Lowball! takes a look at home sales over the past week from a very different perspective. For those new to Lowball!, a lowball offer is when a buyer offers a significantly lower bid than asking in hopes that the seller accepts the offer. We take a list of home sales over the past week and pick out the sales that have the highest percentage difference between asking price and selling price.
Lowball! is to show buyers that the market has changed and buyers now have considerably more leverage than sellers. Just a short time ago, lowball offers would have been laughed at and discarded, however, not any more. The fact that so many under-asking offers are being accepted is clear proof that the market is changing.The list does not contain all sales, I hand-pick the most interesting sales from the list. These listings might be the highest dollar drops, biggest percentage reductions, or sales in towns that are thought to still be ‘hot’. Please note, even with double digit percentage reductions, these homes are still incredibly overpriced.
I’m sure many readers did a double take when they saw this title. Well, what can I say. We’re back in business. Please excuse any errors and point them out in the comments so that I can correct them.
On to the list!
MLS# 2201697 – Hillside, NJ
Asking Price $289,999
Selling Price $190,000 (34.48% Lowball!)
MLS# 2222842 – Vernon, NJ
Asking Price $224,900
Sales Price $168,000 (25.3% Lowball!)
MLS# 1697901 – Union, NJ
Asking Price $250,000
Sales Price $190,000 (24% Lowball!)
MLS# 1687244 – Kinnelon, NJ
Asking Price $2,500,000 (Originally $4,350,000)
Selling Price $2,000,000 (20% Lowball!, 54% off OLP)
MLS# 2099356 – Bridgewater, NJ
Asking Price $299,900 (Reduced from $309,900)
Selling Price $245,000 (18.31% Lowball!, 20.9% off OLP)
MLS# 2089638 – Andover, NJ
Asking Price $795,000 (Reduced from $825,000)
Selling Price $650,000 (18.24% Lowball!, 21.2% off OLP)
MLS# 2222050 – Warren, NJ
Asking Price $629,900 (Reduced from $659,000)
Selling Price $520,000 (17.45% Lowball!, 21.1% off OLP)
MLS# 2213524 – Millburn, NJ
Asking Price $5,000,000
Selling Price $4,150,000 (17% Lowball!)
MLS# 2213051 – Bloomingdale, NJ
Asking Price $299,999 (Originally $325,000)
Seling Price $250,000 (16.67% Lowball!, 23.1% off OLP)
MLS# 2212484 – Knowlton, NJ
Asking Price $349,900
Selling Price $292,000 (16.55% Lowball!)
MLS# 2105298 – Long Hill, NJ
Asking Price $575,000 (Originally $699,000)
Selling Price $490,000 (14.78% Lowball!, 29.9% off OLP)
MLS# 2111088 – Mendham, NJ
Asking Price $2,095,000
Selling Price $1,800,000 (14.08% Lowball!)
MLS# 2095331 – Mount Olive, NJ
Asking Price $359,000 (Reduced from $399,900)
Selling Price $310,000 (13.65% Lowball!, 22.5% off OLP)
MLS# 2213052 – Hanover, NJ
Asking Price $989,000
Selling Price $860,000 (13.04% Lowball!)
MLS# 2205837 – East Side Park, Paterson, NJ
Asking Price $389,900
Selling Price $340,000 (12.80% Lowball!)
MLS# 2200532 – Morris Plains, NJ
Asking Price $429,900 (Reduced from $439,900)
Selling Price $375,000 (12.77% Lowball!, 14.7% off OLP)
MLS# 2058076 – Hopatcong, NJ
Asking Price $999,900 (Reduced from $1,299,999)
Selling Price $880,000 (11.99% Lowball!, 32.3% off OLP)
I’ll cut it off here, the list was rather long given the date range. Just to give you a feel, approximately 160 homes sold will a 5% or greater Lowball!
Caveat Emptor!
Grim
A Washington Post quote made 2/7/06 from David Lereah Chief Cheerleader National Association of Realtors, on Real Estate slowing…
“Sometimes people lose sight of the fact that real estate is cyclical,”
This guy must be a pot smoker, he has done a complete about face in a very short period of time…Yes folks it is gonna be ugly over the next 3 years.
Ooooops!! What were they thinking? Could prices be on the rise for the Spring fling?
MLS# 2238915 – 109 Linden Ave, Verona
New List Pice: $$525,000
Old List Price: $499,000
MLS# 2237953 – 9 Holly Ct, Bloomfield
New List Pice: $619,000
Old List Price: $599,000
I have to wonder if the NAR will clamp down on information access (e.g., realtor.com inventory browsing) if things turn ugly.
Information helped speed the fall of communism in europe. The NAR may well heed that lesson.
An alternative to the St. Joseph statue: burn frankensense on charcoal with a dash of cinnanmon. It smokes!!!
Warning: Be carefule because you could easily ignite your house. Either way you’ll get rid of it.
Here is my Lereah prediction for Summer ’07 :
“The drop in prices at this time is consistent with the cyclical nature of the real estate market. There is no reason for concern. The correction in prices is necessary to ensure a healthy market.”
grim
It’s all a game of manipulation.
Lowballs vs out of this world asking prices.
The trick is to ask such a high price that getting 20% less still gets you back to 2005 prices. It’s laughable.
Buyers beware you will regret buying at these so called lowball prices if you have to sell in next 6-8 years.
I actually saw the Warren place mentioned. Very nice lot, great neighborhood, low taxes. the house did need some work, but not that much. At that time it was listed at $659K (then it was relisted after 4 months). My agent said that it came below $600K, I should bid for it. I didn’t know the sellers were eager enough to sell to let it go for $520K. I might have been willing to take it for around $550K.
This shows the hazard of putting your asking price too high. People won’t even consider the house.
I also saw the Long hill place from outside. Here I think the buyer did not get a great deal, lowball or not, because the property sold for $290K just a year ago. It was a pure tear down.
Well there was a bank owned home for sale in Mendham!! It was an open house this weekend.
It is happening now.
It is easier for folks to foreclosure that to sell if they are one of those that bought with zero down at the peek.
When areas like that are getting hit you know there will be more of the same in all areas
HEY BUYERS. Have a little patience already. Sellers are starting to panic a “little”, but damn it wait.
You have to put things into perspective. You have to look to see where prices have come from.
For example if a house sold for $350k in 2000 and now they want $750k you call that reasonable. Did your income go up 100% in 5 years? For a very few it did but for most NOT! If you pay the high prices you will be lucky to break even in the next 10 years.
Buyers do some Do some homework and find out what prices were in 2000 for homes in the neighborhood.
Give’em 5% appreciation per year. A $350,000 house in 2000 with 5% appreciation is worth about $450,000 now. That’s it.
A $200,000 house in 2000 with 5% appreciation per year is $243,000 house now. That’s it.
Another thing, If you can’t really afford it without some conjob mortgage loan do NOT buy. It will be a nightmare in time. Believe me. Lots of nightmare scenarios playing out right now and the future. Just watch and observe what is happening. You are witnessing one of the biggest irrational markets ever. It takes time to correct the excessive speculation.
I agree with waiting it out. If you look at the historical data, it could take 5-10 years to return to normal. No one can predict what is really going to happen. We can’t rely on the fed to take one direction for any length of time. They have proven this in the past.
Bought a house in Sparta in 1984 for $140K by 1989 the comps were bringing them in at $280k. Put it on the market. By 1991 the best offer was $200K. Took it off the market. Finally sold it in 1996 for $240K. Took 5 years to recoup 1/2 the paper gains built up from 1984.
For those homes that were relisted at higher prices; the owners must have been watching ‘flip this house’ and they are convinced that painting the room actually increases the worth of the house by $20k.
Either that or they are using the “overestimate” approach, list high and take a lower offer so that they buyer thinks they are getting a deal. (ie: house was listed at $519k, but i offered $20k less and got the house!!)
-Richie
I’ve got preliminary January sales numbers for Northern New Jersey in front of me.
Looks like January ’06 sales were down ~5.7% versus January ’05 and down ~16.3% last month.
grim
Grim — you’re talking about actual sales or houses going into contract ? The sales are typically trailing indicators.
This January was the warmest Jan in years. I would have expected Jan going into contract to be higher than last year, even in a cooling market.
The numbers are sales closed in January, not contracts.
Keep in mind, those numbers are still prelim and can change, certainly not enough to push them positive however.
grim
I wonder if the $4.3m reduction to $2.0m was a new house. I could see a builder seeing the writing on the wall and cutting by 50% fast to get the sale done, but it would be pretty shocking if that was an existing home
GREAT BLOG! Finally someone tells it like it is and backs it up with factual information.
I have been looking for almost a year. Been offering lowball bids with no luck. The realtors are the problem, sometimes they won’t accept your bid! Who are they to tell you what a buyer will accept!
Forget about spring fling, they can list as high as they want but they will not get any buyers. Realtors saying not to “lowball”, and homeowners not wanting to accept “lowball” equals a DEAD MARKET.
A question here…How to find out if a house has been re-listed. Is this information easily accessible to a buyer or the buyer’s agent.
grim said…
I’ve got preliminary January sales numbers for Northern New Jersey in front of me.
Grim, do you have by a chance pending sales for Jan? I went to several open houses in the last couple of weeks and all of them were pretty crowded, especially compared to the 2005’s last quarter.
That was is Paramus and surrounding towns, where there was almost no new listings since December and quite a few old ones have disappeared with many of them going under contract (according listing agents). That seems to be consistent with the mortgage apps growth in January.
Anonymous said….
….I have been looking for almost a year. Been offering lowball bids with no luck. The realtors are the problem, sometimes they won’t accept your bid! Who are they to tell you what a buyer will accept!…
Realtrs are required to present ALL offers. If your realtor refuses, you can contact the Real Estate Commission and report them, or file a law suit.
Also, your option is to go to another realtor. Though the first realtor showed you the house, the one that delivers the offer and gets the contract is entitled to the commission.
Happy House Hunting
I’ll see what I can do about getting those numbers.
Seems like everyone wants leading indicators.
grim
Hi Grim..I’ve reading your blog for last few months..great site. keep up the good work. I saw few houses in Morris county in Sept-Dec. in 500k range…they were old and in shity condition so I decided to wait( although it was hard to convince my wife :)
). I just read this article on the Money Magzine, thought it would be interesting to the readers here..
http://money.cnn.com/2006/02/08
/real_estate/money_zillow/index.htm
Believe it or not, Toll Brothers is reporting strong activity in Hudson County. We have been raging about it for a couple of days here…..
http://www.hudsonteatenants.org/tearoom/viewtopic.php?t=400
any thoughts on why?
Wall Street money obviously. My opinion is that it will burn off like a morning fog by April. Still somewhat irritating for us “bubble sitters”.
Let me tell you a story. it was 1993 and a friend was biddidng on a house. Things were bad for real estate.
The house was asking about $135k. So my friend put in a bid of $95k. the realtor said she could not do that. he said you either take the bid or i will get another realtor.
After a little back and forth he got the house for $105k.
Friend made about $40k a year. so he bought a house at 2.6 times annual salary.
IT’S YOUR MONEY, YOUR LIFE AND YOUR RISK. TELL THE F$%# REALTOR TO SHOVE IT AND BID LESS.
“Believe it or not, Toll Brothers is reporting strong activity in Hudson County. We have been raging about it for a couple of days here…..”
I agree. This is likely a short-term effect of record Wall Street bonuses, likely combined with impact of exorbitant RE prices in Manhattan. Th effect off Wall Street bonuses has impacted the sale of many “luxury” items. For example, sales increased 172% for Bentley and 246% for Maserati in January.
My guess is that it’s the same “rolling boom” that pushed up Brooklyn.
Wow, how lousy that those realtors wouldn’t even communicate those offers made my anon 10:27.
A note on realtors and using their sometime-sliminess to your advantage:
Twice I have purchased homes by making lowball offers, and twice they have been accepted (after some negotiations, but still, accepted for much lower than asking). The reason for this, I feel, is that I was in “dual agency”. This means that on purpose we used the listing agent as our buying agent. If you’re like me and you do all your research yourself, you really only need the realtor for paperwork.
But think about how much harder that agent will work to get the seller to accept YOUR offer – even it’s on the low side – if they are getting DOUBLE the commission on that house!
I wouldn’t be surprised if my agents in both cases urged the sellers pretty strongly to take my offers. Now I don’t feel this is unethical; in both cases my offers were fair although low, rock-solid with good earnest money, and made it to closing with no problems (I don’t believe in niggling over pennies for tiny repairs; I take that into consideration BEFORE the offer and unless something major comes up in inspection I leave well enough alone).
Anyway, for anyone who is looking to buy, consider the benefits of dual agency. I think it can be a huge money saver for the buyer.
On the other hand, when I was a seller my agent asked if I would allow him to enter dual agency with a buyer. I said no (which any seller can do) so he referred the buyer to another agent in his firm. I think this is only a good idea for buyers.
Just a thought.
When did Toll Bros say they were seeing strong activity in Hudson County ? Was it in their earnings call ?
As far as open houses go, they were fairly tepid where I looked till last weekend. Last weekend, I did see a fair amount of foot traffic at 2 out of 4 locations. The 3rd location had a lot of neighbors and the idiot agent spent all his time talking to them rather than to prospective buyers like us.
Off topic, but Chicagofinance, I have a random question – I am also in Hoboken and our building (we just learned) is being converted. It’s nowhere near the size of Hudson Tea, but the prices (at least for our unit) are insane. We’re not buying (we want a house) but I am wondering, since it seems as though you’ve been through it, what’s the best path to take? It seems, from reading the offer, that they can kick us out within a year if they offer 5 mos. rent free, according to NJ law – is that true? Am I reading that wrong? It sounds too good to be true to me, but I’d love to know from someone who’s been through it.
“When did Toll Bros say they were seeing strong activity in Hudson County ? Was it in their earnings call?”
Yesterday Toll had a “forecast” conference call. The will follow up with the earnings call in about 2 weeks when they close the books for January.
Toll’s fiscal year is 11/1 – 10/31, so their 1Q06 results span November, December 2005 & January 2006. If you track back to last fall, the Toll announcement that flattened all the homebuilders was the forecast call for 4Q05.
NJGAL,
I don’t know about the 5 months of free rent provision in the law. According to my understanding of NJ law, a landlord converting an apartment building to condo’s is a “cause for eviction”. (This law does not apply to buildings with 3 or less units where the landlord occupies one unit.)
You are first entitled to a written notice of “intent to convert”. 60 days after this notice, you are entitled to a written “notice to quit” which is a 3 notice before your landlord may proceed with an eviction. So, you have 3 years and 2 months notice. You are also entitled to one months free rent to cover moving expenses. This should put you in a good position to negotiate.
http://tinyurl.com/8u3hz
michelle–
good advice re: using the listing agent. thanks
Thanks rentinginnj…I saw those provisions, but there was a funny thing tacked onto the end of it in our offering that piqued my curiosity, to say the least (who wouldn’t want 5 mos rent free?). I will have to go re-read it, but it looked like it had something to do with them getting us out well before the 3 yr period – maybe it’s something they created themselves to offer us incentives to leave well before the 3 yrs (maybe they see the direction the market is going:)) But I will have to check. It would be interesting if they added a special incentive on their own…
njgal — they are clearly offering you some sweetners to vacate early. They would probably ask you to waive your 3 year right.
I would also check with a RE lawyer. Shouldn’t take that much money.
I am definitely going to consult with an atty about this one…we pay over 2K in rent…I am just imagining the extra cash in my pocket! And if I can manage to hold them off for a while, I can wait ’til 2007 to buy and get a good deal…
The New Jersey Tenants Organization might be helpful. It might be worth the $22 membership fee.
http://www.njto.org
Re: Hudson County sales activity
I am aware of several houses in Hoboken that recently (January-February) recieved multiple above asking offers. And in my opinion, a sales price 10-12% below asking is not a “lowball” — that used to be standard. Asking price and sales price are always a matter of negotiation. In a buyer’s market, buyers have more room to negotiate. Seems like in Hoboken, when the price is right, seller’s still have an edge.
NJGAL –
Be sure to let us know how things turn out. I have a similar situation brewing (you might recall some anon posts a few weeks back).
So far, the other posters’ advice/commentary about your situation and the law concur with my understanding of the rules.
But how things work out in practice should also be instructive.
I wonder if you can get a buyout.
“IT’S YOUR MONEY, YOUR LIFE AND YOUR RISK. TELL THE F$%# REALTOR TO SHOVE IT AND BID LESS.”
……Absolutely! Couldn’t agree more bro! Why am I going to make my life miserable just because some realtor with 2 weeks worth of “Realtor College” says so!
You know what the irony about what you said is…..the guy that bought the house in ’93 was making 40K per year. Bought the home at 2.6 times earnings – my wife and I make 100K a year and we are probably going to spend 4 times earnings! We already moved North and West. Bought a house in PA in 2004 and drove 80 miles each way to work! F-THAT! Sold the place and now renting back in NNJ.
My point is, you are eliminating the middle class in this country, and the realtors are totally blind to it. They may agree with that – but they just want $$. You can’t blame them.
Maybe prices in Hoboken or JC are justified — people need to be close to work in the city and make the big bucks. But can justify 400K for a house in Hawthorne, or Haledon that sold in 2000 for half that amount? The people that are buying hold middle class jobs and middle class salaries. You can’t expect them to carry a $2,700 per month mortgage payment!
Anon at 7:22, I will definitely let you know…they are already working on converting a bunch of the empty places in the building so it’s clear they want to get moving…
I did discover that the 5 mos. free rent is a real provision, but wouldn’t come into effect until eviction proceedings start 3 years down the line. But that doesn’t mean I won’t try to bargain for them. I anticipate the market slowing a little, and feel that if they start to get a little nervous about a tanking market, they may want us out earlier.
My only issue – I don’t want another rental. Yes, I know there is a bubble in this area but my husband doesn’t care and wants a house. He won’t rent another place. I just hope we can hold out long enough to see how the market shakes out!
So what is the situation in Hoboken actually like ? We have anon@2:35 claiming the market is still hot (maybe fueled by Wall Street bonuses).
Hoboken is picking up from where it was in the winter, for sure, but there are A LOT of price reductions and a lot more inventory (tons of open house signs, and I don’t care what the bulls say, I have never, in 6 years of living there, seen this many open house signs or for sale signs). The buildings that are selling seem to be the hotter, newer buildings with lots of amenities in good locations (or even slightly older ones with similar attractions) There is a lot of new construction on the horizon as well and I have noticed a lot of what appears to be flipping on craigslist.
I would guess that Wall St. bonuses for the littler guys may be sparking some of this – I still think that the upper levels of Wall St. would never consider Hoboken – they still live in the American Psycho world to an extent and want NYC, not NJ. But that’s just a guess – of course, if you asked the Hoboken bulls, ALL the guys with $20 million bonuses are just DYING to get into Hoboken:)
There were a lot of buildings completed a year or two ago, so that flipping may start soon as well, and as I said, my place is converting, and I have heard that once the conversions start, the market is over.
My own suspicion about Hoboken is that it has topped out. In the long run, you will see appreciation at very low levels, because all that will happen is young couples buying, staying through one baby or maybe two and selling their condos to other young couples, continuing the cycle. Hoboken doesn’t seem to have as big of a “this is my neighborhood” crowd as places like Brooklyn, where similar gentrification has happened or is happening.
just to tack on to njgal’s post about Hoboken:
Most of what grabs people’s attention in Hoboken these days is the new construction.
So if we will just focus on this particular segment, there are two types of new construction – good location and bad location. While everything was hot in the summer 2005 (no pun intended), no I believe it is only the GOOD location properties that continue to sell. Much of Hoboken is dry as a bone.
When I mentioned the Toll Brother’s results the other day, you should recognize that of the three complexes noted, two are waterfront, and the other is roughly a 10 minute walk to the PATH train (but in a ridiculous joke of a location).
chicago
Chicagofinance, when you say ridiculous location, do you mean RIGHT NEXT TO NJ TRANSIT TRACKS? That’s right, 700 Grove, right next to all of the train tracks that run into Hoboken – with some of those being Diesel trains. What a terrible location, right? It’s a dirty location, not a nice street, just awful. I would rather a longer walk than live there.
But you’re right – I notice of lot of western Hoboken apts. sitting on the market, not selling, even new construction. With reduced prices. The light rail is terrible – not a good selling point in my opinion.
no offense to those who love Hoboken, but my impression of the town is that it is a weigh station for people who either (A) really want to live in Manhattan, or (B) are on their way out to the suburbs buy are weaning themselves from the city in stages.
I think as real estate was rapidly appreciating, it made sense to buy in a place like Hoboken. You could own for 3-5 yrs, sell and make a nice profit, then get your dream place in Manhattan or in the suburbs.
This strategy won’t work now. For the people who really love Hoboken for being Hoboken, a downward pricing trend might bring them in.
But for all of those buyers (who I believe are a majority) that were hoping to trade up from a Hoboken place to something else in a few years, such a trend will keep them out.
Comparing free information and fall of communism to NAR. Take a look at Zillow, and this thought on foreclosures. Buyer with 5% down and 80%/15% mortgages on a $200,000 home goes into foreclosure. After expenses, the bank would want to list property for sale at around $210,000.00 to try to recover foreclosure costs plus commissions. But what if it isn’t a price the market will bear? The bank, more than an owner-occupier or casual investor, will want to cut the price to avoid having its capital sit in a declining market.
Anyone and everyone will be able to see what comparable homes are selling for. Smart sellers will probably start thinking very seriously about FSBO listings to avoid or reduce real estate commissions to make a lower sale price more palatable. Expect some savy web-based listing businesses to emerge quickly.
If the bubble bursts, it may be the begging of the end for the brokerage industry in its current form.
Any thoughts?