The low-ball offer:
Why buyers start with a low-ball offer:
Just because buyers bid low doesn’t mean they’re trying to steal your property. They:
- May not see the value as you see it
- Come from an area where comparable homes cost less
- Could be from a market where large reductions are common
- May be first-time buyers and everyone tells them to start low
- Want to see if you want to just get it over with
Low offers are commonplace. Expect them and you'll live longer. Buyers have a way of moving up in price and the result is often a deal acceptable to both parties.
How to respond:
When buyers give you a low-ball offer, let them know you'll get back to them shortly. If it's an in-person situation, confer with someone briefly, even if you have to fake a call. This gives the impression that you thought about it.
Tell them that you like them as buyers, but that you really would like to have an opening offer that “you could consider more seriously.”
Another response is to say, “I'll counter at xxx,xxx (come down $1,000 from the asking price) so that you know that I'm willing to negotiate, but I really would like to hear a more realistic figure.”
If questioned about the home's value, provide comparisons as to why it is priced where it is. Find out where they are coming from–both figuratively and in their offer. If they are indeed moving in from another area, perhaps the housing market there is considerably different.
If they are earnest in their purchasing aspirations, this will stop them from coming back with just a little higher offer and look foolish. It also makes them believe that you're not desperate.
It doesn't do you any good to let them know how you really feel about their offer and embarrass a potentially good prospect. Don't get emotional. Strive to remain cool and keep focused on selling your home with counter offers that will get your home sold.
Get them excited with your counter
A little used tactic that is highly effective, is to make a large drop to a low-ball offer that goes to your bottom line. Get the buyers excited as they see the deal coming together and suddenly can see themselves moving in.
Example: Suppose you're asking $249,900 and the buyers come in at $220,000. Instead of timidly coming back with a small counter, come back at $234,000. You are at your bottom line, BUT you don't tell them that. They see the big drop and are thinking "this is going to happen." So they don't want to look like ogres and only come up a few thousand after you dropped 15 large, so they come back around $227,000.
Now you tell them - that $234,000 is where you have to be and that you wanted to make a strong price drop instead of just going back and forth. Point out how you like them as buyers, how they'll really love living in the home and that you hope that the difference of $7,000 doesn't stand in their way of getting the home.
They know that they have gone from their original difference of almost $30,000 (250-220) to within $7,000 of something they have gotten really excited about and had been picturing themselves living there. So now the fear of losing something sets in and they usually decide to accept your counter.
"This is all we can afford"
Do not give in to this ploy. Respond with, “I’m sorry, but it’s worth a lot more than that.” If you can’t take their “poor me” approach, come back with your own; “This is how much we have to have in order to move” counteroffer.
They could get some family member to help provide additional down payment, look into a longer term loan with lower payments or a lower rate with an adjustable mortgage.
See if they will give you the name of their lender to investigate what it would cost you to buy down the interest rate for a period (one–two years). It would have to be enough to lower their monthly payments to a level acceptable to the lender, but at a higher price on the home to offset your expenditure (the buydown). The lender will be willing to work with you since they have a potential loan to make.
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