Currency and Property
by Images of Money
Real estate is a people-oriented field. Communication, emotion management, negotiation, and rational strategizing are all qualities that Realtors® and in fact all market players must possess to be successful. Success is measured in purchase price and sale price. In most cases, home price negotiation is a zero-sum game, so things can get pretty hot.
One of the toughest situations for home sellers is an incoming low-ball offer. This means that a potential buyer sends in an offer on the house but offers much less for it than the seller is asking. These situations are much more frequent during a buyers’ market when supply is higher than demand and buyers have plenty of properties to choose from.
As with any offer, you only have three options when a low offer comes your way: you can reject it immediately, send back a counter-offer, or accept it. First of all, every offer deserves an acknowledgement. You don’t want to burn bridges, especially when you’re in a market in which a favour can make a huge difference. So send a thank-you note back to every pitch, or have your agent do it for you.
Your next steps will depend on plenty of factors. If time pressures you, every offer is vital. This may be the case when a foreclosure is imminent or when you’ve already purchased or chosen your next home and need the money from the sale of your old one to finance the purchase. Either way, you’ll need to consider whether you have enough time to make a counter offer asking for more cash. If you don’t have enough time or the buyers aren’t willing to go any higher, you may have to resort to accepting the low offer to avoid higher costs or penalties later on.
If you feel like you have plenty of time and/or multiple offers coming in, negotiation is the way to go. Even irrationally low offers should be returned with a reasonable price proposal unless there are other issues with the individual offers. If you do indeed have enough time, let it be your distinct advantage over many other buyers. Don’t rush to closing, but don’t miss the opportunity when it comes about.
If you actually reject an offer right away, you’re signalling that there is something fundamentally unacceptable about the buyers and their proposal. Of course, these buyers may still extend another offer to you if they realize that their initial offer was too low, but a rejection is a much stronger statement than even a counter-offer with completely revised terms. Treat this vehicle carefully because many buyers will not have the audacity or interest to return after they’ve been bluntly rejected.
Compromise Without Emotions
Even though low-ball offers are often initially disappointing for sellers and some may even feel insulted, such offers should be reviewed without emotion as a business proposal made by the buyer. If the situation is dire, try to find the best compromise that will have the smallest negative effect on your future.
Whenever you’re in doubt, consult your progress with your Realtor®. Your agent should be the expert and should know what’s going on in the market and in the minds of buyers and their agents. Don’t be shy because advice and help are exactly the things for which your agent gets paid in the first place.
What is your experience with short sales? Please let us know in the comments.