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153 Comments on Sellers – What To Do With a Low-Ball Offer
I was trying my best to respond to each poster, but that's just not feasible. There are some I'd like to respond to specifically.
Nancy #45. For some sellers, they look at that 'meet in the middle' point and deem it to be not good enough. The fact of the matter is, you don't know where the buyer's mindset is. For every counter the seller issues coming down, they're feeling the low offer is giving them traction.
Carol #46 - a bird in hand indeed. Go with it unless you have something better!
Renee #47 - just for clarification, how is it an offer if not in a contract?
Jaime #57 - I agree with your comment about rejection. I had one seller who was hell-bent on rejecting an offer, rather than countering it. In this case, it worked out for him. The buyer came back with a much more acceptable (to the seller) offer, and actually bought the home. However, he definetely wanted to communicate - thank you very much, but no thank you.
Visually Creative #58. Yes, I agree that the term Low Ball is very subjective. But it's the term that both buyers and sellers relate to. It's low ball if they think it it, but it may not be in terms of what the market dictates. We can advise sellers not to get mad, but they don't always listen :) However, if they're educated about the possibile scenarios of the current market, it shouldn't come as a surprise when an exceptionally low offer arrives.
Drew #59 - We agree. It's always about what a buyer is willing to spend and where a seller agrees to sell. And both parties may change their minds when the see what they want potentially eluding them.
Drew #59 - The market does indeed do the talking. If you get 3 offers all deemed to be 'low-ball' by the seller, then the market has spoken. My sellers get updated comps along the way, so that they know what the buyers and their agent are looking at.
Wow! Did you ever hit a nerve with this post! It's about time though. Your suggestions are excellent and well received. This crazy market we're in is so up and down from one buyer/seller to the next. Trying to figure out what is best for my client can be tough and it requires alot of research to justify "whatever".
This Post definately gets a "Reblog" from Me! Thanks you Karen!
Karen #60 - I've sure seen it play out that the two agents aren't in alignment about what counts as a comp. There in may lie the problem for the list price to begin with.
Bill #61 - Wow, the voice of wisdom and reason :)
Mary #75 - loved your analogy. Some people don't like the idea that a game is being played. But who can win a game that they refuse to play?
Valerie #85? Priceless!
Melissa #86 - I haven't had very many buyers lately who have been able to play the low offer game. They're either buying in a neighborhood with very little inventory (has happened more often than you'd think), or at a price point where they are competing against other offers.
Patty #88 - you get the prize for the best presentation technique. I love that!
Rob #94 - that's the second reference to Broker Bryant. I will have to check that out.
Mona #98 - that's the second reference to a form such as that. I don't think we have such a thing in CA. Will have to check that out.
Sylvia #108 - I agree with your advice about countering at full price unless the market dictates that you don't need to. If that's the case, you probably will have others. But it states that you absolutely aren't entertaining any negotiations whatsoever.
Great post Karen.
We can only negotiate if the line of communication are alive, or receptive to new injection of energy. That's why a counter is almost always advisable, one never knows how it will pan out. If not countered, at the very least, let the message be clear to the buyer that the seller will be glad to look at alternative offers.
Cheers.
In 20 years, if I reject all the low balls, I would have never made any volume of deals. WE ALWAYS COUNTER! That is when we, "get to know each other". And all processes some have fruit at the end and some do not. But the process NEVER changes in all maarket cconditions...
It's called negotiating. Even a counter at full price shows you are trying to negotiate.
I like your first step - communicate. It at least give the courtesy to the other party that you are rejecting their offer, as opposed to just letting the offer expire.
A simple three step process. Aknowlegde the buyer, thank them and counter.
First things first. Check with the other agent as to why the offer price. If they says something like "that's what they wanted to offer" then I ask for comps to support the price so I can show the sellers the reasoning and not the fact that the buyer is just going around making lo ball offers in the hope they will get a sucker. The other agent is the real key...hopefully they educated the buyer and you have educated the seller. Then if the the buyer is serious, negotiations can take place. No counter till the buyer motivatoin is known. I usually tell the other agent that if the buyer makes a realistic offer then the seller will accept or make a realistic counter, assuming your asking price is realistic. I have this happening all the time as I deal mostly with short sales and buyers think you offer 20-40% below asking price all the time.
Karen, I always encourage seller clients to counter. Rejection of an offer essentially is NOGOTIATION or NEGATIATION.
Recently, I represented buyers from out of state who wanted to purchase a home in an expensive resort community. Over the past several years, very little had sold there because sellers still didn't get that the market had changed. The house my clients wanted to purchase had been on the market for over 2 years, was vacant and was grossly overpriced. I presented the offer to the sellers and listing agent with comps justifying the offer-nearly $200,000 below asking price. I have no doubt from the reaction that the sellers thought it was "low-ball". The sellers countered, coming down by a small percentage. The buyers countered back with a smaller percentage. The sellers came back and rejected the buyers' counter. The buyers were shocked and disappointed that the seller chose to stop the process in the middle of negotiations. I instructed them to not react to the rejection but instead let the sellers house sit on the market for a couple more months during which time they'd pay another high property tax bill and more utility bills. In the meantime there was a strong storm with high winds and the house sustained damage from that. When the buyers came back to the table several months later with a new and final offer (at a price slightly below where they would have gone several months before had the sellers not stopped negotiations), the sellers were more than willing to negotiate. The house sold for nearly $150,000 below the asking price.
In the end, the sellers got real. It took them nearly 3 years to let go of what they planned to pocket from the sale of their house and accept that what they would pocket was what someone was willing to pay for it, not what they wanted. In the meantime, they lost thousands of dollars in upkeep, utilities and taxes on a vacant house and most likely pocketed tens of thousands less than they would have had they priced it correctly when it first came on the market.
Personally I've always countered when I got a low ball offer at, or very close to, my original asking price.
This discussion definitely changed my mind on not doing a counter if the offer was too low. There are always variables to take in account when making the decision on how to answer an offer back.
It is hard to go wrong with a counter offer. Always try and find something to give. Talking can always lead to something.
I've got this potential situation right now...or coming soon, and my sellers, having been through this when they sold their fulltime home last year, understand and don't take it personally. (Thank God). We are selling their vacation home and the very serious potential buyer has been talking about a low offer....understandable, not only because of the market but her heritage is one that bartering is common and since my sellers recognize that, TOO, it's going to make it even easier in the negotiating process.
It is so important to prepare Sellers initially in the listing presentation how to handle offers. Then, when they come in it is easier to negotiate them. A lot of what he do for our clients is preporation for the storm comes LOL!
Hi Karen, All of these are good points and I agree with your thoughts. Have a great day, Ellen
Good Posts, everyone should always counter offers, you never know what the buyer may be thinking and every day represents an opportunity to make a sale!!!!
Great blog. The worst thing is for the agents and the sellers to get insulted and offended and emotional. We also always tell sellers (and buyers) to counter and let the other person be the one to finally reject or else we will come to a agreement.
Ah, the power of Active Rain. This blog was written on 7/31, yet I'm still getting comments. I'm not sure where the blog appears that it's still finding readership, but I really appreciate that it does.
Ann #146 - I really appreciate your term "Nogotiation" . Says it all.
The sentiments expressed here really seem to confirm - no conversation leads to no deal. At least get into those conversations. At least then there's a chance.
I would never turn away any offer unless it has been worked to the point of no agreement. I think it is silly to either jump or feel insulted by someone that is shopping. We get so hung up on the emotional and not the fundamentals of bringing to parties together.
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