Dealing with a low-ball offer on your home
Reader question: Our home is for sale for $284,900. It has been for sale for 2 months. We just received a low-ball offer for $245,000. We are very disappointed and stunned with the offer. We feel like telling them to get lost. How should we deal with this situation?
Monty’s qnswer: The offer is about 16 percent below asking price. Consider looking at the offer like this: “Hey — we have an offer on the house!” If you paid 10 real estate appraisers for their opinion of your home’s value, the difference between the most conservative and the most optimistic could be 16 percent.
Consider taking the following steps: 1. Check your emotions at the door. The proposal is strictly business. Yes, it is your home, and it is full of memories, but those feelings have little to do with the current situation. The key to success here is knowledge, patience, and effort on your part. 2. Look to your agent. Do you have a written document that contains the best comparable homes? Have you driven by them? Does the report include adjustments between your home and each comparable for the differences between each comparable and your home? If you do not have such a document, ask your agent to prepare one. Also ask for the following statistics from 2 months ago to the same measurements today: a.) Number of similar homes on the market. b.) Number of similar homes sold and closed since the listing’s inception. c.) Number of listings that expired unsold. d.) Number of pending transactions. e.) Number of new similar listings (your competition)
with the data sheets and pricing. Your goal here is to understand the lowest price you should expect and the highest price you can expect based on upto-date information.
3. Determine the sales rate of homes in the area similar to your
home. The sales rate will tell you if it is a buyer’s market, a balanced market, or a seller’s market. If your agent verbalizes about the state of the market, ask them to prove it to you with the facts. Many agents will be surprised to learn their opinion, and the facts do not line up.
4. What do you know about this potential buyer? Have you seen a pre-approval letter? Do
you know why they offered the price they did? Do they have comparables they used in setting their price? 5. Make a new counter
offer. A counter offer is a rejection of the original offer. You are reversing roles with the buyer. You and your agent can now take their comparables and either demonstrate better comparables or why the differences between their comparables and your home need to be adjusted. You are using logic and data to educate the prospective buyer in a reasoned and calm fashion.