A seller’s worst nightmare is, of course, not being able to sell his home (it’s right up there with having his front yard designated as a Pokemon Go gym). But also scoring very high on the would-be disaster list is getting a lowball offer—as much as 10% to 30% below list price—from a buyer who is in serious need of a reality check.
So what’s up with that? Did the buyer not see the gorgeous kitchen you remodeled? Or the beautiful landscaping in the backyard? What about the awesome home fitness center you built? Heck, this home is worth every penny that you’re asking for!
Stop, take a deep breath, and focus on the patch of blue in this stormy sky.
“A lowball offer can lead to a successful sale if the seller plays their cards right,” says Kimberly Sands, a broker at Coldwell Banker Advantage in Apex, NC. After all, you’re the one who ultimately decides whether to accept or reject the bids that come your way.
In other words, the ball (or rather, lowball) is in your court. So take these steps to turn a bunt of an offer into a home run.
First, don’t get insulted
Just because a buyer starts with a low offer doesn’t necessarily mean the person is trying to take advantage of you. She might be moving to the area from a market where lowball offers are the norm, or where home prices are substantially lower than they are in your neighborhood.
“There’s a natural tendency to get upset when you receive a lowball offer,” says Sands, adding that the initial bid is a starting point. “There’s usually room for negotiation, so I never tell a client to reject an offer outright.”
A little gratitude—even if you’re not exactly thrilled about the size of the offer—can go a long way.
“It doesn’t do you any good to let the buyer know that you think their offer is rubbish,” says Sands. Indeed, responding in a negative tone can potentially kill the deal for good. “It sounds like common sense—don’t piss off the buyer—but many sellers get caught up in their emotions,” says Sands.
Put yourself in the buyer’s shoes: Would you want to raise your offer for a rude seller? Probably not. Thus, when sending the buyer your counteroffer, cushion your response. Try: “We greatly appreciate your offer and we’d love to work with you. Here is our counteroffer.”
Write a strategic counteroffer
Assuming you priced the home well, don’t feel pressure to drastically slash your asking price.
“Some people feel so eager to sell their home that their counteroffer is actually too low,” Sands laments. It’s OK to give up some ground, but you don’t need to meet the buyer halfway.
Offer the buyer a slight price reduction—$5,000 to $10,000 for a $300,000 home, or $10,000 to $20,000 for a $1 million home—and briefly explain your reasoning. You could provide information on the comparable properties that you used to determine your list price (you did look at comps, didn’t you?). Another option: Have your agent draw the buyer’s attention to some of your home’s great features (e.g., your new energy-efficient HVAC system).
Expect a counteroffer to your counteroffer
Agreeing on a purchase price can feel like a chess game: You make one move and the buyer makes a countermove (in this case, a counteroffer).
“When a buyer comes in with a lowball offer, the buyer and seller might go back and forth for a while before both parties agree on a sale price,” says Sands, adding that sellers need to remain patient throughout the process.
Negotiate other terms
Having trouble settling on a sale price? There are other ways to sweeten the deal in your favor. Depending on your timeline, you could ask the buyer for an earlier settlement date. If you’ve already purchased your next home, for example, settling in 30 days instead of 45 would reduce the amount of time you’ll need to carry two mortgages simultaneously.
You could ask the buyer for fewer contingencies. One that would help you save money: Persuade the buyer to make her home inspection contingency an information-only inspection, which basically means that you won’t be asked to make any repairs.
Another negotiating point: Get the buyer to increase her earnest money deposit. This would give you greater assurance that the person is serious about purchasing your home.
“As a seller, you always want the buyer to have more skin in the game,” says Sands.
The bottom line: No seller dreams of getting a lowball offer, but with the right strategy you can turn a mediocre bid into a great sale.
After reading this article, Melissa Christopher, Ocean County, NJ Real Estate Agent has the following insight:
Every seller wants top dollar and every buyer wants bottom dollar. Negotiating is where you will find the common ground. Yes, the low offer may offend you because your home is personal and you value it higher than anybody else will because of the blood, sweat and tears you’ve poured into it, but think about what the buyers are thinking. They want your home, so feel flattered. Just try and find a common ground to where you both walk away getting something you want.