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Would it Offend The Seller if the Buyers Offered Less Than Full Price?

By
Real Estate Agent with Reece & Nichols Realtors-Kansas City

 Would It Offend The Seller If the Buyers Offered Less Than Full Price?

 Homebuyers Kansas City real estate

Not necessarily. That’s right, I said it out loud. In the end buyers and sellers are simply people who have goals that they want to meet in a real estate transaction. The seller wants to sell their house for the price they’ve listed it for – for whatever reason. The buyer wants to get a good deal on a house , and sometimes a good deal is defined as getting it for less than it is listed for. Sometimes it’s even paying asking price because it meets their needs. Everyone comes from their own perspective, which is fair.

Everything that all of us in the transaction does is geared towards attracting, then connecting a buyer to a property.

As real estate agents, we are trained to be professional and not stoke emotional fires that may be counterproductive to the negotiations. We keep the conversation focused on terms of the offer.

From the seller’s point of view:

When an offer comes in that is less than asking price, what are some of the reactions that you can expect the seller to have?

Anger–They are confident that they had it priced right, and along comes a buyer who doesn’t see the value of their home. Plus, they feel their price was fair, and is what the house is actually worth with all of the upgrades and maintenance they’ve done.

Shocked – That the offer price is lower than they expected.

Offended –This buyer is trying to take advantage of them and get a bargain at their expense. Not every real estate market is as bad as the national news makes it seem.

 

From the buyer’s point of view:

Excited – They found a home that they would love to buy.

Anxious- They always ask, “What will the seller think of my offer?” I hope they will accept it, or that we can come to an agreement.

Scared- That they may over pay. Or, that they may be able to get it for less than the seller is asking - and by not asking - that they may be paying too much. It would be easier to pay full price, or close - if they could justify it, but they think it’s priced too high.

Overwhelmed- Getting advice from every corner – parents, friends, co-workers, their agent. Who should they listen to when they have their own ideas about what to do? Don’t want any “I told you so” statements.

The List/Asking Price

As agents, we know that when a house comes onto the market that is priced very well, that it will sell fast. Depending on the market, fast may be hours, 1 week or 1 month. On the other hand, when we list a home that may be priced at what we feel is market value, or at the top of the market –it may not sell “fast”. We tell the seller that we will monitor showings and agent/buyer feedback. If it doesn’t sell “fast”, price is most likely the issue. It needs to be reduced if they want it to attract a buyer. Buyers know value when they see it. They’ve been looking at similarly priced properties in their price range, and are current market experts at that particular time because they are immersed in the details of these homes. If they see a home that is an excellent value, they will not want to lose it. With so much information and market data available to buyers, including from their Buyer’s Agent, they are smart enough to know what they feel is a good value. Even if they think the house is priced right, their negotiating personality may be to offer less – just because. They may not care that there are granite countertops, or beautifully tiled floors at this point. Or, maybe they do care and simply just don’t want to pay the price. Keep in mind that their buyer’s agent has advised them of the risk of coming in lower than list price. They decided to take the chance anyway. They may be disappointed if the seller is offended and outright rejects the offer. That’s the risk that the buyer took. But the seller also has the option to respond to the offer with a counter-offer that reflects terms that are acceptable to them.

In a Real Estate Transaction, the Buyer is King or Queen

Homebuyers Kansas City real estateUltimately, in the real estate transaction, the buyer is the most important party. Everything that the all of us in the transaction does is geared towards attracting, then connecting a buyer to a property. The seller doesn’t reach their goal without a buyer who is willing to pay a price for their home. The buyers in our market set market value. We know that the pure definition of market value is determined by what price a ready, willing and able buyer will pay for a home.  If a buyer is willing to pay $100,000 for a house that is listed for $500,000 – the true market value at that time is $100,000. No matter how many upgrades, how well the home has been maintained, or that the owner/agent thinks that it is priced perfectly, the market/homebuyers will tell us for sure.

Remember, the seller always has the option to reject any offer if it doesn’t meet their needs. They could keep the house on the market for weeks, months or years while they wait for the buyer who is willing to pay their price to come along. It very well may happen. So, if their negotiating style is to stick with their price, all or nothing - then buyers shouldn’t be surprised if their lower than list price offer is rejected. They should be prepared to either pay full price, or find another house to fall in love with.

Maybe Not…

It is easy to see how emotions may come into play with a buyer who really wants a home and doesn’t want to offer list price, and a seller who wants to sell for their price (or close). It doesn’t always work out. The benefit of having professional agents to guide the buyers and sellers through the negotiations is that if it doesn’t work out, both sides are able to move on, hopefully recognizing that it was simply a matter of differing opinions and objectives.

 Homebuyers Kansas City real estate

 

Posted by

 Kansas City Real Estate Stacey Johnson-Cosby

 

Comments (78)

Robert Bob Gilbert
Berkshire Hathaway HomeServices Anderson Properties - Katy, TX
Your Katy TX ( West of Houston) Real Estate Expert

I am basically a buyers agent and I never tell my clients to make a full price offer. There is always room for price negotiation and negotiation of numerous other items.. Thanks for the blog..

May 29, 2011 10:34 AM
Joy Carter & Jeff Booker Brother and Sister Team
Keller Williams Parkland/Coral Springs Realty-GreatFloridaHomes Team - Coral Springs, FL
Trust Your Family's Move To Our Expertise!

Stacey, GREAT JOB Summing up the feelings that both the Buyer and Seller goes through.  This is where our expertise comes in as counselors and advisers based on experience and market statistics.

Certainly worthy of a re-blog!  Joy

May 29, 2011 10:44 AM
RhondaHeaslip NanaimoRealEstate
RE/MAX of Nanaimo - Nanaimo, BC

Stacey, I think this is a great article for both buyers and sellers to read, so they can better understand where each other is coming from, paving the way for an easier negotiating experience for them both. Well written indeed.

May 29, 2011 11:02 AM
Marc MyWords
Slidell, LA

Excellent post! Thank you.

May 29, 2011 11:34 AM
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Offering below asking price is rather the norm in the current market. However, I've seen up to almost $100K below asking (78% of asking), then it's somewhat in the realm of a little outrageous, especially when the property is already priced "right".

May 29, 2011 11:45 AM
Ann Grant
KELLER WILLIAMS in CT - East Hampton, CT
SFR

In the buyers market and in the buyers mind, no seller should expect a list price offer. When I am working for the buyer and I show them the comps, they will never make a full price offer based on the area comps (I never see a seller priced AT what he should get offered). Most sellers today still think it is 2005 and they are going to get more than what they have their house listed at.

May 29, 2011 12:32 PM
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Stacey, most agents make this process a sports called 'tug-of-war' whereas it should be a 'win-win' for all parties. Yes, buyers want bargain, yes sellers wants almost asking price - and yes, all of them need a professional to achieve the 'WIN-WIN'.

May 29, 2011 02:17 PM
Stacey Johnson-Cosby
Reece & Nichols Realtors-Kansas City - Kansas City, MO
Selling Kansas City-Real Estate & City Blog

Hi Everyone! I am finally back in front of my computer and all I can say is WOW! Thank you so much for taking the time to comment! My 1st Feature! I've been out all day (listing a short sale condo & showing out of town buyers - exciting!). Whenever I could take a peek at my phone, I saw each comment. I just reread every single one of them. I am heartened. So many thoughtful comments. Each of us facing the reality of our market and recognizing that simply having an offer is an ideal and wonderful "start"!

A recent AR blog post discussed different ways to respond to lower than full price offers (with a lot of behind the scenes sarcasm to teach the agent & buyers a lesson). I was a bit worried about the focus. I feel better now. Without a buyer, none of us earn a living and the seller doesn't reach their goal. I don't care how a buyer justifies their offer. I'm just glad when they do take the time so that we know where they are coming from and can respond based on their personality, needs and negotiating style. I thank the agent that encouraged the buyer to invest the time to justify their offer. I agree with you all - sellers are less likely to be offended when they know that low offers will/may come in, AND understand why the offer is what it is (whether they agree or not - most likely they won't - but we never know) . And like so many of you said, in this market many sellers are jumping with joy that they even got an offer of any amount. All it takes is 1 to get started. Again thank you for stopping by and contributing to great conversation!

May 29, 2011 02:46 PM
Anna Tolstoy
Coldwell Banker Residential Brokerage - Natick, MA

When I check market history for certain properties in MA, that have been on the market for quite some time, I see often that there was an offer soon after the property was put on the market, then it didn't work out (My guess is that it was "too low" and "too soon" for the seller), then price keeps dropping, and eventually the house sells for way less it was first listed for. So if the seller gets offended and doesn't want to start a negotiating process with an offer that is less the full price, well, seller is being unreasonable.  

May 30, 2011 03:42 AM
Jan Stevens
Coldwell Banker Pittsburgh - Cranberry Township, PA

If you are representing the buyer, the key is to do your homework and know whether the asking price is a realistic value for the house. Then you can advise them about an appropriate offer. Of course, they don't always take your advice...

And if you are representing the seller and the house is TRULY priced right -- countering at full price can be OK. It has worked in the past...

May 30, 2011 03:57 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

The important thing is to have a realistic view of the market and make the offer with that in mind. 

May 30, 2011 05:45 AM
Christine Koch
eXp Realty - San Antonio, TX
Realtor - eXp Realty San Antonio TX

Nearly everyone of my sellers wants to price their home with a little negotiotion room.  However if priced right a seller CAN get asking price or very near it.

May 30, 2011 07:17 AM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Stacey - Agents really should be the unemotional, third parties in these transactions.  It just makes it easier for us to help everyone navigate.

May 30, 2011 09:12 AM
Patricia Beck
RE/MAX Properties, Inc., ABR, GRI, SRES - Colorado Springs, CO
Colorado Springs Realty

The market is brutally honest and sellers need to be prepared for that.  I agree with your point about buyers being overwhelmed with all of the advice of what to do and how much to offer; it can become really confusing for them!

May 30, 2011 11:27 AM
Anonymous
Anonymous
In these times as Real Estate Agents we have to educate our clients wither they are Seller's or Buyer's. We need to enlighten them to the way the process is done, also to be aware of the current Market Conditions as well as the Econmic Conditions because of some seller's are unrealistic in what are asking for their property because they sank a fortune into with up grades and the house is located in a neighborhood that the average home that has last sold is let's say $ 25,000 to $30,000 over the average because seller put a Hot Tub and up graded to High End Features, they have to understand that thos luxeries were what they wanted and enjoyed. But now is the time to be Realistic and except that they did this for themselves and it doesn't help you to over improve your property if you are in a neighborhood that the avrage home in that area is priced less than that. I ask my Buyers to look at the homes that they wish to view and to be Fair in their offers to purchase because there are no lenders that will write paper for a over priced home that has $ 30,000 over the Average price, when you perform your CMA's you find like properties to substaniate your opinion of value, and if you have to look 10 miles away to find like property you know that price is not going to be accepted and the buyer would be foolish to buy that over priced property when down the street the house with a similar size and floor plan but with out the up grades have not been done is selling for the correct price for that area. So it's better to be for real and give them the information and let them make there offers based on Fair Market value the days of everyhouse is not going to bring in a million dollar selling price, especially in nieghborhoods that are considered to be a low market area.
May 30, 2011 01:52 PM
#73
Juan Bassett
Long & Foster - Germantown, MD
GRI

As listing agents we should take a little more time at the listing appt. to cover low/low balling offers. Also, we should be mindful that this is a part of the game. So here's a strategy.. 1.get feedback from the sellers on their point of view of low offers and how they may want to counter 2.Make sure you have priced the house according to the market 3.Represent your clients best interests at all times and refrain from becoming emotional yourself.

The buying and selling of real estate can be an emotional experience. It is up to the agents to remain level minded while paying close attention to detail. And to be prepared to handle the unreasonable events (offers) that at times are offensive. If the realtor stays focused, it will be easier for the client to re-focus their attention on the sale of their home. Which by the way they've entrusted the realtor to do. Let's save the emotions for after the settlement! While being creative in our counter offers.

May 31, 2011 03:19 AM
Caryn Baker
Realty Pros & Assoc. - Ormond Beach, FL

Unfortunately, not all sellers or listing agents are reasonable!  That being said - buyers often aren't as well!  Every deal has to be worked on its own merits and hopefully the agents involved can bring the parties together!

May 31, 2011 06:07 AM
Marshall Brown
Mid America Inspection Services, LLC - Fargo, ND
BSEE, CHI

Hopefully, when you get a lower than listed price offer it's because that's what the property is worth in the buyers eyes and not simply to beat the seller down to see how desperate they might be.

May 31, 2011 06:18 AM
Anonymous
Anonymous

Stephanie

Keep at it.  This was a great post!  It's great to be part of the AR community

 

May 31, 2011 07:10 AM
#77
Stacey Johnson-Cosby
Reece & Nichols Realtors-Kansas City - Kansas City, MO
Selling Kansas City-Real Estate & City Blog

Thanks everyone for the continued great feedback! It sounds like we agree that seller educations UP FRONT is very necessary - I think we call that managing expectations. You are also saying that we need to do our homework on the facts/comps when we present the offer & even before that when we are helping the seller determine the price for their house. But, as we can see, the numbers are changing.

Just because comps from 3-6 months ago say that a certain price should be good enough to attract a buyer, the market is changing daily. We have to be flexible and not take it personally when offers come in lower than we think is fair. We should check our emotions at the door and work with the facts: a buyer who wants to buy and has presented an offer, and a seller who wants to sell who must react to the offer. It's truly a different world now...and our professionalism is needed more than ever.

Jun 02, 2011 05:00 AM