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How to Deal With Low Offers
Imagine a buyer just made a lowball offer to buy your home, and you are insulted. What should you do?
While real estate experts give people different advice from one person to the next, they all are willing to tell you what they think. There are ways of negotiating with someone who makes a ridiculous offer; unless you are convinced you would be wasting your time in doing so.
Some experts say you should negotiate and make a counteroffer, and others say if the offer is way below what you want for your house, you should just decline it and not try to negotiate. Here, we will explore how experts say to handle the matter.
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What is Considered a Low Offer?
What is a lowball offer on a house, anyway? Is it any offer that is so low the seller finds it insulting? Or are there definitive criteria one can use to determine if an offer is so low it is not worth considering?
It depends on which real estate expert you ask. One opinion is that any offer that is so low it provokes the seller to be angry or outraged at the person who made it is a lowball offer. Others say any offer 25 percent less than the asking price, or less, is a lowball offer. Regardless how the term is defined, if you personally are insulted, it pays to know how experts say to respond.
Real estate professionals counsel those wanting to buy to offer at least 85 percent of the asking price.
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Make a Counteroffer
Some of those in real estate say to make a counteroffer when you receive a lowball offer on a house. They say any offer is worth considering. Some even go so far as to say the counteroffer should be of the lowest a seller would be willing to accept.
Others say that to make a counteroffer of the lowest price a seller would accept is unwise. To them, one should never so quickly disclose his or her lowest price. They even say a real estate agent who would suggest such an option is incompetent and negligent. Such agents say if a house is priced reasonably and is in good condition, to make any offer with an immediate lowering of price displays poor negotiating skills. Agents say they are there to help sellers and are paid to protect a seller's interest, so offering your lowest price to one trying make a lowball offer is not wise.
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Should You Pass on Extremely Low Offers?
Another course of action may be to pass on an offer that insults you, but to do so in a polite way. For example, one could tell the buyer you appreciate the offer, but you have to pass. Experts say you should say this only if the offer is so low it is nowhere near the asking price.
Taking such action may be considered the same as countering the offer with your full, original price. The buyer must then determine whether he is able to negotiate this price upward at all. It also shows the seller is not in a hurry to get rid of his home.
The agent representing the buyer may ask whether the price offered is even close to what the seller wants. The best strategy in such a circumstance may be to say to the buyer and his agent, if he has one, that you are confused by the offer because it so much less than market value. When offers are so low, sellers don't know whether to even take the person wanting to buy the home seriously.
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An Insulting Offer Can Open Dialogue
Realtors say rather than be insulted or responding harshly to a lowball offer an a house, a seller should respond graciously, even if he rejects the offer. Such experts say if a seller reacts badly to an offer he might lose a sale that ultimately might even be what he or she would want, or at least a lot closer to that amount than the first offer.
Those representing the seller might tell him or her that although the offer is low, to see how much more the person will give if there are further negotiations. Such experts note that although some first offers are low, the people making them are often willing to raise the amount they will pay by massive amounts, if they really want to buy.
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How to Negotiate
Many home sellers will often respond to a low offer one of two ways. Either they will make a counteroffer that takes only a little bit off the asking price, or they will even raise the price of the home, just to make a point.
To some, it is best to not make a counteroffer at all right away. One should instead thank the prospective buyer and say a counteroffer might indeed be made, but the buyer will first have to offer a little more as well before one will be considered.
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Another suggestion about lowball offers is to not make any response immediately. Just say you will get back with the person who made the offer as soon as possible.
When you do contact the prospective buyer, tell the person who made the offer that you like him or her personally as a buyer. Add, however, that you would prefer an offer that you could seriously consider.
If the buyer tells you he thinks the house is not worth the asking price, go over all the good features of your home, and show him why it is priced for as much as it is. You also should know where the prospective buyer lives. Maybe in his area the price he is offering is reasonable. You should let him know prices are more expensive in your area.
Once you have waited and then called the buyer back, you could counter with an offer that is $1,000 less than the asking price and this shows you are willing to negotiate. Add that you want to receive a more realistic offer for your house than the first one.
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Dealing With Low Offers
If you are still lost on how to counter a lowball offer on a house, there are ways of negotiating that might help you receive an offer you feel you can accept to sell your home. You can try the tips mentioned here and negotiate, unless the prospective buyer seems too rigid. In that case, you can just pass on the offer.
It also helps to understand some of the reasons people make lowball offers.
Some of these reasons may include:
- Real estate prices may be lower where the buyer lives.
- The home may not seem as valuable to the buyer as it does to you.
- Where the buyer lives sellers might often try to over price homes.
- The people you met might be first time buyers who have been told to give a low offer first.
- The buyer wants to test you.
- The buyer is willing to negotiate aggressively.
When you have talked with the buyer and gotten an impression of him or her and know how experts say to respond to a lowball offer, you can decide on the best action for you as the homeowner.
Crossland, Steve - Crossland Team - "Responding to Lowball Real Estate Offers" retrieved at http://crosslandteam.com/blog/2005/08/20/responding-to-lowball-real-estate-offers/
Grand Lux Realty - "Ideas Regarding Lowball Offers" retrieved at http://www.grandluxrealty.com/articles/buyer_tips/12-ideas-regarding-lowball-offers
Bankrate - "How low can you possibly go on a real-estate bid?" retrieved at http://realestate.msn.com/article.aspx?cp-documentid=13107841
Helping Home Sellers - "Sell Faster and For More Money" retrieved at http://www.helpinghomesellers.com/answers/d/counter-offers/b---low-ball-offers-how-should-you-counter-it/44/136
For Sale Sign, Lyn Lomasi, Wikimedia Commons under Creative Commons Attribution 3.0
Abernathy-Shaw House c.1908, Brian K. Chatham, the Creative Commons Attribution-Share Alike 3.0