What's the next move?
I look at buying and selling real estate as a fine dance, with either party leading and following through carefully orchestrated steps. The problem is, if you don't know the moves then chances are good your feet will be stepped on.
In a market that finds buyers and sellers so far apart, negotiating a sale can be challenging. There's no question every market is different. Take the east coast. A seller doesn't have to be anywhere near market value to get an offer. Buyers have no problem offering 20, 30, or even 50% below the listed price.
But here in the mellow Pacific Northwest it is much different. Homes need to be priced within 5-8% of market value in order to receive an offer. For close to twelve years I have been helping clients buy and sell real estate and I still can't explain it....not completely. I do think it has something to do with how nice we all are here. When I ask buyers why they just won't make a offer when they think the property is worth significantly less they say, "I just don't want to offend anyone". In my experience, most sellers and their agents would rather have an offer to work with, than nothing at all. Why? Because the start to any completed transaction is receiving an offer.
What do you do if the offer is so far below list price as to be unacceptable? What is the best way to respond?
Here's my advice:
Before you ignore any low offer consider that a proper counteroffer and solid negotiations could turn that low offer into a sale. And that is the goal, right?
So we know the name of the dance is 'Sell this house' - now what are the moves?
Check your emotions
A low purchase offer is not a personal affront - it means that someone wants to purchase your home. Unless the offer is ridiculously low, it deserves a response. Remain calm, do not take it personally, and discuss with your agent the many ways you can respond that will keep the other party engaged in the process.
Counter the offer
Unless you have multiple offers, the best response is to counter the low offer with the price and terms you are willing to accept. I encourage sellers to think about it this way - "what is the very lowest price you will accept to walk away from this home?" I call it the 'walk away price'. Counter in the best faith and lay it all on the line. With a buyer who brings you such a low offer, there is a good chance they won't be going back and forth too many times. Buyers often offer a low price because they're nervous about overpaying or they simply want to test your limits. Push back but push back at the lowest price you are willing to sell.
Know that a counteroffer signals that you're willing to negotiate. One strategy for your counteroffer is to lower your price, but remove any concessions such as seller assistance with closing costs, or features such as kitchen appliances that make more sense for you to take with you, like a new washer and dryer, or perhaps those custom drapes in the living room.
Consider the terms
Price is paramount for most buyers and sellers, but it's not the only deal point. A low purchase offer might make sense if the contingencies are reasonable, the closing date meets your needs, and the buyer is pre-approved for a mortgage. Consider what terms you might change in a counteroffer to make the deal work for both parties. Sometimes shortening closing saves you a mortgage payment. Or perhaps you need to stay longer? Changing the closing date may make the sale much smoother on you.
Review your comps
Ask your agent to prepare a list of recent comps. If these new comps are at lower prices, you may need to lower your list price to match them if you want to sell.
Consider the buyer's comps
Buyers sometimes attach comps to a low offer to showcase their position. Take a look at these comps. Are the homes similar to yours? If so, then your asking price might be unrealistic. If not, then ask your agent to attach 'your' comps to the counteroffer. This goes a long way in keeping the negotiations factual, not personal.
Listen to your agent
That's right! Chances are this is not their first rodeo (a phrase used by a client when describing me). Most experienced agents have negotiated their fair share of transactions and have seen all kinds of offers come together. Most agents worth their salt are deal makers. I have been told that I have put together some deals that seemed doomed at the start. So listen to what your agent is saying. If you need more concrete data than ask for it. But whatever you do, take some time to mull it all over, take your emotions out of the deal, and respond from an informed and educated position.
Until next week,
la chasse au bonheur