Home Selling in Chicago>Question Details

Mike Long, Real Estate Pro in Naperville, IL

I wanted to get some real estate pros opinions on what philosophy they think works best when it comes to

Asked by Mike Long, Naperville, IL Fri Apr 25, 2008

dealing with low ball offers. If you are representing the seller on a place listed at $349,900 and you are feeling pretty confident about the asking price, less than 3 weeks on market, 3 second showings in past 5 days and an offer comes in at $295,000 what do you do? Do you counter? OR Do you nicely reject and explain that you are negotiable but don't think this offer is even in the ballpark and you would like them to show that they are a little more serious about the place? Do you counter strongly and hold firm later? I have my opionion on the matter but wanted to see what everybody else thought.

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Counter-offer---the only time it is ok to basically reject an offer--thus insulting the buyers--is in a strong sellers market---even in those times, I counter with list price (showing we want to play ball) but they need to get realistic. I can give you example after example of sellers rejecting their 1st offers and selling properties 20-30 k below that 1st offers price---1st hand examples! As a real estate professional---you know those 3 second showings may have even a lower price in mind, or may be using your listing for comparison--they may have something to sell---they may have been looking for the last year---and 1st and foremost---they are NOT ON PAPER---a bird in hand.......
4 votes Thank Flag Link Sat Apr 26, 2008
Michael----the question to ask on the comps---are they w/in the last 3 months? The market is changing so radically---6 months ago, the market was better----would never have believed then--- but now 07 looks pretty good!
4 votes Thank Flag Link Sat Apr 26, 2008
Hi Michael.

I almost always suggest that the seller counter. There are exceptions. In most cases........I discuss the with the seller that I will ask the buyer's agent to help me understand how they arrived at such a price. Upon a conversation w/ the buyer agent, sometimes a few other recent property sales may be quoted. If those are not realistic comps, I discuss this w/ the buyer agent the differences between these properties and the sellers property. When talking with the buyer, the interest in selling is confirmed, with an emphasis that the seller and I will listen to that which can be supported by data.

There is a recent thread where a buyer was complaining because a seller agent was overheard raising his voice at a buyer agent over a low offer. That's not in the best interest of the seller. Perhaps a seller might condone the seller agent behavior because they were offended. But, even then, we, as Realtors acting in the best interests of a seller client need to rise above emotional outbursts.

This is one of those scenarios that can have a different outcome depending upon the agent hired.

I generally avoid comments about the buyers "showing they are more serious", but have heard others use similar dialog. Rather than debate the person, I turn the focus on data. While motivation does play a factor in any contract price, it s a secondary focus of my discussions. When buyer and seller move closer to a meeting point, I will then shift more discussion toward personal value derived from making a decision to make that last effort on a home stretch. When I have a seller property that is right priced, work the validity of that first and foremost. It removes personal attacks.

As a seller agent, if your property is overpriced, it is difficult to employ the above strategy. In your question, you stated that the property was priced at market.

Deborah Madey - Real Estate Broker
Peninsula Realty Group - New Jersey
3 votes Thank Flag Link Sat Apr 26, 2008
Deborah Madey, Real Estate Pro in Brick, NJ

The great thing about a low-ball offer given the circumstances you have described is that it might serve to expedite the other folks who have taken two looks at the property as well. You get agents two and three on the phone and let them know you have received an offer or about to receive an offer and that you are extending them a courtesy should their clients wish to participate in seeking a home that they obviously like, having seen it twice themselves. The point isn't so much to generate a multiple offer as it is to prompt a more responsible offer that you may wish to negotiate through.

At the end of the day the decision to counter needs to be made by your clients. But with that said it is our responsibility to apprise our clients of all the facets of the offer - timing, contingencies, state of the market, buyer's qualifications, buyer's agent's qualifications.

In terms of responding to the feeble offering, your clients have nothing to lose should they respond to the offer either with a line in the sand response or a token response.

By the way, one thing uttered by another respondent is that this is a buyers' market. I describe the current market as one that is propitious for buyers. But my sense of the current market in Chicago is seasoned by the fact that all of my sellers have offered their properties with the desire to facilitate their next moves. But they are not desperate to sell. The sooner that more real estate professionals recognize that the real estate market is not monolithic and that not every seller is facing an exploded ARM or is desperate, the sooner they will be able to counsel their buying clients more effectively. Having said this what I see all too often in the current market is the tail wagging the dog. That a consumer would actually justify his offer using Zillow would be humorous if it wasn't so steeped in arrogant nonchalance. And that his realtor would not have the capacity to assume a bit of control and educate his client as to the deeply flawed nature of Zillow's estimates is a sad comment on the realtor's ability to compute accurate comps.

By the way, right before Memorial Day I had lowball offers go both ways. In one instance the lowball offer triggered a second offer that we negotiated through while another lowball offer (armed with inaccurate comps by his realtor) got stuck on an undoable number.

All the best,

Tom McCarey
The Real Estate Lounge Chicago with @properties chicago
2 votes Thank Flag Link Thu Jun 5, 2008
Certainly counter the low ball offer. The question, as you and the others note, is: what should the counter be? Now, this gets into the motivation of the seller. As Amy notes, sellers will sometimes accept very low offers, even if the asking price is reasonable. Maybe they have to move. Maybe there are financial problems. Divorce. Medical issues. Maybe they're just tired of the process, and want it all over. There are hundreds of reasons.

The more motivated they are, the lower the price they'll accept. And that means, as in Amy's scenario, they may not even want to counter. Or, if they do, it'll be pretty close to the buyer's offer. And if that number works for the seller, fine.

On the other hand, with all the activity you've described on the property, and assuming the sellers are serious but not overly motivated, then maybe a counter 2%-3% under the listing price might make sense. It's enough to say, "Look, we're serious about selling" but high enough to say "While we're negotiable, we're not desperate."

And if someone's using Zillow to base their offer on--and are simply misinformed regarding the value of the property--you can accompany your counter by actual comps.

That's what I'd suggest.
2 votes Thank Flag Link Sun Apr 27, 2008
Don Tepper, Real Estate Pro in Burke, VA
Hi Michael...again,

I have a file w/ Zillow Zestimates that I have printed out. When a property closes, I match the two. I keep this file for cases just as you describe. Zillow's own disclaimer is in my Zillow packet, also.

I started keeping tabs after encountering a situation where a client clung tightly to Zillow info. Before I had my documentation in support of the disparity, I relied solely on my explanations about how Zillow has complete disclaimers and suggests buyers and sellers work w/ a professional Realtor.

You can gather current MLS data of active listings if those properties show a Zestimate. If a property is listed less than the Zestimate and has been on the market for 90 days, would that not indicate that the Zestimate is inaccurate? Conversely, a property with a very low Zestimate that sells for much higher did not get financed in today’s market if it did not hold that true value. The Zestimates can swing in any direction.

Do Zestimates appear for properties in Zillow if it is also listed for sale in Zillow? I am not sure.

Zillow is fun for lurking and entertainment. But, it has it's limitations, and depending upon a data source which clearly asserts it’s own disclaimer of inaccuracies is not a source to weight substantially for a major investment.

Deborah Madey - Broker
Peninsula Realty Group - New Jersey
2 votes Thank Flag Link Sat Apr 26, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
I would call the buyer's agent and probe... try to find out their motivation for such an offer.

Chances are they are testing the waters to see what your client will come back with.

If I were you I would pull up comps again, just to make sure that you are not missing something that has gone pending or sold recently, and present all options to your client, it is your clients decision as to what they want to do, however, if I were you, I'd suggest that they counter...

Michael, try to create a win-win for both parties, and try not to get emotionally attached to these numbers. We, as realtors, are hired because of our ability to bring a transaction to close. All the best! Cristina John
1 vote Thank Flag Link Mon Jun 9, 2008

I've been on both sides of this recently (having given and received the lowball offer). The problem on the listing side is that often times your sellers are so insulted by the low offer that they don't want to respond. The best thing to do is to tell sellers to take emotion out of the equation and make a strong counter offer. You can also explain to your sellers that a lot of buyers agents are under pressure from clients to make lowball offers.
1 vote Thank Flag Link Tue Jun 3, 2008
Hi Michael, this is a good question and in my opinion, it ultimately depends upon the needs of the seller.

If the seller is desperate to sell and the offer will heal their pain, then it may be in their best interests to accept the offer, however this typically isn't the case with most sellers.

In today's market there are many buyers that think sellers are giving away their homes at prices way below the list price. I've advised my sellers to counter-offer all low-ball offers with the price and terms that best suite them and their needs while showing a willingness to deal with the buyer to reach a point where both parties are satisfied.

If I had to deal with your scenario, (several second showings in a short time frame), I know I'd be in touch with the "other" selling agents to find out if there was more interest from their clients. This would give you more to negotiate with by leveraging the other potential buyers against the one who wrote the offer. I think that merely rejecting the offer sends a bad signal to the buyer and surely doesn't get you closer to the goal of selling the home.
1 vote Thank Flag Link Thu May 8, 2008
We present all offers to seller(s). The seller(s) are the decision makers. Our advice? Always advise the sellers to counter. The sellers make the decision, and we don't have to stay awake nights wondering if we did the right thing. Nor do we have any liability for not presenting the offer.
1 vote Thank Flag Link Thu May 8, 2008
Thank you again for all of the responses. I think they are great. I will add this one tidbit: the buyer agent did mention that the buyer (who is not from the area) used Zillow and their Zestimates as a motivating factor in their offer. What are your thoughts when you hear someone say that they used Zillow as a guide to price?
1 vote Thank Flag Link Sat Apr 26, 2008
I would always ask my seller to counter to keep things going in the right direction. Getting offers is a good thing!
1 vote Thank Flag Link Sat Apr 26, 2008
The seller needs to be less greedy and more realistic. It is a BUYERS market afterall. Comps are a great selling feature and starting point but what sold 2 weeks ago does not mean it will sell for this week. Sellers are not only competing against other sellers, but against all those foreclosures out there.

I have purchased 2 investment properties this spring for 25-35k under market. These are 200-225k properties and no, they were not bank owned but just homeowners that needed to sell.

My advise is to look at it this way, buyers are not knocking your door down so don't be foolish and let this buyer walk away. Heidi hit it on the head , a bird in hand.... Counter offer and counter offer to the price you feel that you and the buyer will accept. There is no such thing as a low ball offer in this market.

Best of luck!
1 vote Thank Flag Link Sat Apr 26, 2008
Thanks for the responses. I'd love to hear more. I agree that a counter offer is in order. I think something at list price or maybe even a thousand off ask to show them that we are appreciative of the offer but realistically it is nowhere close to where we need to be. It is a buyers market but the amount of comps that support this price is amazing. Honestly, it isn't even one of my listings. It was a discussion I was having with a friend/fellow Realtor and we had different opinions on what was the best approach. Thanks again and enjoy your weekends!
1 vote Thank Flag Link Sat Apr 26, 2008
Get creative with the give and takes.....for example: maybe the washer and dryer were excluded and can be used as negotiating chips...also closing dates, home owners warranty, etc.
0 votes Thank Flag Link Thu Jun 26, 2008
You always want to negotiate. Never rejects buyers. You become creative. Maybe the buyer's agent is inexperienced. So what do you in this case. You counter with backboned facts. Counter the offer with recent comps and explain your objection with detail features of the property. Hey you never know ...once the buyer reads all that info that you created...may decide otherwise you got yourself a deal.
Web Reference: http://www.jordanmossa.com
0 votes Thank Flag Link Thu Jun 26, 2008
Michael, I always push for a counter, even if its minimal. Keep the negotiations going. I have had low offers come up quite a bit from their initial offer. Its just an initial offer and hopefully your sellers won't take it personally or get insulted.
0 votes Thank Flag Link Tue Jun 17, 2008
If you have done a CMA prior to listing and the asking price is justified by this report, would it make sense to suply a copy with a counter for the current listing price or perhaps $1k less - just to show you are not inflexible?
Web Reference: http://www.GregZaccagni.com
0 votes Thank Flag Link Tue Jun 10, 2008
Regardless of the offer low or high ...you always want to counter. Selling a house is not a yes or no question. A real estate professional he or she must think outside of the box. Meaning become creative. Negotiating is a win win situation. A lot of deals nowadays won't gp through not because of sellers and buyers...it is simply the faults of agents out there who lack creativity.

Weigh your options and dicuss the offer with your clients and come up with new ideas to close the deal.

Getting listings is an easy task. Selling and making your clients happy another daunting task that not many agents can deliver.

To your $295,000 offer...are they asking closing cost credit?....how much money the buyer he/she approved for?...how much money down are putting down?...review all of the above and counter wisely so both sides can feel a winner. Good luck
Web Reference: http://www.jordanmossa.com
0 votes Thank Flag Link Mon Jun 9, 2008

I would always ask my sellers to counter. I think it is in their best interest to do so.
0 votes Thank Flag Link Fri Jun 6, 2008
Hi Michael,

I recently completed the GRI 2 course. Our instructor brought this up in class. He had a friend who offered really low on a house...just for kicks...and the owner jumped on it. Now his friend is wondering WHY??? and what is wrong with the house that the owner would accept his ridiculous offer. He wanted to play ball but the seller blew him away by accepting the offer without negotiating.

Always negotiate. A bird in the hand... Yes, it may be a buyers market, but who wants to give away their homes?

We also had an appraiser in the GRI 2 course. She admitted that appraisers are throwing out the short sale and foreclosure sales. They do have to mention them, but if they have to go outside the neighborhood to find a comp, they do. I am finding that buyers, and realtors, are using short sales and forclosures as comps. Sorry, mine listing is NOT a short sale or foreclosure. Lets get realistic!

I agree, Zillow is WAY off the mark! A recent sale in my neighborhood was GIVEN away with 50k in upgrades and navigable lake front w/ dock and zillow priced it 10k below actual sale price. They dont know the home inside or if it is on a navigable lake.

My advice, get an appraisal. Make sure the appraiser has the comps you used to price the home. The appraiser that taught the GRI 2 class said you should always work with your appraiser.
0 votes Thank Flag Link Sun Apr 27, 2008
Tis the season for low ball offers! I have a very simular situation of my own. We countered back with basically 5 grand off the asking price! They have 36 hours to counter back...So basically till the end of the weekend. With the media only sharing negative news with the public, people think we should pay them to buy the house! I would counter back with very close to the asking price. It shows that you are confident with your price and you aren't giving it away! It has only been on the market 3 weeks! This is no fire sale! Don't try that hard to make the deal stick. If they counter back something that still isn't even in your range, let it go. I know in my MLS anything above $300,000 will be on the market for about 6 months, but it usually gets 97% of asking price! So... Play the game a little, if they want the house, they will buy it at a fair price.

Good Luck! Keep us posted.
0 votes Thank Flag Link Fri Apr 25, 2008
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