The Low Ball Offer... You're Bound to Get Them- What to do When You Do

I remember when this happened to me just last year when I was selling my house... The house had only been on the market for 1 week, was priced well and showed well. We had an offer come in for almost 20% less than our asking price. We are not talking about a $500K+ house here either. First reaction is to just laugh and say they can't possibly be serious- NO NO NO... 

Now, if your house has been on the market for little while, you may have already dropped your price and are waiting for the buyers to rush in and make wonderful offers on this deal of a property. Then it happens... the buyer comes along and offers much less than what was just agreed upon. About 10% less actually with a subsidy request of about $5000. Now your house that you just dropped the price on has gone from $350K to a net of $294K... How do you handle a low ball offer such as this?

Well, first, don't get angry, panic or lose any sleep over it and be sure don't reject the offer right off the bat and tell them to come back when they are serious! REMEMBER, it is a game of negotiation and the buyer IS serious or they would have never made the offer in the first place.

Several things have happened before this offer came in. The buyer, and agent, have researched the market, walked through as many as 30 or 50 properties, conducted a study on the value of the property and written an offer for your house or land. Think about it... you just won the lottery. They could have written on ANY other property, but they selected yours. So get busy and negotiate!

First, analyze your own goals and needs. How much do you really need to come out of this property to meet your goals of moving to your next home or reaching whatever goal you are wanting to obtain? What could you really live with and what amount are you going to counter. Remember this last point -- WHAT ARE YOU GOING TO COUNTER? This is assuming that you're not going to roll over and that you're going to stay in the game.

Next, conduct a CMA of the property once again. What has happened in the market to get this buyer to offer such an offer (notice I didn't say 'low'). It could be that your property is now worth that amount. And if it is -- that's okay, because it probably means the property you wanted to buy up into is also worth less. At the worse, you're going to take away less money. The best thing to look at, however, is that the property you are wanting to secure will likely take less to get into now as well and you will get to SELL your property instead of letting it sit stagnant on the market.

Now, getting to the negotiation. Keep in mind, this is for the long haul. Keep it alive as long as the buyer will keep it alive. Give up a little bit at a time. If you reduced the house to $324,000, expecting to get an offer of $319,999 with closing costs of $10,000 -- then start there. You're already willing to accept a net of $309,999, so you're not really all that far off. Understand you're not going to get top dollar with if your not willing to give some on the buyer's closing costs. So come down to $320,000 and give them their closing costs. So now, your net has essentially come up to $315,000.

Wow, now you're actually ahead of the game if they accept. Oops -- they don't. Now they've countered to $309,000 and still want the $5,000 in closing. (Now our net's at $304,000). Great. Just think. When you started, you were $324,000 (remember, you had NO offer at all). Now, you're only $5,999 away from the net you were willing to accept in the first place. Not too bad.

Before I go too much further, here's a negotiation tip...keep it civil. Use a lot of complements about the offer, the buyers and the agent. "What a great offer....What a decent offer...What a nice offer...(you get the point) Thanks so much for writing. We are very excited about selling THIS house to you."  You want the buyer agent and his/her clients to know that you want to work with them. Don't let them have any doubt about that. You've been waiting months for this day (negotiation day) and you want to keep everyone engaged in the process to get your goals met -- sold and on your way to where ever you have set your goals to be. Now you are ready to offer your final counter (or maybe next to final). You really want to use the complements at this point: "We are so close." "I can't wait till we wrap this up, and we can all celebrate."

At this point, you know the buyers want to buy and your sellers are ready to start packing, so you want emphasize that you're very close. Use can use language like this: "We are so close. We still have some goals to meet, just like you do. And I hope we can bring this together to get us where all need to be." Now is when you make the final offer and be sure to stick with it. If you offer $314,000, they definitely get what they need and you get closer to your final net -- which at this point would be $309,000 -- just $999 off of your initial goal. Then you know if it goes forward or you're back on the market. However, don't be so stubborn that you lose the one buyer you have because of $2,000 or so. There are countless sales lost over just a couple thousand dollars.

If the buyer is stretching and this just won't work, this is when the honesty comes out. Their agent might tell you, If we can't do $309,000, it's just not going to work. This is simply beyond what they qualify for." Then you can decide whether to keep it on the market (hoping you don't have to drop the price again), or you cut the loss and move forward with closing. Be patient, do not get upset, remember, they're trying to meet goals just like you are. By working together, both buyer and seller can get what they want.