August 23, 2007 at 8:04 pm
· Filed under Bremerton WA Real Estate, Buyers, Real Estate Bites, Sellers, Sparks from Sparky
Okay, so it sounds like a loaded question, right? As a Seller, how do you respond to a low offer? Why, with an outburst of laughter, of course, how else?
Well, think again. In today’s slowing market, as it is here in Kitsap County Washington, with more and more houses listed for sale, competing for the same diminishing pool of Buyers, now is a good time to re-think your strategy for responding to low offers.
Let’s face it, this is America. Home of the Brave, Land of the Free or significantly reduced! Everyone wants a deal. Some even feel entitled to it. It’s in our nature to haggle and barter. How do you think we got this country in the first place?
And so it is, in a slowing market, that it’s only natural for Buyers to become more ‘brash’ or aggressive in their price negotiations. And with the higher levels of inventory (available homes for sale), I can guarantee that there’s a Seller or two out there who are desperate enough to strike a deal.
You have to start off by honestly evaluting and assessing your home selling goals: Why are you moving? How soon do you need to be relocated? How much equity do you have in your home? What is your bottom dollar?
There are obviously many other factors that will affect your ‘motivation’ for selling. But make sure your goals are reasonable and realistic in light of current market conditions. Some housing markets can shift rather quickly. As a Kitsap Real Estate Seller, the last thing you want is to find yourself playing the game of ’Price Reduction Catch-Up’ in a declining market.
As a licensed real estate professional, I always counsel my Real Estate Sellers that EVERY offer that comes in is a serious offer, regardless of how low it may be. It takes time and energy to draft a contract offer. As such, each and every offer should be given careful and courteous consideration. Even the seemingly ‘laughable’ ones!
Regardless of how ridiculously low it may be, try not to take the low offer personally. Some Kitsap Real Estate Sellers, especially if they’ve lived in a home for any length of time, become very offended with low offers. They take the low offer as a personal affront to their perceived value of the home - the cherished haven of fond family memories. Soon, egos become embroiled and the offer often goes unanswered or disappears!
As difficult as it may be, try as much as possible to separate the personal/emotional side of selling your house from the business aspect. Keep your goals fresh in your mind and stay focused towards achieving a successful sale.
As a minimum, you should at least counter the offer to a price level that is acceptable to you. You’d be surprised how many Buyers appear to be fishing for a deal, but would gladly pay more. They are offering less because that’s what they’ve been told to do! In addition, there may be other elements of the offer that can be negotiated more in your favor. Price, while obviously important, isn’t the only aspect of the offer that can be of advantage to you. Your Real Estate Agent can advise you accordingly.
Many times low offers can end up being negotiated to a point of mutual acceptance. And THEN you can laugh as your transaction closes and you freely embark on the next adventure in life!
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Rich,
Good article here and it’s right on the money. “EGO” in some circles stands for “Edging Good Out.” It’s our job to help Sellers understand that any offer in this market is a good offer worth considering. When they don’t, all they do is disallow both agents from doing our job of finding that place where both parties can settle happily together. Thanks for sharing this one with us.
Conventional wisdom in our market has always been to answer all offers. Maybe because we have not had the sellers markets that other parts of the country had.
Laugh about the offer, rant about the offer, grumble about the offer but counter the offer, politely and professionally (without emotion) because it is really the only thing within your control in working with that buyer.
I have found while representing a number of buyers who have just taken a significant hit in their sale that they want to start low for fear of being burned again. However, if they are serious, and my buyers have been, they will step up to the plate once they realize that their offers were not in line with the local market. One of my buyers from NJ explained that they always start out low there and they wouldn’t have felt right unless they tested the seller but once they got the high counter back they accepted it no questions asked. So much depends on where the buyer is coming from and hopefully sellers will counter just as you suggested. Of course, there is also the case of the overly optomistic seller!
Good article Rich. How often do we see potential sales fail do to Ego. It is time to revisit the negotiating skills basket for us all.
I like what Richard Bolen wrote about how EGO means, “Edging Good Out”. Great thought!
Good Points Rick.
I had an investor once tell me his three rules on selling and I have taken them to heart. The last one is especially important now.
1. More is better than less.
2. Sooner is better than later.
BUT
3. Any offer is better than no offer.
Sparky wrote @ August 26th, 2007 at 10:43 am
Richard: It’s unfortunate when ego gets in the way of a potentially successful closing. You’re right that it is OUR job to help them navigate through such emotionally charged circumstances and to keep their eyes on the end goal. Thanks for sharing your thoughts!
Sparky wrote @ August 26th, 2007 at 10:45 am
Maureen: I have encountered agents who will not present some low offers. So much for our sacred mandate to present ALL offers. You’re right on the money…Counter, counter, counter!!
Sparky wrote @ August 26th, 2007 at 11:05 am
Diane: You’re right, some Buyers just feel that they HAVE to start out low. It’s almost like it’s expected. In a brisk market, one doesn’t normally have that luxury. I always ask my Buyers for the specific reasons why they want to submit a low offer. If they insist on offering less, then I normally ask them to strengthen all other elements of the offer. Sometimes it’s a fine line between representing our client’s desires and interests, and yet counseling them intelligently on the realities of the market.
Sparky wrote @ August 26th, 2007 at 11:13 am
Herb: Slower markets demand greater negotiating abilities on both sides of the transaction. I am seeing many agents going back to presenting offers in person again, making the process more personable and requiring greater interpersonal skills….
Sparky wrote @ August 26th, 2007 at 11:14 am
Sean: Thanks for stopping by SoundBite. We appreciate those who take time to visit our little corner of the Blogosphere!
Sparky wrote @ August 26th, 2007 at 11:15 am
Marty : Nice to see your mug around these parts. Absolutely right on, a bird in the hand is worth two in the bush!
Rich, thanks for this excellent article…sellers (and their agents) need to be willing to discuss and negotiate - and that means acknowledging a low offer and use it as a starting point…
There was a client interested in a property that was almost 3/4 million dollars and he didn’t want to spend that much but he was unwilling to even start the process with a low offer for fear of insulting the seller. As it happened, I knew the seller would not be insulted and encouraged the buyers agent to tell him to go ahead, the worst that can happen is the seller says “NO”, but she couldn’t get him to make the offer.
It’s too bad that people are afraid of “insulting” someone with an offer….he may have gotten what he wanted and the seller may have realized that his price was too high and this offer was worth taking…
Ines wrote @ August 31st, 2007 at 4:59 pm
Rich - great article - Rick and I have made this talk part of our listing presentation - to prepare our selling customers ahead of time. I think if you warn people that they WILL receive law ball offers, they will be ready to counter and not get offended.
Rich-This is great information. Recently, some of my buyers have written low offers which sellers have been unwilling to negotiate on. Later, the sellers were chasing my buyers down- unfortunately, too late.
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