How to Deal With a Low Ball Offer on My Home
Getting a low ball offer on your home can be pretty frustrating initially. You have your sights set on a price that you feel is reasonable and you expect to get at least that much on your home. When the low-ball offer comes in it can be upsetting, but it doesn’t have to be. The fact that someone wants to buy your home is a good thing and you should deal with every offer – unless it is just completely ridiculous.
Negotiation is how selling a home works and low offers are better than no offers. Maybe it will even turn into the perfect sale. This is something every seller should consider before emotions take over and they just slam the door on a low offer. Before you are done reading you will see how to handle a low ball offer on your house by following the advice provided.
Handling low offers on your home
Control your emotions – Selling a home can be surprisingly emotional. You may have spent years living in your house, raised a family and done a ton of renovations. All of this can make the house seem like a treasure instead of a piece of real estate. When you are selling though, it is time to leave your emotional attachments at the door. You are engaging in business and it is a business of negotiation. The first person to lose his or her cool is the one that loses. This may be a hidden opportunity, so remain calm and deal with the offer appropriately. Recently I was selling a home and the home owner received what would be considered a low ball offer.
The seller’s immediate reaction was one of disgust. Of course this is a normal reaction and one that numerous Realtors have to deal with. As you can probably guess the owner of the home wanted me to tell them to take a leap off a bridge. In fact they actually wanted me to counter offer back to the buyer over the asking price. Taking their emotions to the extreme they wanted to use the “I’ll show them” mentality. Instead I asked them to take a deep breath and not act in the same manner that the buyer did.
The one thing I tell all of my seller clients is that it doesn’t matter where a buyer starts with their offer. What matters is where they end up! As a real estate agent with years of experience there are times where you can just tell that the sale stands a strong chance of coming together. Other times you know it won’t. This was a case where I was pretty confident it would end up coming together and it did. The buyer happened to be a first timer who was getting bad advice from their parents.
While most parent’s intentions are good, many think they are real estate or negotiation experts. Rarely is this ever the case and the parents could have cost this buyer purchasing their dream home. In the end it worked out because I convinced the seller to treat the sale of their home as a business transaction and nothing more.
The buyer of this particular home initially offered $70,000 less than asking price on a home that was priced well. The initial counter we ended up making to the buyer was $5000 less than asking. What this did was send a very clear message to the buyer saying we are not desperate and have priced this home where it needs to be. Long story short, the home ended up selling for $15,000 less than asking which was right in line with the seller’s expectations. The seller followed my advice to a tee and got exactly what they wanted. Does this happen in every circumstance? No of course not. The sale of your home will be much more successful if you keep the emotion out of it.
From a buyers perspective the last thing you want to do is insult the seller with a low ball offer. More than likely the house you have set your sights on is something you really want. You don’t want to get off on the wrong foot with the seller and completely blow your chances.
Most buyers forget the seller may have lived in the home for years. It is a place where lasting memories have been built like kids birthdays, a first child, opening toys at Christmas and numerous gatherings with friends and family.
At this point you may think of it as just another house, to a seller they think of it as “home”. Never underestimate the emotional attachment homes can bring. While the goal of any buyer who makes a low ball offer is to get a great deal if you have no deal at all because you have royally pissed off the seller where will that leave you!
You are in control – The thing about selling your house that you need to remember is that you are in control. You don’t have to accept any offer you don’t want to. Granted, you may be under some sort of deadline – you found another home you want to buy – or you may just really need the money. Circumstances are different for everyone. But in the end, you do not have to say yes to anything you don’t want to.
Make a counter offer – There are a number of reasons why a person could offer you an amount much lower than you are willing to accept. Buyers are sometimes worried that they will pay too much for a home and they make low offers initially as a customary gesture. They are interested in your home and want to get the negotiations going without committing too much. This is why you don’t want to get worked up over a low initial offer.
Another thing to keep in mind is that there are some cultures who are taught you ALWAYS need to negotiate. Your home could be the best value in town but that doesn’t necessarily mean the buyer is going to start the negotiations where you want them to.
It is possible the buyer could be not listening to their Realtor and instead looking at a Zillow estimate of value. While most Real Estate agents understand the chances of Zillow pegging a real estate value accurately are as good as seeing big foot in your backyard, buyers do not. Instead they rely on data that is completely out in left field.
When you are confident you have priced your home correctly this is when you want to hold the line very close to your asking price. Often sellers will put some cushion between the list price of their home and ultimately where they expect it to sell at. For the same reason the buyer is now bidding low because they are probably expecting to meet somewhere in the middle. When you really want or need to sell meeting in the middle makes everyone feel like a winner.
When dealing with a low ball offer you can do one of the following;
Do nothing and tell the buyer the offer is insulting.
Counter offer over asking price.
Counter with something minimal.
In most circumstances when dealing with a low offer, choice #3 is the best course of action. The first two choices are confrontational. They make you feel better in the short term but they don’t work towards accomplishing the desired goal of selling your home.
If after you have countered with something minimal and the buyer does not come up substantially then you know you are wasting your time.
Review the terms – The selling price of the home is not the only thing that is important for you or for the buyer. There could be other things that you are also concerned with. As stated earlier, you may want to sell the house quickly because you are buying another home that you really want. If this is the case, a buyer that is willing to close quickly may be worth catering too, even if it is for a slightly lower price than what you want. There are other factors at play besides price. Review these factors and decide if they are worth going lower on your asking price. Here are some reasons that could make one offer more appealing than another besides price:
A preferred closing date.
A rock solid mortgage pre-approval letter from the buyer instead of a pre-qualification.
The buyer putting more money down.
The buyer is paying cash so there is no mortgage contingency.
The buyer having fewer inspection contingencies.
Look at the comps – Depending on where you are in your sale, the comparable listings may have changed since you set your initial price. The price of homes goes up and down all the time and your asking price may no longer be competitive. The buyer may also have a list of comps that you want to review.
There is no point in blindly insisting that the price you set is the only reasonable price for the property. How other similar homes are selling right now is an important indicator of how much you can sell your home for – right now. In the example I shared above the home had just come on the market so I was extremely confident in the value that was provided to the seller.
One of the ways we were able to get the buyer to come up so substantially from their original offer was to provide them with comparable sales data. The buyer’s agent was not from the area and did not know the area nearly as well as I did. It was easy for me to share how the market value of the home was arrived at.
Neither the buyer nor their agent had an understanding of the differences of one neighborhood to the next which plays a substantial role in a property’s value. All of the comparable properties that were selling in the area had very narrow list price to sale price ratios. I made sure this was pointed out to the buyer’s agent. The market was dictating the fact that homes were selling fairly quickly and going close to asking prices.
On the slip side if your home is overpriced a buyer who makes an offer substantially under the list price is not really a low ball offer. They are offering what they feel is the real market value or close to it. Today’s home buyers are pretty astute so if your home has been sitting on the market for months longer than the time it takes for the average property to sell in your area they will know. Most buyers know how to tell if a home is overpriced. If you have had tons of showings on your property and it has been on the market for quite a long time you might want to think about why that is the case.
Look to your agent – This is part of why you hire a Realtor. You want a team member that is willing to negotiate for you and get you what you want. The Realtor does this for a living, so he or she is best suited to get you a good price on your home. Let the agents discuss the deal together and see where you wind up. It may be that your Realtor is the key to getting you the deal you want for your house. One thing to keep in mind is that not every agent is equipped to keep their emotions in check.
You don’t want an agent that will act emotionally. Unfortunately there are some Realtors who relish “the drama” of selling real estate. You don’t want a drama queen as part of your negotiating team. The agent who is calm, cool and collected is the kind of Realtor you want in your corner. A skilled real estate agent should never overreact to a low ball real estate offer. It should be business as usual. The agent’s job is to get you the most money with the least amount of hassle so you end up at a closing table!
Hopefully the best way to deal with a low ball offer on your home has become clearer!
Additional Resources on Negotiating and Selling a Home;
Say no to low ball offers via Inman News.
Will submitting a low ball offer help me buy a home by The Las Vegas Luxury Home Pro.
Use these additional helpful resources to keep your emotions in check and negotiate the best possible sale price for your home!