How To Handle Low Ball Offers In Real Estate
Selling a home can, at times, come with frustration, confusion, and uncertainty. One of the top challenges that is faced when selling a home is handling low ball offers. Low ball offers can be extremely frustrating to home owners. Home owners often have an amount they want to sell their home for and when they initially see an offer that is $20,000-$30,000 less, it obviously is frustrating.
It’s important to remember that every real estate transaction is not easily “put together.” There are often transactions that take several rounds of negotiations between a buyer and a seller. It’s frustrating to a seller when they are receiving no offers, so a low ball offer is better than no offer at all, right? It’s possible that if the proper steps are taken, a low ball offer can turn into an offer that is acceptable to all parties involved.
If you’re selling a home, before tearing up a low ball offer you’ve received on your home, here are some tips and considerations on how to handle low ball offers in real estate.
What Is A Low Ball Offer?
This frequently asked question from home seller’s cannot be answered with an answer that is always 100% going to be the answer. The easiest way to define a low ball offer is a purchase offer from a potential home buyer that is low enough to insult the seller. Some home seller’s will consider an offer $5,000 below asking price a low ball offer while others will consider an offer $15,000 below asking price a low ball offer, it truly depends on the individual.
Why Do Home Buyers Make Low Ball Offers?
There are many reasons a home buyer will give why they’ve decided to make a low ball offer. The most common reason why buyer’s submit low ball offers is because they feel the home is not worth what it’s listed for. Sometimes this maybe true, other times it may not be true. There are many resources available on the internet to home buyer’s that provide home value estimates. These online websites often provide home value estimates, or “Zestimates,” that are actually very inaccurate.
Other popular reasons why home buyer’s make low ball offers include:
- Justifying potential home repairs and improvements
- Advice from their Buyer’s agent
- Advice from their family or friends
- They are “testing the waters”
How To Handle Low Ball Offers In Real Estate
Focus On The Goal – Selling Your Home
The reason any home owner lists their home for sale is to sell their home. It’s extremely important to keep this in mind when handling a low ball offer in real estate. Even though a low ball offer can be extremely frustrating, knowing that selling a home is a business decision can help a home owner focus on the goal, selling their home!
Control Your Emotions
You’ve spent endless hours and dollars transforming your home into the home that you have loved and cared for, only to receive an insultingly low ball offer, frustrating right? Often easier said than done, controlling your emotions when handling a low ball offer is extremely important. In most cases, the party in a real estate transaction who gets upset and frustrated, ends up being the party who loses out.
Recently while selling a home in Irondequoit, NY, the seller received what would be considered a low ball offer. The seller was clearly frustrated with the offer when I first presented the offer. Not only was the purchase offer price low, but the buyer was also requesting a significant amount of seller concessions towards their closing costs and prepaid items from the seller.
I explained that the most important thing to remember when entertaining a low ball offer is that it’s where the purchase offer ends up, not where it begins and to not let emotions get in the way of making a wise business decision. After a handful of counter offers, the buyer and seller were able to agree to terms and all parties were pleased with the final outcome. A low ball offer is a starting point.
Always Remember, You’re The Boss!
A common pricing mistake in real estate that seller’s make is pricing a home high to leave room for negotiations and hope to ultimately end up at a number much less than the list price. Pricing a home high to leave room for negotiation is actually a bad idea. It’s common to hear a seller say, “If I list my home for that price, I will have to get close to the asking price.” Remember, you’re the boss when selling a home. Whether you receive a low ball offer or a strong offer, only you can make the decision whether to accept a purchase offer or not.
Always Respond With A Counter Offer
One of the biggest mistakes that seller’s make in real estate is not responding to a low ball offer. This is a huge NO NO! When receiving a purchase offer, even if it’s a low ball offer, you should always respond with a counter. There are many reasons why you may receive a low ball offer on your home.
Whether it’s because the buyer feels your home is overpriced or because they believe that no purchase offers should ever be close to the asking price, always respond with a counter offer.
There are couple different options that you have when countering a low ball offer. One of the top negotiation strategies when responding to a low ball offer is countering the offer to your lowest and final price that you’d be willing to accept. This can eliminate lots of back and forth between a buyer and yourself.
Another popular negotiation strategy that seller’s and their Realtors may utilize when responding to a low ball offer is countering the offer back to full price. This can show a buyer that you are not looking to play “games” and that you are looking for serious offers, not insulting low ball offers. It’s important to understand, however, that countering a low ball offer back to full price can often deter a buyer from pursuing a home any further.
Remember, if you happen to receive a low ball offer when selling a home, you should always respond with a counter offer.
Review The Recent Comparable Property Sale Prices
When preparing a comparative market analysis, the purpose is to ensure a property is priced competitively with current market values. A comparative market analysis usually only has a “shelf-life” of a couple months, since the real estate market changes daily. Depending on how long your home has been on the market, you may have to revisit the recent comparable property sale prices. The real estate market is constantly changing, prices go up and down, and it’s possible that the price your home is listed at is no longer competitive in the market.
If you happen to receive a low ball offer on your home, have your Realtor request from the buyer’s Realtor a list of comparables they used to determine the purchase offer price. It’s possible the buyer’s agent doesn’t have a list of comparables or that they don’t have experience in your local neighborhood. It’s strong suggested that buyer’s ask when interviewing prospective Realtors if they have experience in the local area. If an agent doesn’t have experience in your local area, it’s possible they are providing the buyer with “comparable” properties that truly aren’t comparable at all.
Look At All The Terms Of The Purchase Offer
Price is certainly important when deciding whether or not to accept a purchase offer. Low ball offers are one of the biggest reasons why buyer’s purchase offers are rejected. The thing to remember when handling low ball offers is the price is only one component of a purchase offer. There are many often many contingencies and terms in a purchase offer. It’s important to weigh all of the terms before deciding to rip up a low ball offer.
What terms should you consider, in addition to price, when reviewing a low ball offer?
- Closing Date
- Seller Concession Amount
- Inspection Contingencies
- Contingent Buyer or Non-Contingent Buyer?
- Possession Date
- Amount of Earnest Money Deposit
- Type of Financing Buyer Will Be Obtaining
- What Is The Buyer’s Down Payment Percentage?
- Amount of Bank Repairs
- Personal Property Requested
As you can see, there are lots of terms and contingencies in a purchase offer that should be looked at. Even though price is one of the most important terms of an offer, it is not the only term that you should consider.
Rely On Your Realtor
When selling a home, it’s critical you choose a top Realtor to sell your home. As a seller, you are likely responsible for paying the commissions, therefore you should expect your Realtor to know how to handle low ball offers. It’s important that your Realtor does not get upset and frustrated when receiving a low ball offer, because often these emotions will be passed onto yourself.
Remember when handling a low ball offer, selling a home is a business decision. It’s very important you take all emotions out of the home selling process. If you allow emotions to get involved, it’s likely you will end up frustrated and with your home not being sold.
If you happen to receive a low ball offer, it’s possible that the you could still end up with an acceptable offer when it’s all said and done, if the proper steps are taken!
Other Top Home Selling Resources
- How To Deal With A Low Ball Offer On My Home via Maximum Real Estate Exposure
- Low Ball Offers in Real Estate – Do They Ever Work? via The Las Vegas Luxury Home Pro
- Top 10 Things You Need To Know Before Selling A Home via Rochester’s Real Estate Blog
- 20 Cold, Hard, Facts in Real Estate Home Selling via Imagine Your House
If you’re thinking of selling a home in Rochester, NY, the above tips on handling low ball offers may come in handy. Hopefully when you sell your home, you will not receive any low ball offers, but it’s important to be prepared. If you’re thinking of selling your home, contact me and I’d be happy to share my expertise, knowledge, and procedures on handling low ball offers.
About the authors: The above article “How To Handle Low Ball Offers In Real Estate” was provided by the Keith Hiscock Sold Team (Keith & Kyle Hiscock). With over 30 years combined experience, if you’re thinking of selling or buying, we’d love to share our knowledge and expertise.
We service the following Greater Rochester NY areas: Irondequoit, Webster, Penfield, Pittsford, Fairport, Brighton, Greece, Gates, Hilton, Brockport, Mendon, Henrietta, Perinton, Churchville, Scottsville, East Rochester, Rush, Honeoye Falls, Chili, and Victor NY.
Visit our website at www.HiscockHomes.com.
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