THE UPSIDE OF A LOW-BALLED OFFER © 2012 Wayne D. Lewis, Sr.

Previously Posted at: http://www.richfitusa.com

If you have had your home on the market for any length of time, you may have received an offer that was totally ridiculous. The offer probably may have had you seeing red. Your veins were popping out of your forehead. Chances are, you were so mad that someone would offer you so low an offer. The term we call it: A low-balled offer.

A low-balled offer, regardless of the terms, is often insulting to the seller. And if a Realtor representing the seller has to be the one to bring the low-ball offer forward, it is an uncomfortable position. Sometimes, the seller may become suspicious of everyone. They begin to wonder if someone is trying to take their property. So many emotions come out, and reasonably so.

No one, who is selling their home, is willing to give it away, literally or figuratively. Generally, homeowners are well informed and have made the best possible decision on how to price their home, especially if they have a Realtor involved. With that said, there can still be an opportunity for a homeowner to put a positive spin on a low-balled offer. How? Here are three ideas for you to consider, and why:

1.      Consider why the offer was made and who made it

2.      Look at the additional terms (Cash, incentives, deadlines, financing)

3.      What is your strategy for handling offers in general?

What is an example of a low-balled offer, and when are you likely to get it? A low-balled offer is not necessarily relative to how your home is priced, nor is there a fixed time for when someone may make a low-balled offer. Many times, a home that is just listed, will receive a low-balled offer from someone who just fishing to see if a seller is desperate. Right now, we are focusing on homes that have been on the market for an extended period of time.

While it is safe to say that your home may have been priced correctly for its condition 6 months ago, a low-balled offer is very likely to come your way. The buyer may be presumptuous that something is wrong with your house, or that for the most part, no one is interested in it, so they make such an offer.

For example, if your home is listed at $100,000.00, and you receive an offer for $30-$60,000 less, you have the makings of a low-balled offer. While I indicated earlier that a low-balled offer may come after your home has sat on the market for an indeterminable amount of time, you can also receive a low-balled offer the first day it is listed. A low-balled offer out of the gate is usually someone testing the waters. But I still want to encourage you to take a proactive position before dismissing any offer.

The thing to remember is that a low-balled offer maybe your first and only offer, so it is important that you have a strategy that treats every offer as though it is the best offer, because, it is an offer. Here are some suggestions for a strategy:

First of all, consider why the offer was made, and who made it. Does this mean for you to track the potential buyer down? Not necessarily. An offer made and written may give a clue about the buyer. Some of this information your Realtor maybe able to ascertain from the buyer’s Realtor, as long as it does not infringe on confidentiality. You may find out that the buyer is from out of town, or lives down the street. You may find out that the buyer used to live in the neighborhood as a child, or is trying to buy up every piece of property in the neighborhood. Or, you may not find out anything on the buyer directly, but there maybe other clues. Here area a few other signs to look for:

1.      How is the buyer paying- Cash or financing?

2.      If financing, how much is the buyer financing of the loan, 80% or 75%, or more?

3.      Whether paying cash or financing, how much of a deposit is the buyer willing to put up-$100, $500, $1000 or $5000?

The point behind these questions, rest in surmising the seriousness of the offer. For example, if the buyer is paying cash, does he want to close in 2 or 3 weeks? If they are financing, are they financing at 80% as opposed to 50% of the proposed purchase? These 2 pieces of information may indicate that the buyer is serious if he or she is willing to finance 50% of the proposed purchase and, wants to close in 30 days.

The buyer may also be serious on another front if their deposit is high, which suggests that they are willing to risk something for the right price. If the buyer is willing to put a $10,000 deposit on an accepted offer rather than $500, then you may have an opportunity to counter and to negotiate a price that you both can agree on.

Last, but not least, your strategy for negotiating a low-balled offer has to be better than outright rejection, or not responding at all. When your property has been on the market for more than 90 days, 6 months, or even a year, any offer that comes in, must be given some credence. The fact that your home is perhaps the nicest home on the block is no longer an assurance that it will set at the price that you set. Many of your property competitors are Short Sales, Foreclosures, Auctions, Bank-owned, Investor-owned, RELO’s and of course, sellers like yourselves. It’s nothing personal, but any offer today is going to come across your dinning room table with little regard for your feelings or, how much you have put into your homes. The best house on the market is the one that sells, even if for less than you, as a homeowner, want to sell it for.

An offer that comes is an offer that deserves attention, and should be countered, not rejected, because there are so many homes that are still sitting on the market, and no one is offering, not even a low-balled offer. So, the upside of a low-balled offer is, that it is an offer, and regardless of how low, it deserves to be analyzed more in depth than the price that is being offered, that is, if you want your property to have a chance at selling. Thanks and best wishes on the sale of your home.

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