Profile picture for misswoosie

How to negotiate an offer that's 15% lower than the asking rpice

Have a home FSBO and received an offer (via buyers agent) 2 hours after the showing, but it's 15% lower than the asking price and 5% lower than price paid for property in 2006. Also asking for $4500 in closing costs and home warranty.Since then home has had upgraded baths,new roof and heat pump and lots of work in the yard. One of the lowest price properties in the desirable zipcode. House 2 doors away (same size,slightly younger but not as nice inside or out) sold in June for our asking price. Looking at the deed registry will show there's no mortgage on the property but parents who are owners remortgaged their home in their home country to purchase it and we feel, looking at comps, that the house is worth what they paid for it, and there's only 1 other house (a double wide)  available on the market at anywhere close to our asking price. We don't want to alienate the prospective buyer - we expected to have to negotiate, and we know where we have to be $$$ wise. .Is it best to counter with our lowest price we can accept or go somewhere midway between  our lowest price and their offer? We're about $7000 away from our lowest price. Also-the pre-approval letter the agent sent today is dated today(v (viewing was yesterday) and approves buyer for the offer price- but assuming that doesn't mean they couldn't get approved for more- it's just that that's what she's asked for at the moment? Also-if her closing costs are less than $4,500 we only pay what the actual costs are-correct? This seems like a lot for closing costs?  
  • October 25 2013 - Charlotte
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Answers (19)

Best Answer

Profile picture for Mark Lemmons
Fast offers are sometimes an attempt to get a buyer to settle for less than what the market will bear. They are low-balling you and putting lots of concessions in the contract in the hopes that you will take the first thing that comes along. They are trying to be the 'early bird' that gets the worm. This doesn't mean you should counter with your lowest acceptable price.

My advice would be to counter-offer at what you believe the market price is currently (based on some recent comps in the area) and only concede what you are willing to give up on the home warranty and closing costs.

Stick to your guns with your price and what the market price is and you will come out fine. But make sure you are getting good information on what the market price is currently. Most Realtors will provide a CMA at little or no cost to provide you with the ammunition that you need to make an informed decision!

Best of luck!
  • October 25 2013
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Hello Miss Woosie,
Each state may be different as the market and demands in that state controls how buyers offer. 
In Las Vegas , what I have my seller do is counter back in a way that keeps everyone on the " fair " 
What I mean by that is , ask yourself a few questions . 
1. How long was your home on the market ? 
2. If you don't take this offer and no other offers come through , will you have lost more in the continued mortgage payments or what you could've negotiated. 
3. Never just reject an offer , try to find out what would work for the buyer. Ask your agent to see if they may discover what would be the buyers bottom line. Usually the buyer comes in low as they anticipate the seller to counterback and usually the winning bid is the number the seller wanted but had the buyer not offered low enough , that price would've maybe not been achieved.
Hope this helps . 
  • November 11 2013
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Offers lower than the asking price can be frustrating, nevertheless having an Offer give you a starting point to getting your home sold, an offer is just that, an Offer, it does not take away the value that you deem  your home to be worth, when an offer comes in, you and your Agent should look at it carefully and objectively. Reevaluate the net profit that you intend and make a decision as to a counter offer. If the Buyer is not willing to reconsider his or here offer, you have the right to past on the Offer and continue Listing.
  • November 11 2013
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Try not to take someone's lowball offer personally.  They are not doing it to insult or offend you.  I would suggest pulling some comps and sending those back with your counter offer.  If the buyer is unwilling to increase their offer, then they may not be serious buyers in the first place.
  • October 26 2013
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Profile picture for wetdawgs
thank you Sisters!
  • October 26 2013
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Profile picture for Rebecca Marvel
I'm sure you know that every seller feels that their house is worth more than everyone else's in the neighborhood and every buyer feels that they don't want to pay full price (asking/list price).

I wouldn't take it personally - treat it like a business transaction.

Closing costs are based upon the sales price of the house so IMO $4500 is not unreasonable.
  • October 26 2013
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Wetdawgs:  I agree. I thought that remark was very snarky.  Not what I would expect of a professional agent.
  • October 26 2013
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Profile picture for wetdawgs
@ Brad:  Your statement is  rude IMHO and suggests you are posting on Zillow to push away potential clients.  What a strange reason to pay for PA status....

  • October 26 2013
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Hasn't included the additional provisions addendum which is where the offer expiry would be

Are you saying this is not a full contract?

While you are doing your calculation remember you still have inspections to get through and the buyer can come back and ask for more money off.

I tend to agree with Hamp.  You have only been on the market a week. Too soon to discount this much.  I'd counter a couple of thousand lower than your asking price.  They will more than likely counter back.
  • October 26 2013
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Profile picture for DFisherBroker
Good morning Woosie:
Setting a good list price and negotiating for you are good reasons to hire a real estate broker for more than just MLS data entry.  Several studies show that FSBO's sell for less than broker assisted sales. Without knowing what the other comparable sales are in the area, you are working blind.  At the very least, you should hire an appraiser ($350-500) and market and negotiate off of that that price. You could also pay your listing broker to do a comparative market analysis and advise you. If you appreciate an answer, please give thumbs up.  For the most helpful answer, please say thanks with a best answer click. 
  • October 26 2013
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Profile picture for Bkgdc
Did any of the listing agents you speak to quote you a commission rate of 15%?  I bet not.

You get what you pay for.
  • October 25 2013
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misswoosie
I saw that you'd only been on the market for a week. You'll get a better offer than that one. I wouldn't counter for a dime less than asking price plus $2500. Or listing price with $2K in closing costs. The market there is way better than '06 prices. I can make a few calls next week and possibly help you a lot more. If you're not in a position where you have to sell, hold off for better offers. What you have there is a rough diamond in the rough. This is just my humble opinion. I've had a SC RE license for 30 years and have been a Mortgage Broker in the area for going on 20. Patience is the key to your best deal. That offer is low low-ball. I wish you'd email me the address through my profile.
  • October 25 2013
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How long have you been trying to sell your house? I live in SC, and know the area you're talking about. That is a highly desirable area.
  • October 25 2013
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Profile picture for misswoosie
Hasn't included the additional provisions addendum which is where the offer expiry would be. Comps are difficult. Criteria 2+/2+,max 1200sf, 100-150k only 3 homes in our zip in last 6 months.  House on street won't be on MLS as it was never for sale,but it's on Zillow and deed registry. That sold in June -so >90days. One home in last 90 days is a lot further from all amenities and interstate-ie 5 plus miles and no marina nearby, but newer home by 7years , 1car garage and SS appliances. Same sq ftage but 3 beds (ours 2). Other home in last 6 months is 1970s ranch which said needed TLC- paint and carpets. If I take the average per sq ft for all 3 (2 of which aren't  in last 3months) It comes out at 120 psf. That would be $127k for our home. If I take out the one that needed new carpets and work on one on the street and one further out in country without lake fac, but with garage and 3 beds it's 130 psf - which is 2k more than we paid for it in 2006.
We of course did look at comps before we priced it. 28117 doesn't have many homes in this price range and many ar owned by investors.

yes we have 3% buyers agent fees.The mortgage is conventional 4.5% 30 yr  118,750 - so 5% down.

We can afford to close with anything! Have nothing borrowed on property- mortgage  is in UK on my parents home there.The min price I talked of is what they need to pay off the mortgage.
  • October 25 2013
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Aside from the offer price and the $4500 in closing costs - what kind of loan are the buyers approved for?  FHA, VA or Conventional?  Are they no money down VA, 3.5% down FHA or more down which would be conventional?

Are you also paying a buyers agent commission?

Without knowing your specific market it is hard for us to advise what percentage you should counter back at.

It may be 5% less than you paid in 2006 but how much do you need to pay off your loan and close? Do you know what your closing costs will be ?  Can you figure out your net?

I don't think you should counter back at your lowest price.  $7,000 under your lowest price plus you have considered the 4500 buyers closing costs and your closing costs in addition?

I also would not be quick to give them a counter.  Look at your sales contract and see what the date of acceptance is.  You need to do your math first and plan a strategy.  If you counter expect they will counter back.  You need to leave yourself room.
  • October 25 2013
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Profile picture for misswoosie
This is our feeling too. For sale for 1 week- also on MLS (flat fee), but this was first viewing.
It's in Mooresville- Lake Norman school district and priced under $150k. Our main concern is that homes either side (rentals and not dilapidated but not brilliantly looked after- but that's mostly the norm in this area for that price) are putting people off. It's a lovely bright, clean,house with nice features and lovely view- v close (walking) to 2 marinas and only 4 miles to new I-77 exit.
  • October 25 2013
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Profile picture for wetdawgs
The market value of your home is determined not by "we know where we have to be $$$ wise" but what the market will bear.     Whether or not you owe money on the house has nothing to do with the market value of your home. 

It sounds like the June sales price 2 houses away gives a hint, but it is critical to have more than a single comp for establishing a market value.

A good lender will provide pre-approval letter for the offer price rather than telling you their max so a date of today for their offer price is not of concern.   They may be qualified for $10,000,000 but want to make an offer for $200,000.  The only thing the seller needs to know is that they can afford what they offer. 

I would counter at market value of your home (as determined from several comps from the last three months)  if you are going to pay closing costs.    Or, drop slightly less than market value and reject the closing costs.    It sounds like this is a low ball offer, and perhaps they won't negotiate.




  • October 25 2013
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Congratulations, Miss Woosie, for having an offer to negotiate with!

I'm going to let you in on a secret that very few "tough negotiators" want you to know about . . . the secret is: you just don't know.

The thing about negotiations is that we can tell you how they "typically" go, but that's not a reliable predictor of how YOURS is going to go.

With that in mind - and without knowing anything about you, the buyer, or their agent, knowing nothing about anybody's personality or the customs in your part of the world . . . let me suggest that you counter midway between the list price and your lowest price. This will give you room to negotiate, and if the buyers run off, well . . . you could chase them while screaming out your lowest price!

All the best,
  • October 25 2013
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Charlotte market is too good to sell for 15% under asking and pay that much in closing costs. How long has your sign been in the yard?
  • October 25 2013
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