Dealing with low offers is often the hardest part of selling a home. Most likely you have worked with your Realtor to determine the correct price, you’ve made repairs, applied fresh paint, kept the home clean for showings, and then a buyer comes in and offer tens of thousands less than your asking price. Most likely your initial reaction is one of disgust, like many of my clients, and you want to tell the buyer to pound sand. You may even tell your agent that you don’t want to hear anything more from these buyers, or any other buyer that comes in with a low offer.
While it is not unusual to feel that way, I caution my clients to take a step back, calm down, and come back with a counter offer. At some level, this buyer is interested in the house, so we need to find out why they offered a lower price.
Why Low Ball Offers Happen
There are a few reasons low ball offers are placed on homes by buyers. Often times their agent will let you know that this is all they are approved for, or question your sales price and ask what comps were used to support your asking price. Other times you will not know but can ask questions to help determine where the disconnect is coming from. The buyers may be from an area where sales prices are generally lower, they may be getting bad advice from family members that advise them to always offer a really low price first just to see if they can get it for a deal, other times it could be an investor looking for a home to flip.
Check Your Emotions and Your Comparables
Before you respond you need to make sure you have not overvalued your home based on your emotions. I have yet to meet a seller that doesn’t believe their home is the best home on the block. Honestly, we all love our homes, we have put our blood, sweat and tears into it and have amazing memories of our time there with family. Buyers do not have that, and will not count those memories as increased value. If your agent has already discussed a lower sales price with you and you wanted to start high to have room to negotiate, or you just believed they were wrong, now is the time to really look at what other homes in the area have sold for and make realistic comparisons to determine the true value of your home.
Terms of the Offer
The offer price is not the only thing you need to be worried about in a potential sale. Contracts can contain requests for inspections, repairs, closing cost help, extended closing dates, and other negotiating points. A lower sale price might be acceptable with a fast closing, cash sale with no inspections that could reveal problems. Working with your agent to determine which terms are best for you in the overall picture is important.
Make a Counteroffer
Anytime you receive an offer on your home you have three ways to respond. You can accept the offer as is, you can just say no, or you can make a counteroffer. I always advise my clients to make a counteroffer, no matter how infuriating the first offer was. This will show the buyer that you are not desperate, but you are willing to work with them and come to a mutually agreeable price. Just like many sellers want to start high to leave room for negotiations, many buyers want to start low for the same reason. If their agent is doing their job, they probably already expect that their low ball offer will not be accepted. If they are serious about the house you will get a response and if not, well at least you tried. Like most of life, the answer is always no if you don’t ask.