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Selling a home is generally a nerve racking experience, even in a good market.  In a bad market, the difficulty in selling a home doesn’t stop with longer days on the market.  The negotiation phase is longer, too.  Smart buyers know the tables have turned in their favor and they negotiate for deals like never before.  

Smart sellers recognize the present environment and are anxious to negotiate a mutual agreement with any qualified party.  They are not offended by low offers, even if they seem ridiculous at first glance.   They keep their cool and realize that negotiating is a necessary, first step in the journey to sell their home.

Lowball Offers:

A lowball offer is one that is far below the home’s fair market value.   If your home is fairly priced at $250,000 and you receive an offer of $150,000…you have been low balled.   There is a huge difference between submitting an offer on the low end and lowballing.  

For the most part, low ballers are generally tire kickers, not serious buyers.  Many are graduates of “Get Rich in Real Estate for $1.00″ seminars.  They place often ridiculous offers in hopes of finding a deal, not unlike the Antiques roadshow personality that finds a Monet painting at a garage sale.  

When dealing with the lowball offer, the seller has options, but they should recognize the game and see if real interest exists.

• Sellers can reject the offer, which stops the negotiation in its tracks. 
• Sellers can opt to hardball and scruntinize every term of the offer, but the result is usually no progress, just hard feelings.
• The seller can choose to return a full price counter-offer, or one that is slightly less than full price, in hopes of continuing the negotiation.
• The seller can counter offer with a lower price and request that the buyer provide the comparable sales data used to arrive at the first offer price.  

Note:  Seller’s should always request a letter of pre-qualification, if one was not provided with the first offer.   It is a waste of time and patience to deal with a buyer that wasn’t qualified to buy in the first place.

If you have received a disappointing, lowball offer, try to find out as much as you can about the buyers and why they offered the price they did.  Before you show them the door, hand them a smart counter offer.  Not only will it keep the deal in play, you will learn more about negotiating with the next buyer.  

• Real Buyers don’t Play Games:   Real buyers often make an offer on the low end of the homes price range and see how the seller reacts.  Generally, sellers list at the high end of the price range, creating a gap.  The win-win for this situation to fire back a serious counter-offer that closes part of the gap, with sales data to back up your position.   Do not counter back with your bottom line price.  Buyers in this market will need to negotiate back and forth to feel they won a good deal.
• Is the Low Ball Offer a Reality Check??:   An low offer is not a low ball offer, if it accurately reflects current market values.   Many sellers do themselves a huge injustice by overpricing a property and leaving too much room for negotating price.  If your house has been for sale for months, or other homes like yours are selling, the “low ball” offer you receive may be one you seriously should consider.  Again, know your market like the back of your hand and price your home in line with your competition.
• Old Comp’s and Sales Data are Worthless:   If your home has been on the market for some time, you may need to revisit the current market value.   In a weak, declining market, prices keep declining.  If your house has been on the market for a long time, review all recent sales prices, before you reject any offers that appear low at first glance.
• Keep Your Cool:  Selling a home is an emotional experience for most of us.   Remember that as long as an offer is based on actual sales data, it isn’t insulting.  If you have an interested, qualified buyer, remain calm, patient, well informed and willing to pursue a deal.   Remember that the first offer is a fact finding mission and is not intended to insult.   The cooler head will prevail and close the deal.
• Take the Focus off of the Price:   Provide a list of ammenities included with your property.  Does your price include new appliances, granite counters, security or sprinkler systems that the buyer may not be accounting for in their offer?   Are you willing to help with the closing costs or work with them on the move in date?   Have you made improvements that save on energy bills?  If so, provide copies of your utility bills with your counter offer.  Have you remodeled or upgraded your home?  If so, provide warranties, contractor contact information, etc.
• Throw in a Freebie:   Many first time buyers don’t own lawn maintainence equipment, washer/dryers or kitchen appliances.   If you won’t be needing yours or don’t want to move them, throw them into the deal.   This often works real well with items like outdoor patio furniture, gas grills, storage buildings, hot tubs, etc. that are too expensive and too much hassel to move anyway.
• Play to Cash Strapped Buyers:   Often, buyers are tapped out by down payments, moving expenses and closing costs.  Smart sellers can possibly net more money by leaving the sales price higher and offering to pay some of the out of pocket expenses for the buyer.   Consider a counter-offer for the cash poor buyer that includes paying their closing costs or costs of repairs to the property.
• Low Ball Offer or Wake Up Call:   Many buyers heavily discount from the list price if the property is dated or in need of repair.   They often slash the offer price because they are uncertain how much money it will cost to update or repair the problem area’s.  Smart sellers can offer to take care of the fixes and repairs, so the issue of “how much will it cost” is off the table.      
• They’re Back:   Treat all real buyers with respect, regardless of how offended you may feel.  Many buyers will return to a home, even if the first deal didn’t work, if they like the owner and feel they are willing to work it out.   Be nice even if the deal falls apart, they may be back after some more house hunting.

In conclusion, whether the sellers reaction to a low offer is despair, anger or rage…it pays to remember there is more than one way to negotiate.  Consider all offers as serious and work from there. 

Qualified buyers should not be taken for granted in a weak, declining market.  Do yourself a favor.  Even if you can’t make the deal work out, calmly, stay in the game.  Use the experience to learn as much as you can before the next offer is presented.

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This entry was posted on Wednesday, April 30th, 2008 at 3:31 pm and is filed under For Sale By Owner (FSBO), Selling Your Home. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.