You've just received the phone call from your agent that you got an offer on your home but your excitment is quickly dashed when you hear the price they offered. How do you respond to a "low-ball" offer? Many sellers first responses are anger and frustration, but this is a mistake. It is important to check your emotions, take a deep breath, and move forward with negotiations.
Although you're convinced the buyer is ignorant or shady because of a low offer, you need to remind yourself of the goal- to sell your home. A low offer is still an offer and an indication that someone does in fact want to purchase your home. There are many reasons people submit low offers such as: to test how desperate you are to sell, because they believe it is standard practice to start low and work up, and some simply because they don't have an agent informing them of the market conditions in your area. Take advantage of this opportunity to sell your home and submit a counter offer to the buyer. Here's a few tips to approaching a good counter offer and turning that low-ball buyer into the new owner of your home.
1. Look at all of the terms of the offer, not just the price, to determine what is the actual net price the buyer is offering. The low offer price might not be that bad of a deal if the buyer agrees to pay all termite repair work, take the house as is, pay all escrow and title fees, etc. However, it might be extremely low if the buyer offers a low price plus asks for additional credits, appliances, a full termite clearance, etc. List all the areas the buyer is reducing your sales price so a "true" net price is clear to you and you know where to start in your negotiation of the offer.
2. Consider what terms you are willing to concede to make the deal work. This is where your Realtor will be most valuable to the negotiation. Your agent should discuss with the buyer's agent what are the non-negotiables for the buyer before you make your counter offer. Sometimes the buyer absolutely has to have closing costs credit in order to even purchase the house. If you know this to be true, then you can agree to keep those credits but raise the buyer's price higher than you might have countered to reach your desired net price and allow the buyer to keep their credits.
3. Some buyers who present low offers also submit comparable listings with the offers to substantiate their price. Review these with your agent to determine if they are good comparables for your home and whether or not you were an overpriced listing. After review, you might decide the low offer is actually a good one. If they didn't send compables with their offer, review the current comparable with your agent and submit that list which evidences your counter offered price to the buyer. Sometimes the buyer just hasn't been given enough facts prior to making their offer and once they see the market conditions they are more likely to come up to your price.
4. Know when to say "when". There are some buyers that just aren't willing to pay market value or bend on their list of concessions. Some are because they are just looking for the absolute rock bottom priced deal and others are misguided by their agents. If you have negotiated to your bottom line and the buyer still isn't willing to concede, then obviously you're at an impass, and it's time to stop the negotiations from your side. Have your agent notify the buyer's agent that your last counter offer is your best offer and you will not be negotiating any further. Many times this calls the buyer's bluff, so to speak, and the buyer will come back to the table to accept your last offer.
The key to navigating this market of foreclosures which triggers a mindset of low ball offers by buyers is to take your emotions out of the transaction. While generating your counter offer terms, remember this is a business transaction; the buyer isn't buying your memories of raising your family in the home. And if possible, respond to all offers because you never know if you can put the deal together unless you're willing to give a little to make the deal work too. One final tip to discourage buyers from lumping your home into the list of foreclosures they've viewed and submitting a low ball offer to you- make sure your home is either occupied or staged and that the phrase "motivated seller" is not on your listing advertisements. Happy Selling!