Sellers – What To Do With a Low-Ball Offer

By
Real Estate Agent with Alain Pinel Realtors, Pleasanton, CA BRE#01732313

Low Ball Offers

 

 

It’s difficult, but try your best not to be insulted by the offer.

 

I know it’s hard!!  But buyers listen to so many ‘experts’. Economists. Friends and neighbors. National or state news reports that may be far different from your local market.  Sometimes it’s wishful thinking on their part, hoping they’ll find someone who is at the point of desperation. Sometimes it’s trial and error. And occasionally, it  may be that they are lacking buyer’s comps for the property they’re considering and don’t really understand the value of the homes in your neighborhood.

 

First communicate....... Mr. & Mrs. Buyer, Thank you for your offer. 

 

Then you ultimately have three options:

 

  • Reject It.
  • Accept It.
  • Or, Counter It. 

 

Let’s talk about what potentially happens when you choose one of these options.

 

Accept It. This isn’t usually the favored option if the offer is truly a low-ball offer. However, a short-selling homeowner may consider this if they’re painfully close to a trustee sale, hoping to halt the proceedings. Whether or not the offered price will fly will now be a matter for the short-selling bank to determine.  

 

Reject It. This sends a pretty strong message. There is nothing about this offer that you like. The buyer may be throwing things up against the wall to see what sticks. Your response very loud and clearly tells them this one doesn’t have even a glimmer of hope of coming to a meeting of the minds, at least from your point of view. If the buyer is a bottom fisher, they’ll learn pretty quickly that yours won’t be a contender. If however, they have a sincere interest in your home, they’ll learn two things 1) If they’re attached to this home but can’t afford the price tag, no matter what the market value, they’ll need to move on. 2) if they’re able to qualify for the list price, but don’t want to pay it, they’ll understand that the two of you are too far apart to make any headway. BUT, many a low-ball buyer offer has come back to the table with a better offer once this hard line has been drawn in the sand.

 

Counter It. If you can bring the buyer up some, and you’re open to coming down as well, the two of you may find an acceptable point of agreement.  If you’ve been on the market for awhile and have had no offers, it’s prudent to at least consider a counter. After all – if you don’t reach a mutually acceptable price and terms, then you’re no worse off than before.

close

Re-Blogged 13 times:

Re-Blogged By Re-Blogged At
  1. Gabe Sanders 08/01/2011 07:45 AM
  2. Sally English 08/01/2011 10:17 AM
  3. Lisa Ackerson 08/01/2011 10:26 AM
  4. Michael Collins 08/01/2011 10:32 AM
  5. Ruby Lee Sweeting 08/01/2011 04:39 PM
  6. Victor Zuniga 08/01/2011 04:46 PM
  7. Doug Patterson 08/01/2011 10:16 PM
  8. Linda Lipscomb 08/02/2011 12:39 AM
  9. Gene Riemenschneider 08/03/2011 12:20 PM
  10. Barbara Martino-Sliva 08/03/2011 12:25 PM
  11. David John Medendorp 08/16/2011 11:27 PM
  12. Sandy McAlpine 08/19/2011 02:02 PM
  13. Winston Heverly 08/12/2012 07:24 PM
Topic:
Home Selling
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low ball offers

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Ambassador
672,301
Karen Crowson
Alain Pinel Realtors, Pleasanton, CA - Livermore, CA
Livermore Wine Country Homes

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.

 

 

Aug 01, 2011 08:04 PM #134
Rainer
63,112
Doug Patterson
Park Place Real Estate, Broker-In-Charge - Winston-Salem, NC
CRS, ABR, Broker-In-Charge

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!

 

Aug 01, 2011 10:12 PM #135
Ambassador
672,301
Karen Crowson
Alain Pinel Realtors, Pleasanton, CA - Livermore, CA
Livermore Wine Country Homes

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.

Aug 01, 2011 10:35 PM #136
Rainer
93,762
Ranji Singh, SRES
Royal LePAGE York North Realty, Brokerage - Newmarket, ON

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.

Aug 01, 2011 11:23 PM #137
Rainer
168,452
David Evans
RE/MAX TOWN AND COUNTRY - Cumming, GA
HUD NLB Cumming GA

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...

Aug 02, 2011 12:28 AM #138
Rainmaker
128,113
Mike Henderson
Your complete source for buying HUD homes - Littleton, CO
HUD Home Hub - 303-949-5848

It's called negotiating.  Even a counter at full price shows you are trying to negotiate.

Aug 02, 2011 12:42 AM #139
Rainer
15,095
Liz Johnson
Ann Adams & Associates - Chandler, AZ
Realtor Selling AZ Homes ~ Chandler, Tempe, Maricopa & Phoenix

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.  

Aug 02, 2011 12:53 AM #140
Rainer
46,726
Lucien Vaillancourt
Native Sun Realty, Inc. - Jacksonville, FL
Jacksonville Florida Real Estate

A simple three step process.  Aknowlegde the buyer, thank them and counter.

Aug 02, 2011 10:13 AM #141
Anonymous
Anonymous
jayne

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.

Aug 02, 2011 10:18 AM #142
Rainer
37,085
Ann Steinemann
Russell Realty, Sandusky, Ohio 419-625-5555 - Huron, OH
REALTOR, GRI

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.

Aug 02, 2011 10:43 AM #143
Rainmaker
337,405
Debra Gould
Staging Diva / Six Elements Inc. - Toronto, ON
The Staging Diva

Personally I've always countered when I got a low ball offer at, or very close to, my original asking price.

Aug 02, 2011 01:08 PM #144
Rainer
216,461
Gerard Gilbers
Stingray Performance Marketing - Waldorf, MD
Your Marketing Master

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.

Aug 03, 2011 02:00 AM #145
Rainmaker
1,259,053
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

It is hard to go wrong with a counter offer.  Always try and find something to give.  Talking can always lead to something. 

Aug 03, 2011 12:14 PM #146
Ambassador
559,955
Gayle Rich-Boxman Fishhawk Lake Realtor (503)755-2905
Vernonia Realty - Vernonia, OR
"Your Gateway to the Lake" Birkenfeld Oregon

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.

Aug 04, 2011 12:29 PM #147
Rainmaker
150,151
Dale Taylor
Re/Max All Properties New Lenox Illinois - Frankfort, IL
Realtor = Chicago Illinois Homes Townhomes Condos

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!

Aug 04, 2011 11:30 PM #148
Rainmaker
170,660
Ellen Kippel
Weichert Realtors - Suffern, NY
Realtor Suffern Rockland County NY 914-588-2365

Hi Karen, All of these are good points and I agree with your thoughts.  Have a great day, Ellen

Aug 05, 2011 04:55 PM #149
Rainer
201,577
Mary Macy
Top Agents Atlanta Metro - Roswell, GA
Top Agents Atlanta Metro

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!!!!

Aug 16, 2011 11:30 PM #150
Rainmaker
278,360
Kasey & John Boles - Jon Gosche Real Estate
Jon Gosche Real Estate, Boise ID - Boise, ID
Boise, Meridian, Ada/Canyon/Gem/Boise Counties

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.

Aug 17, 2011 02:20 AM #151
Ambassador
672,301
Karen Crowson
Alain Pinel Realtors, Pleasanton, CA - Livermore, CA
Livermore Wine Country Homes

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.

Aug 17, 2011 10:57 AM #152
Rainmaker
736,081
Winston Heverly
Winston Realty, Inc. - Atlantis, FL
GRI, ABR, SFR, CDPE, CIAS, PA

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.

Jan 13, 2012 07:45 PM #153
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Karen Crowson

Livermore Wine Country Homes
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