What is the best way to counter a low-ball offer?

Asked by Brandi, Charlotte Hall, MD Sun Nov 7, 2010

Our asking price 314,900, sellers offer 290,000 plus 14,500 in closing--we owe 295,000 on our house

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9
The Roskelly…, Agent, Gambrills, MD
Mon Nov 8, 2010
Hi Brandi,

What you owe on your home has no correlation to market value. And even if you are able to counter-offer and reach an agreement with this prospective buyer, the home still has to appraise. So you counter-offer should be based on market value. Your Realtor should prepare a net proceeds summary to see where you will end up with you counter-offer.
1 vote
Richard Schu…, Agent, Los Angeles, CA
Mon Nov 8, 2010
Talk to your agent. They may be able to talk to the buyers' agent to get an idea of what the buyers' bottom line is - knowing that can help you know how to approach a counter offer.

Best of luck,
Richard Schulman
Keller Williams Realty
0 votes
Ania Miller, Agent, Millersville, MD
Sun Nov 7, 2010
Brandi;
Hopefully you have hired an experienced Agent to list your home. Prior to listing your home, he or she would do a thorough examination of the local market and GUIDE you to position your house in such a way that you would be in front of the market instead of chasing it. Another idea is to have an appraisal done to satisfy everyone.
If all of those things have been done, and you know what your home is worth (you had it appraised) and you still receive a "low-ball" offer, you can do one of two things: if this offer is so ridiculous that is has offended you - don't even respond...or : find a way to compromise, in today's market, if you as the Seller don't have to come to the table with monies, it's worth coming to a compromise, where there is a win-win for all parties involved. Something must have motivated you to choose to sell. Another thing to think about....the longer you wait for that perfect offer, the harder it will be to sell. There is another waive of "short sales" and foreclosures coming up, what that means to you is that there will be more homes to choose from at a lower price most likely due to foreclosed homes. Things to think about.
Good Luck to you,
Ania
AniaMiller@kw.com
443-336-8206
Web Reference:  http://www.aniamiller.com
0 votes
Patrick Dugan, Agent, California, MD
Sun Nov 7, 2010
Brandi, in today's market you really need to know what your house is worth. Sadly, it may not be worth what you still owe on it. Yet, you also may have a savvy buyer who is trying to low ball you. Hopefully you have a seller's agent who has given you a Highest Price Analysis of your home. This is a tool I use to let me clients know at what price their house will probably sell, and what incentives they may have to include.
If you do not already have an agent, feel free to contact me at the Charlotte Hall office if you have any questions,

Patrick Dugan
301 6723 1925
Web Reference:  http://www.Patrick4Homes.com
0 votes
Gerard Dunn, Agent, Chevy Chase, MD
Sun Nov 7, 2010
You need to first know what YOUR bottom line to sell may be.

Counter at that price, and let them know this is the "Best and Final".

If they can do it - they will. If they don't bite - you can quickly move on.

Remember - in this difficult market - ANY OFFER is a good offer.

Good Luck!

Gerry Dunn
Associate Broker
MD/VA and DC

703-216-9100
0 votes
Pat & Steve…, Agent, Westlake, OH
Sun Nov 7, 2010
The first question is what is your home worth in your market? I am assuming that you don't have a Seller's Agent since you don't mention one. An Agent would prepare a CMA (Comparative Market Analysis) for you, comparing like homes recently sold in your market, homes currently listed, & expired homes to your home. Your Buyer thinks your home is worth $275,000 (the offer includes $14,500 in Seller concessions). How you counter depends on what you believe your home is worth. You need to consider how long your home has been on the market, how many showings you have had, do you want to sell or do you need to sell, etc. Many Sellers don't counter a low ball offer, if they don't need to sell. If you need to sell, you could counter slightly higher than what it will take for you to come out even. Keep in mind that the Potential Buyer does not have much cash for a down payment, given the request for $14,500 in closing costs.
0 votes
Bill Wootan's…, , Waldorf, MD
Sun Nov 7, 2010
Sounds like you have a shortsale here! The bank/mortgage company will accept less than loan balance, based a lots of approvals - like you don't have thousands stored away and are truly in a hurt!
Is your house really worthh $315K? If the purchaser really needs closing help you will still probably have to go to closing with cash.
Your agent should be able to negotiate a better offer, and with working with your lender get you out of this, but doesn't look like there is any room for a commission. If you need to go short sale, contact me - I handle a lot of them - just had two close this month - one due this week in Chalotte Hall.

Bill Wootan "The Real Estate Man"
Leader of Team One @ Century 21 Associates
Web Reference:  http://www.billwootan.com
0 votes
Stacy Carter, Agent, Roswell, GA
Sun Nov 7, 2010
Brandi,
The most effective way to counter an offer is to have numbers, statistics (in otherword, evidence) to support the counter. Unfortunately, what you owe on the home is not relevant.

First, you should evaluate how long you've been on the market. Is this your first and only offer? What is your monthly mortgage payment and how much is it costing you each month to stay on the market. If you haven't taken a price decrease yet, then you should also consider that. Most likely your first adjustment from $314,900 would be to $309,900. (And the next one $304,000 and the one after that...$299K)

Then, have your agent re-analyze the area comps with the most recent activity. An offer of $290k is 92% of asking. (Factoring in the closing costs, it drops to 87%) Is that the going rate for your area? Find out what the average is, and counter with that.

Have your agent find out if the buyer NEEDS the closing costs. There are good buyers out there but often they don't have the cash on hand for closing costs. If it's not a necessity, then you can counter the closing costs as well.

Ask your agent to run the various scenarios in a Net to Seller sheet to see what combination is most favorable to you. You'll see what the impact is after commissions as well.

The bottom line, you have an offer, and you should make an attempt to make it work.

Good luck,
Stacy Carter
Associate Broker
Better Homes & Gardens Real Estate Metro Brokers
0 votes
Ariana Loucas, Agent, National Harbor, MD
Sun Nov 7, 2010
Dear Brandi,
Good question. I share with my buyers that not everyone has the equity to accept a low ball offer. Your scenario is the prime example. I always do the math of what their interest rate is and what the difference would be in their payment offering full price v. the low ball figure. As a result taking $25,000 out of your pocket, which you don't have, will save them a small amount monthly. In other words, if they like the house is it worth them being rejected to save maybe $45 per month (depending on their rate of course). If you're agent isn't sure how to figure that, have him/her contact the lender for the buyer to ask the impact on their payment and if they can qualify at full price or higher.

You could take the above approach or counter to full price, or slightly over if you want to grant closing help. Just begin the dialogue of negotiation.

Hope this helps. Good luck!
Warmest regards,
Ariana Loucas
Keller Williams Realty Centre
0 votes
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