Question Details

Lippers, Home Seller in

How do you handle Low Offers?

Asked by Lippers, Tue Jan 22, 2008

Our house was priced at 600K and we recieved an offer for 552K. 8% less than asking. Our house was priced very well given the market. The house has been on the market for less than 3 weeks and this is our first offer. Our new home won't be ready until , so we do have some time.

The buyer would like to settle in less than 1 month. This would force us to move into temporary housing. It appears like they are very motivated buyers.

We countered their offer with 595K. Decided to give a little to see if they were serious.

What have been your experiences dealing with low offers in today's market?

Thanks in advance for your advice!

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No zip code here .. so I have no idea what part of the country we're talking about and that can make all the difference in the world... somewhere between $552 and $595 you have a basis for doing business. :^)

Now here comes the part where the agents really earn their money ... they need to be great negotiators first and agents second, they also need to know their information is dead-pan accurate ...

Comps are great, but if the $600,000 house on the next street sold because of the Brazilian wood floors and that 350 sq ft master bath then you might be in for a bumpy ride ...

Thats why it's so important that your agent takes you to 4 or 5 comps in the neighborhood before you set a price - don't read about your competition, see your competition ... you might be right and you might be wrong but you'll find out in a hurry, not 3 months from now .l.o.l..

Most of all .. there is no such thing as a low ball offer, because offers are the residual of interest - no interest, no offers .... the key item here is always keep communicating and negotiating with the buyer, 2 or 3 times a day if need be ...

If you feel uncomfortable with the ability of the agent(s) then have the buyer over with the agent and do the negotiating yourself .. you'd be amazed what a little linguine and some Shiraz will do -- if nothing else, you'll get the truth.

1 vote Thank Flag Link Tue Jan 22, 2008
Simply, there is no such thing as a low ball offer. In the "business world" which it sems many Realtors fear to tread, an offer is what one person is willing to pay for a product at that particular time.

To me, Realtors don't understand simple supply and demand economics. IF your Seller does not want or really need to sell then they won't accept it. However, a Buyer has every right to offer what they are willing to pay.

Just tell your Seller that here is an offer from a Buyer who is only willing to pay "X", based upon his determination of value at this specific time.

Ever been to an auction...I call it the last bastion of capitalism. Truly buyers determining what they are willing to pay, as it should be.
1 vote Thank Flag Link Tue Jan 22, 2008
Due to the way real estate marketing works, most of the activity a listing receives is in the first 14-21 days. Assuming that the marketing has been effective and thorough, there is a good possibility that the offer you have is an accurate reflection of what the market thinks your property is worth.

Generally speaking a home sells closest to list price in the first 30 days. I would suggest seriously negotiating with this buyer. However, not oral negotiation. Get it in writing, or it's not worth the paper it's not written.

If your home will be ready in May, plan on an extra 30-60 days just incase. It's possible you can negotiate a favorable rent back agreement (meaning you go ahead and close escrow, the new owner takes title, but you stay in the house and pay a fair market value rent. Normally you would pay the new owner the principle, interest, taxes, and insurance that they would pay as if they were living there. However, you might be able to get your Realtor to negotiate "because we are willing to accept this low offer, in exchange, my client needs to remain in the property until his new home in completed. The average rent in this area is $X,XXX, he is willing to pay that rent."

That means that the new owner is "subsidizing" your rent for a few months.
Good luck!
0 votes Thank Flag Link Tue Jan 22, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
I have to tell you that I don't feel that a 92% offer, in today's market, is something I would consider low. I have seen offers coming in well below that. Depending on your home, your region and how well your house was truly priced (every seller believes their house is priced very well), an offer that begins at 92% of list price is decent.

I would negotiate with them, in earnest. Don't toy with them, because it's early in the game and you're hoping for a higher offer, or you're waiting for the next offer which will allow you to stay in the home 'till May. That 2nd offer may, or may not, materialize, and you could find yourself left holding the bag.

Everything about the offer is negotiable, counter them with your best case scenario... the closing date is negotiable, or perhaps you could negotiate a rent-back from the new owners, while you wait for your new house. Sometimes, that first offer turns out to be the best (or only) offer, and you might find be kicking yourself for allowing them to walk away.
0 votes Thank Flag Link Tue Jan 22, 2008
Alan May, Real Estate Pro in Evanston, IL
It's all about building a case for yourself. A real estate professional will be able to provide accurate comps that will either validate your price or indicate the buyers offer is somewhat realistic. In this business you not only need the information on the subject property but it is absolutely essential to also be completely aware of what is and has been happening around you.
Recommendation: If you do not have current information about other neighborhood homes that have: sold, expired, or been withdrawn form the market start collecting this information-it will assist you in making the best informed decision.

Good luck!

The "Eckler Team"
0 votes Thank Flag Link Tue Jan 22, 2008
Yes, I do have a realtor. I am trying to poll how these situations typically pan out. We are right now in verbal negociations. Any insight would be appreciated.
0 votes Thank Flag Link Tue Jan 22, 2008
Hello Lipper Family,

If you were selling your house using a Realtor, then the Realtor should be handling the negotiations for you. If you have "gone it alone," and you are not experienced in negotiating such offers, then you have a challenge ahead of you.

Have you accepted the offer in writing and if so, was the closing date made clear in the contract. If so, then you’ve made the bed. If you do not have a ratified contract, and the offer is still being verbally negotiated, then the ball is in your court.

I’m not sure what geographical area you’re writing from, but it doesn’t sound like you had much difficulty is obtaining a qualified buyer. Depending on where you live, it may not be uncommon to acceopt offers up to 10% lower just to sell. Was the offer a cash deal? That can affect the offer as well.

But if they want to close earlier than you desire, then factor in what it would cost you to store your belongings and pay rent for 3 months’ time.

Stand strong!

Frank Biganski, Realtor ABR
0 votes Thank Flag Link Tue Jan 22, 2008
To clarify - Our new home won't be ready until May at the earliest.
0 votes Thank Flag Link Tue Jan 22, 2008
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