I understand your point. Of course, it’s also a growing ‘Average’, since every month we see more inventory and less sales.

You may be right on the math, but IMO the “average” seller will not sell their property at all, having nothing to do with the ratio of actives to pendings, but because average sellers are not pricing their properties low enough to entice buyers to buy. Average sellers look at that chart Matt posted and see only the sky high selling prices (not the tiny amount of sales); average buyers look at the same chart and think the bottom is about to fall out of prices. If it is not perceived to be a “bargain” (not just price, but “perfect” condition – don’t talk “potential”), average buyers are not interested. Yes, there are occasional exceptions (which just fuel the greed fire), but we are talking “average”.

I scroll through the Kauai listings, and seller after seller thinks their property is worth at least twice, and sometimes 3 or 4 times what they paid just a few years ago. That mind set is why they will not sell. I don’t know why realtors(R) waste their time (not to mention their money) listing and advertising these “priced to sit” properties.

I can see how my saying, “We told their agent we would have gone higher if a realistic counter had been made” would cause some confusion. I should have made clear that this was after the sellers had rejected our offer without counter.

I do not at all suggest that anyone go “agent free” unless they are up to the task. We have bought and sold several homes and properties in the past, sometimes using an agent, sometimes not (both as buyers and sellers). I am a lawyer, and I plan to use local RE counsel on Kauai if/when we do get under contract.

Also, thanks for your responsiveness on the blog. Hopefully, you will start getting more readers/commentors, and a dialogue can take place that may benefit both sellers and buyers alike, if you are willing to host such dialogue. I know many brokers are uncomfortable allowing free and frank discourse on their blogs.

David

Well… all I can say is that if my sellers get a reasonable cash offer for their listings, I’ll encourage them to accept it.

I wish you all the best with your search.

You may be assuming facts not in evidence. We did not make our offers “using the Listing Agent as our representative”. The agents owed us no ethical duty to not discuss the offers with their clients. For all I know the agents recommended rejecting our offers, and expect something better to come their way. Maybe there were other factors (unknown to us) that complicated things (e.g., mortgage balances or other encumberances). Who knows.

As far as both sides having “a false sence of entitlement”, maybe it is just semantics, but sellers are not entitled to buyers paying more, and buyers are not entitled to sellers taking less. In our case, for now, the sellers still have the property, and we still have the cash.

Keep in mind that when you make offers using the Listing Agent as your representative, you’re effectively neutralizing the agent’s ability to influence the negotiation. When you create a Dual Agency situation, the Realtor can no longer (ethically) advise either party about price, terms, etc. So, no matter how wonderful your offer is, the agent can’t explain that to the sellers. As a result, the sellers are on their own, and they often respond from an emotional place that isn’t based in reason, or the reality of what’s happening in the market.

This is why we don’t attempt to represent both parties in a transaction. When my sellers get cash offers, I want to remain in a position where I can advise them about the benefits and price points.

This market requires a diligent buyer, and one that can take full advantage of representation.

We are “bona fide” buyers (cash). Bona fide buyers are the market. Not posers with free-wheeling lenders behind them. Those guys won’t be back for a while. Not to mention the mainland housing bubble deflation that has left other would-be buyers without a source of down payment.

We made two offers in July, both rejected. One was about 15% below asking, and we would have gone up a bit if a realistic counter was made, but the sellers countered at nearly full asking price (mind you, we were offering a cash deal with no financing contingencies). Our other offer was admittedly too low, nearly 25% percent below asking, but their asking price is completely unrealistic (it sat on the market for at least a year, was pulled for a while and back on at the same price). We told their agent we would have gone higher if a realistic counter had been made, but we got no response. I assume they do not need to sell and will wait however many months/years to “get their price”. Maybe they will. Who knows?

“Lowball” is in the eye of the seller. If sellers are priced unrealistically, they will view a realistic offer as “lowball”. Sooner or later, there will be sellers who actually have to sell, and price accordingly. We are picky about location and quality, and we are patient. We don’t “have” to do anything.

The margin between the listing prices and sales prices is simply going to have to grow.

When the market was flush, ‘lowball’ offers were much more common, despite sellers holding firm. Now, in a time when there’s a glut of inventory, short sales, etc., most buyers are on the sidelines watching the prices stay stagnate and the interest rates go up.

The false sense of entitlement is on both sides.