We are selling by owner and had our first open house yesterday. It went well and we had several people that seemed interested.
Today we got an offer from one of those people and it was really low. I’m so angry right now that I just want to tell the buyer to go pound sand. You always say not to let emotions get in the way of a deal, but I’m really having trouble following that advice right now.
I want to sell the house, but I won’t sell it that low. It also doesn’t even seem like they are serious. Are they trying to piss me off? Why do buyers do this? What should I do about it?
Irate in Ithaca
Breathe…count to 10 or maybe 1000.
Emotions are the enemy of all sellers. If you get caught up in your anger, you will blow this deal. Depending on how you respond, you might actually have your buyer right in front of you.
As a long-time broker, I can tell you I HATE presenting lowball offers. Everybody says not to shoot the messenger, but I have lots of scars to prove most sellers forget this advice at the first hint of a stinky offer. I’m getting twitchy from traumatic memories. I may need a hug or a beer after we are done here.
Anyway…here are some bullet points of my best advice to any and all sellers who will listen. Do your best to get rational and let’s see if we can’t get your house sold. OK?
First, and I really hate to go here so early in the advice, but…
A lowball offer is better than no offer
Seriously. I’ve known homes that sit on the market for literally years without a single offer. We can debate the reasons, but it really does happen. The fact that you got an offer the day after your first open house is good news for you. It means you are not that far off with your price.
If you were outrageously overpriced you wouldn’t get an offer, you’d get the polite grandma “Oh what a lovely house” response and never hear from them again. Hate me all you like, but this is a place for truth.
For more on the topic of being overpriced, check out my post If your house isn’t selling, it’s overpriced. (period) Otherwise…let’s move on.
“Embrace reality and deal with it.” -Ray Dalio (Super smart jillionaire)
I know this is only the first offer and it’s quite possible that the buyer is way off base here. Just ask yourself–are they really that low or are they just below what we want?
Lots of sellers decide they are going to start out way up here and leave room for negotiation. Not the best strategy, but it happens all the time. Well, accepting that as truth, is the buyer really “lowballing” you, or are they doing the same thing from the other side of the table?
Sellers are far more often wrong about price than buyers. You are caught up in YOUR house selling and YOUR special features that are, in your mind, driving up the price.
Buyers tend to look at many houses before they pull the trigger on an offer. Therefore, it stands to reason, that maybe–just maybe–the buyer is not that far off and is only trying to get you to reveal your bottom dollar. If so, you got yourself a live one here and you should get your best offer on the table and get going. You can thank me later. Seriously..get going…call them back!
It’s just business. It’s not personal.
This buyer probably has no connection to you or your family. They are just trying to get a good deal on a house they obviously like. People don’t usually bother making offers on things they don’t want. They aren’t trying to insult you or make you angry–they are just fishing for the bottom.
Consider that the buyer could be from out of town and may not know the market in your area. They could also be first time buyers who are getting lots of free advice from friends and relatives who are equally ignorant of market conditions. Some people are just jerks and get off on the haggling process. Who knows? Who cares? You’re trying to sell a house here–not build your fan club. Get over the lowball offer and let’s get back to work.
Ego doesn’t pay the bills
Getting all upset about a lowball offer isn’t going to help you reach your goal. Remember your goal? That’s right…you are trying to get the house SOLD. This is not a contest to see who negotiates better. Put your pride aside and get back in there. Your bruised ego will heal up after closing–I promise. Besides, would you rather be rich or right? I know which one I’m choosing.
Price is important, but it’s not everything
How is the rest of the deal? Are they a cash buyer? Did they pass on asking for closing costs? Are they ready to move and have no other home to sell? Do they want to skip inspections? Are they willing to give you 30 days to move out?
There are lots of other factors to consider when you get an offer. I personally would give up some on my price if the rest of the offer is clean. A full-price offer is no good if they have their own overpriced home to sell or they can’t get financing. A great price won’t matter if they find a bunch of little things during inspections and get scared off.
This is not to say you can ignore price, but just don’t get all hung up on it to the point where you ignore other things that might make this buyer more attractive in the long run.
And don’t think a great buyer doesn’t know they are a great buyer. It’s like the difference between offering someone a price over the phone and walking in with cash in hand. See what I mean? They know they can buy any house they want in their price range so you might want to show some respect.
Respond to every offer–no matter what
This debate has been raging in real estate agent circles forever. Some agents advocate ignoring a lowball offer, but that’s the wrong response. Some sellers want to counter with an offer that’s higher than the asking price. Also not cool. That’s actually worse than no response at all. Besides, what do either of those approaches accomplish? Nothing–that’s what.
Not to beat a dead horse here, but your goal is to sell the house, not outwit the buyer. If you are convinced your price is right, why not back it up with some justification like a few recently sold properties that are similar or a screenshot of the Zestimate showing you are below market? It can’t hurt to supply a few facts to support your offer.
Either way, prepare a good counteroffer and put your best foot forward. It’s fine to leave a little room in case something comes up during inspections or closing, but being an ass here isn’t going to get you any closer to moving.
Besides if the buyer is an investor looking for a deal or a wannabe house flipper, your sincere counter offer is going to cause them to lose interest and go away.
Get face to face with the buyers
This one usually makes sellers nervous, but I’m telling you, get in the same room, preferably the kitchen, with your buyer. People tend to be a lot softer when you are sitting at the same table with them. Put on some coffee and lay out a plate of cookies. Get a yellow notepad and a pen for each party and get to it.
Something magical happens when we put buyers and sellers in the same room. All the posturing and most of the BS goes out the window. It’s harder to be a jerk when you’re sitting right across from someone. Not always, but it’s a pretty safe bet that if they show up, you can make this deal happen.
Tell the buyer what you love about their offer
When you respond, instead of starting out by going for the throat on price, why not write them a note or email letting them know how much you appreciate their offer and list out the things that you like about it (see above). A little honey goes a long way during these negotiations. Just because I’m telling YOU not to get emotional doesn’t mean you shouldn’t try to sweet talk your buyer.
Focus on the bottom line
Too often sellers get caught up in the offer price, but what about the net? What I mean is, what will you actually walk away with at closing? If your buyer doesn’t have an agent, that’s 3-6% you will keep at closing compared to an offer from an agent. If the buyer wants closing costs, do not take them out on the counteroffer–instead, leave them in and simply raise your counteroffer price.
You only care about that last number at the bottom of the settlement statement. You could care less about what other costs that buyer has. The buyer does care and will need to have those clauses in there so just focus on what you need to get after the dust settles and don’t trip over the details that do not matter.
What else can the buyer get?
You are not operating in a vacuum. Your house is only as valuable as the market will allow. If you are priced at $200,000 and there are 35 other homes in that general price range, the buyers will not ignore those other homes to buy yours.
You see, you only need one buyer, but they only need one house. You can try to be selective about your buyer, but just know that if you are not competitive with your price for the location, age, features, etc. then buyers are going to let you know if and when they make an offer. Which brings me to my last piece of advice…
The market never lies…ever
I know I know I’ve said this a hundred times before, but that’s because it’s the truth!
If you get more than one “lowball” offer, you might be getting a loud and clear signal from the market. You may choose to listen and take the lower offer or you can ignore it and wait for the market to catch up.
If you choose to wait, understand that there is no way to know if or when the market will ever catch up to your price. But hey…this is America and you get to do whatever you want.
Just please…don’t shoot the messenger.
As always, if you have questions or great stories, feel free to email me at [email protected] I read every one and if appropriate, I respond to everyone as well.
Best of luck,