot and a new reno with decent quality finishes, it just wasn't my taste as it was designed by someone who IMO needed some design courses. I think s/he should have hired an interior designer to help because s/he could have spent the same amount of money in the end and it would have looked cooler inside. By comps, probably $1.5 million might have been in the right ballpark, but the somewhat unusual design choices turned some people off. Anyhow, the seller just flat out said no to the $1.4 million, and didn't negotiate. Fast forward 1 year later, and it finally sold... for $1.3 million. In that year, I think average home prices had gone up about 6% IIRC, making that $1.3 million value even worse.
Quality post!
Deal Guru
Feb 9, 2009
12360 posts
11249 upvotes
Lots of people forget some try to overprice cause they arent really looking to sell anyways -- they are kinda just threading water in the market in case they somehow got that big bid.

One of my neighbors did this.. tried to sell for 100,000 over comp... he wasnt serious about selling.

Clearly if someone is desperate to sell or have to liquidate quick they will price it right to begin with...

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