Low Ball Offer!
What is it and How Do You Respond?
A Low Ball offer is typically 10% to 20% below the asking price.
Essentially, it's an offer significantly Lower than the Asking Price
Receiving a Low Ball offer on your listing can make you feel defensive, and it's important to prep for this in advance.
The first thing to know is that just because the offer was made doesn't mean that's the most that Buyer will pay. A Low Ball offer is still an offer, and it's just the opening line of a bigger conversation. An experience Realtor® will be able to deftly navigate through this kind of offer.
Sometimes the Buyer is just testing the water. This can be more common with older buyers, typically those in the Boomer or Silent Generations. They may have bought homes in another era when this type of bargaining was more effective. Knowing WHO made this kind of offer can be helpful and can help the Seller and their agent frame their response effectively.
Other Buyers will make a low ball offer and use the home's condition as justification. If the house needs a new kitchen, new bath or maybe significant structural work, the Buyer may be trying to figure out a way to get the house AND pay for the work it needs. This is common when a nice older home has dated kitchens and baths, or needs new structural or mechanical items. The Buyer may need cash at the end of the deal to make these repairs and upgrades.
There are times when the Buyer just wants to make sure they're getting the absolute best deal they can get. No one wants to over pay for an investment, especially a home which is often the biggest investment of a person's life.
To a Seller, these offers CAN feel like an insult. Savvy Sellers and their Agents will prepare for this in advance and keep their ego and emotions OUT of the negotiations.
If the Seller or their Agent feels emotional about the offer, the best thing to do is to let the Buyers agent know that the offer has been received, and that the Seller will review over the next 24 hours and provide a response. This gives the Seller and their Agent time to digest the offer, and breathe. If you're having an emotion reaction, you need time to feel that emotion and let it pass, so that you can negotiate with a clear mind.
Once the emotions have calmed, review the offer in its entirety. This may include some statements or an email from the Buyer's agent. Are there non-financial considerations in the offer that make the offer more favorable? Is there language in the offer that identifies an issue the Buyer is having that the Seller can address?
Make a counter offer that answers known buyer concerns but puts the Seller in the best position. This means the Seller needs to know their must haves and their want to haves. For example, is it more important to the Seller that they get a high dollar price at the closing? Or is the net sale value more important? Maybe the closing date is key, or waiver of appraisal is helpful?
A strategic counteroffer might include a counter offer above what the Buyer is offering, but including a credit for a repair. This can help the buyer because a credit reduces the amount the Buyer has to mortgage and frees up cash to make repairs or updates.
Always, always ALWAYS counteroffer! If your counteroffer is your asking price, politely counter offer at your asking price, thanking the buyer for their offer.
Skilled Realtors® on both sides of the deal help make this a smoother transaction both from their experience levels and the psychological distance created between the Buyer and Seller by having representatives doing the talking.
If you're looking for a skilled Realtor® with ninja level negotiation skills, call Sandi!
401-236-8685