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It’s every homeowner’s worst nightmare: after waiting an impossibly long time for someone to show interest in your property an offer finally comes in, except it’s nothing like you’ve hoped for. It’s a low-ball offer.
According to Go Banking Rates, a low-ball offer is generally considered to be any offer that’s more than 25% below the asking price. With percentages like those, it’s not hard to see why sellers often scoff at the idea of making a counter-offer.
On the one hand, low-ball offers can feel insulting, but if this is the only interest you’ve gotten, can you really afford to throw it away? Can you take the risk and have the buyer walk away after you hold firm on the price?
If these worries feel all too familiar, we’ve got you covered. We asked the nation’s top real estate agents to offer up their advice on how to make a counter offer without becoming a doormat in the process. This step-by-step guide teaches you how to make a counter offer that you feel good about.
Check Your Feelings
Homes can often feel very sentimental, but that sentimentality can hinder your ability to be realistic during the negotiation process. Melanie Henderson, of RE/MAX 440 in Doylstown, PA, has over 20 years of experience selling homes and explains, “When selling your home it is often difficult, but necessary to take your emotions out of the equation. The best approach is to view the transaction as just business.”
Remember that if your home was working perfectly for your family, there would be no reason for you to move. You’re likely ready to move on to the next phase of your life and this negotiation process – no matter where it starts – could be an opportunity to take that step.
Get Clear on the Goals You Have for Selling Your House
At first glance, it seems like the only possible answer is “to sell my house,” but if you allow yourself to dig a little deeper, you may find that there’s more to it.
Some may want to sell their home as quickly as possible in order to be able to meet the start date on a new job, some may want to get as much money as possible out of an investment property, others may want to wait for the right family to take over their forever home.
Chantay Bridges of Real Estate Professionals World Enterprise Marketing in Los Angeles, says a key part of responding to any counter offer is weighing your options. “It’s important to ask your clients the tough questions,” she says. “Things like ‘How desperate or motivated are you to get the property sold? Are you paying two mortgages or run the chance of being in a financial bind? Is there an urgency to sell?’”
Taking a few minutes to evaluate your priorities before responding to the offer can help you go into the negotiation process with a clear head.
Read Over the Entire Offer
Especially in the case of a low-ball offer, it can be tempting to take one look at the sale price and refuse to go any further. However, in reality, there are several other factors that go into negotiating an offer: sale price, settlement date, repairs after inspections, personal property.
“Many people think that negotiation is to establish a high and low then meet in the middle,” comments Gary Hughes, who ranks in the top 9% of real estate agents in Arlington, VA. “But an offer is more complex than that. I try to change the paradigm of a counter offer negotiation from price to value.”
Make sure to read over the entire offer before making any decisions. The whole picture may look very different from the first glance.
Separate the Wants for Selling Your House From the Needs for Selling Your House
Since there are so many components that go into an offer, it’s unrealistic to assume that any buyer would agree to meet your terms on every single line item. The most effective counter offers are those that agree to a good portion of the buyer’s terms while advocating for a few key adjustments.
Ernie Rafailides of Bayview Management in Townsend, MD cautions his sellers to keep their goals in mind, as he goes over the contingencies, “Maybe they’ve bought another house and need to move by a certain date or maybe they’re tight on finances and need to get as much as possible out of the property. Whatever the case is, these are the factors that need to be accounted for in a counter offer.”
As you go over each of the terms in the offer with your agent, make note of the ones that are vital to your ability to feel comfortable accepting the offer and which you’d be willing to compromise on.
Listen to Advice on How to Make a Counter Offer from Your Real Estate Agent
You hired a real estate agent for a reason. They’re a professional who’s likely been through many negotiations just like yours. Use their experience to your advantage and don’t be afraid to ask for their advice on how to package a reasonable counter offer.
Bill Tierney, who ranks in the top 5% of agents in North Scituate, MA with William Raveis Real Estate, says he always offers sellers the same sage wisdom: “All conversations have to start somewhere, even if it you are miles apart.”
Take Another Look at the Comparable Homes in Your Neighborhood
In the case of a low-ball offer, price can be a huge sticking point. If you find yourself needing a little perspective, it’s often a good idea to refer back to the Comparable Market Analysis that was given to you by your agent before putting your home on the market. Since these are homes in your area that have recently closed and are similar to your property, they can give you an idea of your home’s fair market value.
Desare Kohn-Laski, founder of Skye Louis Realty and a top 1% agent in Coral Springs, FL, explains, “if the seller is not receiving any offers I would recommend a slight price reduction based on the comps as this can create more offers as the price may now adequately reflect the market conditions and thus give the seller more contracts in which to counter.”
Remember, unless you’ve received a full cash offer, any agreement will likely be subject to an appraisal and price adjustments may have to be made based off that assessment. It’s often easiest for all parties to reach an agreement on a sale price that’s close to recent values.
Think of Other Concessions You Can Make for Buyers (Besides Money)
Just as it was important for you consider the buyer’s offer as a complete package, the same can be said for your counter offer. Bring back those important must-haves that you made note of earlier. Work them into the counter offer and then go on to make decisions on the other factors until you’ve worked up a complete offer that you feel could be acceptable to both parties.
“Taking the time to counter with something that makes sense for both you and the buyer is not only worth your time but you will be surprised how often that buyer will be willing come up in price after a few concessions, says Justin Udy, Team Leader at Justin Udy & Team Real Estate in Salt Lake City, UT.
Feel Content Regardless of the Results
Keep in mind that once you submit your counter offer to the buyers, the ball is in their court. They can either accept your offer, submit their own counter, or decide to walk away entirely.
As you put together your offer, it can sometimes be helpful to try and gauge how you would feel if the potential buyers decided to walk away from the table. If you feel that you would have some regrets, it may be worth it to go back and retool your offer to make it more attractive to the buyers. But, if you think that you’ve put your best foot forward and would feel content regardless of the outcome, go ahead and submit it.
Henderson explains the positive effect that adopting this mindset has on her buyers. “[If the sellers counter at a reasonable price and] the buyer does not want to come up any further than at least my clients can walk away knowing this was not the house for that buyer.”
Know When and Where to Stop Negotiating
It’s rare that an offer will close after a single round of negotiations, you may want to leave yourself a little wiggle room when writing up the counter offer. That said, whatever counter offer you draw up, it’s advisable to also keep a second scenario in mind: the point at which you’ll be ready to stop negotiating.
Sometimes it’s impossible for buyers and sellers to reach an agreement that satisfies both parties and they need to walk away. You’re under no obligation to accept an offer that doesn’t meet your needs. As much as you should be open to fair negotiations, don’t be afraid to wait for the right buyer, if an offer isn’t the right fit.
At that point, it’s all about remaining respectful. “We always verbally extend our thanks to the buyer’s agent,” says Al Cannistra of San Antonio’s My SA Texas Homes – Texas Premier Realty, speaking of instances where low-ball negotiations can’t reach a resolution. “However, even if the buyer’s agent pushes for us to counter, we still respectfully decline.”
Negotiating on a low-ball offer is never easy and it can feel especially difficult when it’s the only offer you’ve received after a long time on the market. Believe us when we say that there is a middle ground between losing any potential of a sale and giving away your hard-earned asset. If you follow the advice of the experts above, you’ll be able to create a counter-offer that feels feasible to both sides.