Low-ball Offers

Joey:

Guess everyone is looking for a bargain.  I had a low ball offer this week, and my seller didn't even reply to it.  This person offered $17,500- to include two waterfront lots, priced at $24,900 each!  I belive that is less than 50%?

 

Last year I had a buyer come in with such a riduiculously low offer on a home, that the seller got angry and refused to do any further business with them.  Some buyers just don't use common sense.

I was wondering what would be lowball in other areas. Here, I think anything close to 10% off is considered lowball and often times it will only make the seller annoyed or angry - it won't result in folks having a meeting of the minds.  I usually tell my clients that if they don't think a home is worth within 5% of the list price, to not bother. Writing offers and hopeing someone will take an offer  10% under is not USUALLY going to work. When it does work, most often it's because there's a poor listing agent who takes the bad offer instead of getting a smaller price reduction first.....

It all depends...what are the circumstances? has it been on the market 60 days? If so 10% might be a great offer... or not. If it has been on the market 2 days that is another matter. Also what signals are the sellers giving? "Bring all offers"? That invites low ball...

What is lowball to the seller maight be something else to the buyer. Perhasp the buyers hae another use for the property. Or they may not be attached to it. Right now in my market a duplex will sell for a GRM of 13... doesn't pencil. A buyer that knows and understands cash flow will hang in there areound 11% or less...is that a lowball or just good sense?

On the sell side my average selling price is about 99% of list price. ON the buy side my average buy price is about 92% of list price.... is that lowball or good work for my clinet?

All offers are good... some just better. Often they are a way to open negotiation. Whatever the offer I always counsel sellers to keep the door open... both side may not display all there cards first time at the table... besides that is how we earn or commission.

I think an offer is an offer.

My Sellers are coached that they are not allowed to be insulted by an offer.  That doesn't mean they ever sell their property for a dime less than their target price.  That is always the Sellers' decision.

I always thank the other agent for the offer, and let them know that it is a little too low, that a better offer may get a counter, or a better counter.

I tell my Sellers, "We will deal with what comes to us.  The law says I have to bring you all offers, and I will.  If someone offers a ham sandwich and $8.00, I am going to bring you the offer.  I might advise you that the market says you can do better, but I will present it, and we'll talk."

Prepping the Seller properly for lowball offers puts me in the position of alerting them, defending them, and negotiating with a Buyer/Agent who needs help seeing market value.  That is what Sellers are paying for:  Skill, knowledge, and a calm head.

Joey:

I will give you two examples why low-ball offers should be worked with.

I received a low ball offer on a listing of mine that had only been on the market  a few weeks. (We were receiving great feedback and property was showing well). Advised my sellers they had nothing to loose by countering the offer. Sellers had price "in their heads" that they wanted to receive for property and would not take less. After long negotiations buyer came up to their price and home is set to close next month. Had seller rejected offer outright in this market - who knows if home would still be on the market today.

I am also working with a buyer, who always puts in low offers, no matter what. Excellent buyer, lots of cash and they can close quickly. In both cases where we have put in offers, sellers have rejected offer without counter.   We have been watching the homes. One  home has finally go on deposit after almost a year with the last price reduction to less than our original offer. Second home has been reduced to our offer price. Both listing agents have contacted me to have my buyer re-submit our offer.  My buyer is no longer interested because the seller would not work with them in the first place.

My advice is if the other terms of the contract are acceptable, counter low ball offers. Your sellers have nothing to loose.

Sandra