Experienced agents will tell you that any offer can jump-start an ultimately successful negotiation.
Even lowball offers.
So what constitutes a lowball offer? Depending on the market and other considerations, such as market-value of the home, most agents consider anything 20-25% below list price to be a lowball offer.
What to do about lowball offers
First and foremost, stay focused on the goal which is the sale your home. Do not fall into the “insulting offer and refuse to negotiate with the offender” trap. Doing so in counter-productive. Instruct your agent to present all offers to you in writing including lowball offers. Counter all offers in writing, giving the lowball ones a little ground but not much. This strategy should eliminate the bottom fishers and flippers.
Lowballers who are truly interested in your home are often willing to raise their offers, in some cases incrementally. They may eventually arrive at an offer which is acceptable to you. Always have the last word in when negotiating. Be firm but reasonable at all times and gracious to all who show interest in purchasing your home.
Another strategy to consider is to direct your agent to explain to the buyer that you are confused by their far-under-list or market-value offer and invite them to resubmit after viewing a comparative market analysis on similar homes in your neighborhood. Or direct your agent to ask for a logical reason behind that initial low offer. You may learn something about your property that you or your agent missed when setting the price. You may even learn something about the person making the offer such as they:
- could come from an area where comparable homes cost significantly less
- prefer to negotiate aggressively
- may be inexperienced home buyers and getting advice from friends and family to start low
- want to see if you’re at a point where you want to just get it over with
- are afraid of overpaying and leaving money on the table
- can not afford the home unless you drop your price
You can see where many reasons for making a lowball offer may be overcome with a little buyer education. If the buyer’s agent isn’t providing the education, then your agent may be able to help by providing comparative market analysis to the buyer’s agent. Sometimes it just takes a little shopping around the neighborhood to come to the realization that they should submit a better offer.
In addition to the price being offered, consider all of the buying party’s terms – such as when they’re willing to close, what contingencies they are requesting, their financial ability to perform and any closing costs they are asking you to cover. You may find a that a low cash offer with a quick closing and no special contingencies is acceptable to you under certain circumstances. After all, time is money.