Profile picture for James1029

How or should a low ball offer be countered?

My co-op has been on the market for a couple of weeks.  Someone within hours of seeing it presented a low ball offer.  No rationale was given for the low offer.  They acknowledged they knew their offer would not be accepted but wanted to start at that price.  It was recommended by my realtor that I counter somewhere in the ballpark of what the lowest price is that I will accept.  I have no financial problems and am under no time constraints to sell. In what way would showing all my cards benefit me.  My goal is not to get the lowest price I will accept but to get as close to asking as possible.
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April 06 2011 - US
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Answers (15)

Some good info already given, but I agree with John King.  Use the "Invitation to Resubmit offer"

The form clearly outlines that the offer was rejected.  Also states that a new offer "might" be considered favorable under  ________ terms.  

You can safely use this form during negotiations and still entertain other offers if something else shows up.  

At least this is how I would recommend it if you are in Texas.  Good Luck
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May 27 2013

Low Ball offers for real estate just comes with the territory.  Should they be dismissed altogether? Should the seller get angry or insulted? I say no. A low ball offer doesn't necessarily mean the buyers aren't serious. So I'm going to offer a little advice to home sellers.

Even as the market is turning in the seller's favor I believe low ball offers should not be dismissed entirely. Low ball offers are better than no offers at all.  There is a right way and a wrong way to handle them. The buyer may be making a low ball offer because that is all they can afford. If that is the case, then shame on the buyer's agent for letting them waste everyone's time.  More likely the buyer is fishing or testing the seller. I disagree with the strategy but it still must be dealt with. The seller may think theses aren't serious buyers and likely want to refuse it outright. Now Why not dismiss it altogether?[link deleted by Zillow moderator.please see our Good Neighbor Policy for posting guidelines]

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May 27 2013
Profile picture for TybeeGeek
Recently my listing agent called to give me a 'verbal' lowball offer of $47,000 lower (14% lower) than my asking price which matches our recently lowered county assessment. First let me say that we are located on an island and have already experienced a 50% reduction from the 2008 highs.

I am perplexed at this as my listing agent was not representing my property correctly when speaking to me on the phone. He stated 'bad comps.' My property has no comps in our area. He told me that in our pre-listing interview. He stated 'you might not make appraisal.' I already had an appraisal (6 months old) at a higher amount than my asking price. He knows that. My value of my property is 75% commercial land/ 25% building...easy to appraise. Land values are holding steady for the past year.  He stated difficulty in getting insurance for the ground floor. He and I already know that FEMA does not cover ground floor 'living' space in any case. (That statement was very confusing.)

I was told the offer is coming from a Keller Williams Agent in another state. My listing Agent is heavily invested in commercial property here and has a large rental inventory.

I checked my property card today and there is no change. I asked to see recent sales and am seeing a slight, but brisk upturn in our markets. A banking friend of 20 years+ told me that they are experiencing similar tactics on foreclosures. His bank is ignoring any non-written offer as 'bottom fishing.'

It seems that licensed NAR Agents are attempting to drag the markets down further.

FYI: I did not take the offer seriously.
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August 27 2012
Profile picture for the_country_hick
Cynthia, "If they don't respond, then I know for sure they weren't serious in the first place"

Not necessarily true. The person making the low offer could be very sincere and offering all they can offer. When the offer they made is refused what can they do? I have $80k to offer. The price is $115k. I offered everything I can. Did you ever consider that? Sincere, serious, ready to buy but limited in finances.
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April 13 2011
I would always counter an offer.  If it is a low ball offer, I counter high to see if they are willing to come up.  If they don't respond, then I know for sure they weren't serious in the first place.
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April 13 2011
I agree with Jeremy.  I don't believe you should shut the door on a potential buyer until you have exhausted all possibilities of reaching an agreement.

Send a Counter-Offer back.  If you are priced above market value, counter back at a lower price.  If you are priced below market value, you might counter back at your list price, but also include a detailed explanation of why your price is fair.

Most agents who have been around a while will tell you that your first offer may be the only one you get, so don't give up on it before any negotiation has even started.  You need to keep the door of communication open as long as you possibly can, so any Counter-Offer should be civil, logical, and demonstrate that you are being reasonable.
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April 13 2011
Here in Texas, we have a form that is known as "Invitation to Resubmit Your Offer".

Of course thank them for their offer, and be polite....
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April 08 2011

If you've only had it on the market for a couple of weeks it seems too soon to take a low ball offer.  I don't believe I'd counter at all, if I did I suppose I'd counter with asking price or just a little below. I am assuming it is priced to sell already.  If it's not you should still lower the price before dropping way down to a low ball offer.  There might be another buyer out there that is close to your asking price but doesn't see it in their search results because it's just over their limit.

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April 07 2011
Profile picture for theTroll
if you had a household item for sale at $100 and I offered you $30 would you bother to even talk to me?  Even if you were willing to come down to $75 would you do it based on my offer??  if not...why would you do this for real estate. 
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April 06 2011

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.

         * could come from an area where comparable homes cost significantly less.

        * could be from a market where overpricing or large reductions are common.

        * are comfortable with aggressive negotiation.

        * may be first time home buyers and everyone tells them to start low.

        * want to see if you're at a point where you want to just get it over with.

How to respond:

    When buyers give you a low-ball offer, let them know you'll get back to them shortly. Then call back in a few minutes, or if it's an in-person situation, confer with someone briefly, even if you have to feign a serious call with your mother-in-law. This gives the impression that you did think about it and that you're not just coming back with an automatic rejection.

    Now 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."

     If questioned about the value, educate your prospect. Show them comparisons and why it is priced where it is. Also be sure to 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 tells them that you're not a desperate seller.

     If their initial offer was really low, 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."

     These techniques are more effective in achieving your goal of selling than simply blowing off the buyer. It doesn't do you any good to let them know how you really feel about their offer and embarrass a potentially good prospect.

     Experienced real estate agents have an advantage when they respond to a low-ball offer; they remain objective. They don't get emotional or personally involved in the offer. Strive to remain cool and keep focused on selling your home with counter offers that will get your home sold.

 "This is all we can afford"

     Do not give in to this attempt to pull on your heartstrings. Simply respond with, "I'm sorry, but it's worth 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.

     Point out how they could get some family member to help provide additional down payment, look into a longer term loan (40 year) with lower payments or a lower rate with an adjustable mortgage.

 

    See if they will give you the name of their lender. Let them know that you'd like to contact the lender and see 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 this expenditure (the buy down). The lender will be willing to work with you since they have a potential loan to make.

     If they really want the house, they'll seek alternative help. Don't fall for the buyers' pity-me overtures. If their low offer truly is all they can afford, and it's not realistic, then they should not have been looking at your home in the first place. After all, real estate taxes, homeowner's insurance, utility costs and ongoing maintenance expenses will also not fit in with their financial situation.

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April 06 2011
Is the buyer even pre-qualified to purchase at the price you have in mind?

If you counter with close to your lowest price you have no where left to go.

Without knowing how "low" the low ball was or anything about your market it's very hard to give you guidance.  The bird in the hand theory in todays market is certainly worth considering.  If the person can perform it would be worth countering with some downward movement.

Consider this may be a dragged out negotiation with multiple counters. Leave maneuvering room.
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April 06 2011
James,

Simon said it best.  Basically, tell them you decline, their offer is way to low, and if they are really interested in your place, to put in a higher offer.  Or, you can counter with a couple of grand less, but I wouldn't even waste my time.  It sounds like they aren't very serious, and may be trying to figure out how desperate you are to sell. 

Marcin
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April 06 2011
This is a tough place for your agent to get second-guessed, since we don't know the whole situation.  Talk to your agent more about your intentions.

Generically:
I'd have to disagree with the strategy below.  Never push a potential buyer away.  In most of the country, we're still in a buyer's market.  If you had buyers beating down your door, that would be another story.

Don't lowball yourself, but write up a counter at a price that you'd feel satisifed closing.  It's possible you won't come to an agreeable price in the end.  However, sending a buyer away with no counter-offer sends that buyer out to look at other properties the next weekend.  There are a lot of homes on the market.

Always keep a potential buyer in-hand, and in negotiation.
  Putting a written counter in front of a buyer gets a stronger response than any verbal tactic.
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April 06 2011
Yeah, definitely don't show him all your cards.  Feel him out before he can feel you out.  If the property has only been on the market for a few weeks I would definitely not go as low you know you will go.  Wait it out, and if this buyer is really interested and willing to play ball, he will come to you-don't go down to him. 
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April 06 2011
My advice would be to go back to the purchaser's agent and let them know you are willing to negotiate, but there offer is so low that it is not worth responding too.  Let them know if they are serious they should submit a more serious offer and you will respond.
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April 06 2011
 
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