You just received an offer on your home and you are ecstatic…. Until you really look at it closely and see that the amount is significantly lower than your asking price. How should you respond?
For most sellers, receiving what they consider to be a low ball offer generates an immediate and, usually, very negative response. For many that response is “This is ridiculous. I’m not even going to reply!” But, any seasoned real estate agent will tell you “STOP now, before you lose a sale!”
Before you choose to ignore any offer on your property you must first stop to think that a written offer means that there is a person who is seriously interested in buying your home and a responding counter offer may well turn that low price offer into a sale with a bit of strategic negotiation.
In the current market climate I make every effort to prepare my home seller clients for this possibility. In some cases a buyer is just “fishing” to see how motivated a seller is. In others, they simply have the misconception that all areas have suffered the same level of market downturn they hear the media harp on day in and day out.
Stop and Think
No matter how low, all purchase offers deserve a response. In some cases this may be a counteroffer in others it may be an outright rejection. In order to determine which way is best in your situation, you will need to check your emotions and deal strictly with the facts. A frank discussion with your real estate agent will help you determine the ways in which you can respond and still keep the negotiations open. Keep in mind: At the end of the day, it is your goal to sell your home so you, and your agent, must make every effort to progress the negotiations if possible.
Make a Counteroffer
A counteroffer signals to the buyer that you are willing to negotiate. Curb the instinct to respond at full price. While real estate “feels” very emotional, in the end, it is a business transaction and the best response is usually a reasonable response.
In most cases, the best strategy is to determine a price and terms that you would willingly accept and respond accordingly. This may mean lowering your price and removing any seller concessions (such as paying closing costs) or it may mean sticking to your price, but giving in on a few of the buyer’s requests (such as leaving behind the appliances).
Review Recent Changes in the Market
A seasoned agent constantly monitors the local market and should be providing you with market updates throughout your listing period. If you are unsure, ask your agent to provide you with an up-to-date CMA so you can see which comparable homes in the area have sold since your home was listed or if any new properties have been listed for sale. In a volatile real estate market, this data is very important as not only the sale price, but the appraisal price may be affected. Keep in mind: If the new CMA determines a lower price based on the changes in the market (recent comps), you might be forced to lower your price in order to sell.
Have Your “People” Call My “People”
In most cases, the selling agent knows why the Buyer made a very low offer so ask your agent to call them. A buyer’s agent cannot necessarily speak to “motivation”, but if the buyers are using a different set of comps, your agent should be able to get a copy of them for you. If it is simply a situation in which the buyer can’t really afford what he/she wants and is hoping for a desperation sale, then you can feel justified in rejecting the offer and moving on with no aditional wasted time or effort. Basically, you won’t know unless you ask and information is king when negotiating a sale.
In today’s real estate climate low offers are more often a “sign of the times” than an actual statement about the quality or value of your home. However, buyers now have access to real estate listings online and most are aware that certain circumstances may make a seller more receptive to a low offer. If your home is vacant or if the wording in your MLS listing signals desperation (motivated seller, seller says bring all offers) you are much more likely to receive a lowball offer.
If at all possible, try to make your home presentable and reduce any obvious clues that you are overly motivated and the next offer you receive might be more what you have in mind.