I got an insulting offer. Now what?
First…Don’t be insulted. This is a business transaction. Just like you want to get the most money for your house a buyer wants to get the house for the lowest amount possible. Those people probably saw 5, 10, or even 20 other houses and liked your house enough to put an offer in writing. That is a big step!
But this offer is too low for me to make a counter offer!
Think of the first offer as a start to a conversation. You can either completely stop the conversation by not providing a counter offer or you can continue the conversation and see where it goes. The ultimate goal is to sell your house. Refusing to provide a counter offer to a low offer completely stops any negotiation that could happen. You have no idea what the buyer’s highest price for a property is, just like they don’t have any idea what your lowest price is.
Many sellers think that if they refuse to provide a counter offer then the buyers will come back and just raise their price. That usually isn’t the case. Many times the buyers simply walk away.
Is there room to make a counter offer?
Most likely the price you set for your house is a little above what your lowest price is so you have some room to negotiate. Instead of saying no, just drop your price by $5,000 and that indicates to the buyer you are not willing to negotiate much and that they have to come up in larger percentages. If you go back and forth with them a little bit and come to a point that you will not go any lower then just say that. The buyer will have to come up to that price or walk away but at least you tried! It takes just a few minutes to make a counter offer and you can still take offers from other potential buyers. And if you don’t come to an agreement the buyer may walk away for now but come back later if they don’t find anything and you still haven’t sold. They are may not come back at all if you refuse to negotiate at all.
Why would they make such a low offer?
Many buyers just want to see if they can get a deal or they’ve been told they should offer low to start with, sometimes their parents are involved and told them to offer low. Many people get a lot of misinformation about real estate and have a lot of preconceived notions. For example: there are many areas that buyers have to offer asking price or above in order to get an offer on a house accepted. Some buyers say they will never do this, then they lose out on a few houses that they like and they have to start putting in offers at asking price or above.
Sometimes the reasons a buyer is offering low has to do with their real estate agent. Most likely their real estate agent has done research. It may be different than the research your realtor did so they may not see eye to eye. In that case they usually send an explanation so it doesn’t look like they are just low-balling.
Sometimes an investor is making an offer. Investors need to purchase properties at a very low price in order to make a profit. Many times they can close quickly and with all cash and no mortgage so people are willing to take a lower price.
The rest actually has to do with you. If your price is too high you will either have no showings, or it will be shown but not solicit any offers. Then once it sits for a while your house will have a long “days on market”, even if you drop the price. Buyers and their agents see this long days on market as an invitation to low-ball. I get investors all the time who call me and ask for properties that have been on the market a long time because it indicates desperation and they want to submit low offers.
So if someone offers you a low price, don’t be offended, just negotiate. It’s quick, and you may only come down in price a little but at least it shows you are willing to work with the buyers and you never know how much they like the house and what price they are willing to come up to.