Low Bids

During the past 15 months I’ve presented some very low offers on behalf of my clients to sellers’ agents and they were all rejected. I’m not uncomfortable with presenting any offer – that’s my job – but it’s been an interesting learning experience because offers that were rejected out-of-hand last spring now seem to be too high. I’m currently working with another handful of buyers and may soon be repeating that process. Will low bids be accepted now? Probably not.

Here’s the problem, as I see it: I can tell a buyer, with a reasonable degree of certainty but with occasional huge error, what a house is worth today. In the past, that was usually enough to help a sale go thorugh because we all “knew” that the house would be worth at least as much, if not more, a year later. Not now, so while I can say that a house is worth, say, $4.5 million, give or take $250,000 today, I have no idea what its value will be six months from now. Nor can anyone else.

So my buyers, at least, aren’t willing to pay what a house is presently worth – they want a protective cushion that will shield them from a further precipitous decline. I don’t blame them and I’d want the same thing but it’s tough on sellers, especially those who have already pared their price down from an extrapolation up from 2005 prices to a figure that reflects today’s market. They feel as though they’ve done their part, and balk when more is demanded of them. Stalemate.

But for sellers, if you do receive a low-ball offer from your agent, don’t bite her head off or get angry at the offeror. Haven’t you been saying, “just bring me an offer”? Well, someone just has.


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14 responses to “Low Bids

  1. omg-not again! for Mr. Bourke

    Here is a gem of a story about another Greenwich guy too big for his britches…Mr. Frederic A. Bourke lives on Fort Hills Lane off of Round Hill Road..just down the road from Mr. Noel…both are Round Hill Club members…what is the water at that Club?…he just got dismissed from an indictment from the government for trying to illegally to brieb a foreign official!



  2. anonymous

    Chris, would be curious to hear your impressions re: negotiating/economic logic of financiers vs non-financiers; M&A bankers or proprietary traders or HF managers vs corporate finance bankers or PE types….

    Have my own predictions about “rationality” of these various characters, even stratified by tier of firm and one’s professional reputation….but suspect your insights re: personal financial behavior would be interesting…

    • christopherfountain

      Ha! That’s worthy of thousands of words, but here are a few. The money guys are all about numbers – they love to work out assessed value to sales ratios, for instance, and are non-plussed when told that our town’s tax assessing procedure is defective and the numbers generated unreliable. Location, desired features and all that are often worth less to them than whatever statistical analysis they’re dreamed up, which is fine – I can work with anyone. But at the end of the day, I think there should be some room for emotion in house buying. Not so much that you over-pay, but sufficient to make sure you buy a house you actually want to live in. Which is the point, after all. Herreshoff (or some boat designer known for the beauty of his work) said that when you row away from your moored boat, done sailing for the day, you should be able to look back at her and smile. I, for one, couldn’t do that if I were gazing back at some fibreglass, butt-ugly boat I’d bought because it was 15% cheaper than one I loved.
      But for some people, numbers rule, and for those folks that same boat, because it was cheaper, might look absolutely ravishing. Whatever floats your boat, so to speak.

  3. christopherfountain

    Well I don’t know from bribing foreign officials – beyond my experience – but the first story regarding his arrest for harassing some woman, if anyone, boy or girl, kicked my dog so hard that it was jounced from its collar, especially when the investigating ranger said Bourke’s dogs were being “overly friendly” and not aggressive, I’d probably have a few words for the kicker myself.
    Love me, love my dog.

  4. Bourke & Matthews

    Mr. Bourke also tried his hand at speculative building years ago in Greenwich. Making handbags for fancy people was not good enough for him. His firm was up on North Street near Conyers Farm called Bourke & Matthews. He and his partner lost their shirt a few times. They couldn’t make it and went out of business. Sad…too much greed in Greenwich.

  5. Retired IB'er


    First, I should point out that I like dogs (my own in particular, Tibetan Terriers) more than most people I have met. Second, there is no such thing as a bad dog, only bad owners IMHO.

    Now I generally shy away from commenting on non-economic issues, but I take exception to your position and believe that Bourke was clearly in the wrong. Both for physically assaulting the woman, but also for allowing four dogs to run free, charging the woman and her puppy.

    I have been on the receiving end of such a situation, worrying about my dogs’ safety and my own. You can only tell whether a dog is “overly friendly” after the fact (i.e. did the dog try to bite). Moreover, I cannot tell you how many stories I have heard of owners telling me their dog was bit by another dog in just such a situation. And of course, the bad owner always claims, “oh, Sammy’s never bit another dog before.”

    The fault lies squarely with Bourke, the owner, not his dogs. The law says he should have had his dogs on leashes. He did not. He failed his pets and put one of them in harms way. He was wrong and he should be prosecuted to the fullest extent of the law for physically assaulting the woman and for having his dogs off leash. What if the woman had been walking with her three year old son/grandson along with her puppy and four dogs charged them?

    Bourke was wrong on so many levels (undoubtedly based on his sense of entitlement).

    Any dog owner that lets their pets run free (other than on private property or where designated) and cannot stop them in their tracks with a word command are bad pet owners. They endanger their dogs, and others, with their selfish, irresponsible behaviors.

    Rant off…

  6. Flyover Girl

    What I don’t understand is why sellers feel as if they must get top dollar for their property, rather than a fair-if not excellent-profit.

    Let me cite my ex-parents-in-law as an example. They don’t live in Greenwich, but if they were from Connecticut, they would. They lived in the same house in California for 35 years. They paid $60K for the home in 1972 and since then, renovated one of their 3.5 bathrooms, and put perhaps $70K into gorgeous and extensive landscaping.

    In May 2007, they listed their house for $1.195M, about $100K above market value. They didn’t get any offers, or even much traffic. As nicely as possible, I tried to tell them that 30- and 40-something buyers like myself weren’t going to pay more than a million for a family house with 30 year old Formica counters and vinyl kitchen floors. But they didn’t listen.

    They were slow to drop their price, and still are behind the curve. The house is currently priced at $749K and zillow.com says it’s worth $485K now. Yes, it’s zillow, but generally zillow isn’t off by more than 10% these days.

    My ex-PILs are chasing this market down, when they could have priced their house at $950K a year and a half ago and sold their house in a week. They would have made a fabulous profit and had far less stomach churning worry. (However, knowing them, they probably then would have lost 40% of it in the stock market. Oh well!)

    I realize some on this board think Greenwich is exempt from these kind of losses. They only happen in other places, like Grosse Pointe or Monterey. Studying the recent history of other upscale communities might be enlightening for sellers.

  7. anonymous

    Chris, interesting views on buyer/seller behavior

    Agree, many guys who get lost in various pseudo-precise models or valuations tend to be the more annoying (and often less successful) financiers in their day jobs….guys who fixate on saving pennies, while losing many dollars….

    Much of today’s DebtBubbleBurst is due to senior execs who didn’t understand sophisticated quant models of risk…nor had old-fashioned “shrewdness” to figure out when risk/reward balance just smelled wrong….

    Often have observed that one learns much about guys’ sense of risk/reward balance from their choice of primary house (esp vs net worth and age of purchase) and choice of specific car model/driver (esp vs train/cab) for commuting to office….

  8. Vicky

    “What I don’t understand is why sellers feel as if they must get top dollar for their property, rather than a fair-if not excellent-profit.”

    I think many sellers like this have a comp or two stuck in their heads that no amount of empirical evidence about current market conditions can dislodge. These comps are likely to be nearby properties that are genuinely a lot like theirs, but that sold two or three or five years ago. Let’s face it, we have all been conditioned to think that residential real estate in upmarket areas doesn’t REALLY go down … well, okay, maybe are “slow” periods where prices “level off” or perhaps have a “slight dip” offering “extraordinary opportunity for buyers” and blah-blah-blah, insert more realtor blather here. But actual realized double-digit percentage drops? New territory. Hard to fault people like your ex in-laws for not understanding that the moment they put their home of 30+ years on the market is the moment the tide turned.

    On the other hand, I’m with you about the vinyl floors and formica counters. They were probably fashionable and the best-of-the-best when they were installed, and your in-laws still see them that way. My own in-laws’ house in Florida is a perfect time capsule that could best be described as “Brooklyn-born lady goes to Bloomingdales, 1973.” Then again, who knows what delusions of grandeur/stylishness I have about my own tastes!

  9. CEA

    Retired IB’er:

    I so agree wtih you. In fact, I emailed Chris and asked what the rules were in G’wich, because my 3-year old was knocked down in Mianus Park a couple of weeks ago by 2 black labs. Their owner let them off leash in the parking area on Cognewaugh, and they did what cooped-up dogs do: they took off at a huge run.

    My 3-year-old was holding my hand, looking into a stream and bending down to put a leaf in it. The dogs came tearing down the hill, knocked him down (inches from a rock in the water). The owner didn’t stroll on over for a good 3-4 minutes as he took his time on his “morning constitutional”.

    As my child was bawling his eyes out, the dogs are being “overly friendly” and jumping up and down all over us. Now I am holding him so I only have one arm free. The owner after 3-4 minutes finally makes it to where we are, and he says “oh, is that your child?”

    Not “I’m sorry”, nothing. I was desperate to say something but afraid of raised voices scaring my child even more.

    It is not “love me, love my dog”. IF my child had hit his head on that rock or had his eye poked with a stick on the ground, believe you me, I would be calling a lawyer.

    If you can’t see your dog, you can’t control your dog. Your “very friendly” is petrifying to a small child. So you, the owner, need to be there to control your dog.

    I have my children by the hand, and within easy sight. Oh, and I also take them out more than once a day, so they don’t act like caged beasts once let out.

  10. CEA

    Much of today’s DebtBubbleBurst is due to senior execs who didn’t understand sophisticated quant models of risk…nor had old-fashioned “shrewdness” to figure out when risk/reward balance just smelled wrong….

    Here, I disagree. the “bubble burst” is mostly from mortgages given to people who were unable to carry them.

  11. fred

    CEA: Did you post the same Mianus Park story in GT a couple of weeks ago?

  12. Retired IB'er


    First, I am glad your son was okay. Second, you are obviously better able to control yourself them me. I would have screamed at the as#hole owner.

  13. kidding really?

    Quote me… “THEY ALWAYS SELL LOWER…” The bottom in Greenwich real estate is 2-3 years away. For those who argue or disagree ask yourself how all the large layoffs coming in 09 on Wall Street will help Greenwich real estate? Perhaps think about most hedge funds that are down 20% on average and the high water marks 2-3 years away on average market performance. Who is going to buy houses when people are losing jobs and if you have a job you are making less?