Seller's Perspective
Having placed your home on the market, you've finally received an offer for it. But the offer is lower than you'd hoped for - much lower. So where do you go from here?
First things first, you need to get a handle on your emotions. While you may feel insulted or angry, you can mitigate any feelings of wounded pride by reminding yourself that if they didn't like your home and weren't serious about wanting it, the buyer wouldn't have made an offer at all.
Though it's tempting to tune out once you hear the price, be sure to carefully review all aspects of the buyer's offer. It may specify other terms that could make it more attractive, like a long closing or lack of conditions, or you may even discover that a simple misunderstanding is behind the buyer's offer price.
With a level head and a full understanding of the offer, you now have two choices: reject it outright or make a counteroffer. If you reject it outright, it's possible the buyer may approach you a second time with a different offer. But it's just as likely they won't, guaranteeing you won't sell your home - and isn't getting your property sold your ultimate goal?
If you're truly serious about selling, communicate that to the buyer by working with your representation to draw up and present a counteroffer. This is especially important in a buyer's market. And try to remain patient, as counteroffers can volley back and forth between you and the buyer a few times before reaching a mutually satisfying agreement.
Buyer's Perspective
With the recent decline in home prices across the GTA it's no surprise that a buyer's market is now resulting in an increase of low ball offers.
Attempting a low ball offer on a property is a risky game but there's always the chance that it could result in high rewards for the buyer.
Why is it risky? Mainly because low ball offers are offensive to the seller. Emotions run high in real estate transactions and presenting a home owner with an offer that is way below their asking price is a sure fire way to invoke a negative response. Upon receiving your low offer a Seller is likely to react on instinct and just refuse it outright. This puts you in a bad position since you have now lost all negotiating power. Why? It's simple - if your first offer is rejected and you come in with a second the Seller now knows that you have a serious desire to own this property and will use that to their advantage.
The other possible outcome is that the seller decides to give you a counteroffer but has decided to play your game and sign the offer back at as close to asking as possible. Now both sides feel insulted and neither will feel open to reasonable negotiating. Positions are held, heels are dug in and nothing is accomplished.
Once you have found the home of your dreams the best course of action is to present the seller with a reasonable price that you both will feel comfortable working with. If negative emotions are not ruling the negotiating table then both parties are likely to walk away happy.
If, against the strong advice of your Realtor, you still decide to submit a low-ball offer, here are 5 mistakes to avoid:
1. Submitting the offer without calling the Listing Agent. - The listing agent can provide invaluable information that will help your Realtor prepare the offer in such a way that the seller is likely to have a more positive reaction. Also, if they have a heads up about what's coming their way they may be more open to presenting your offer in a favorable light.
2. Submitting the offer with a low deposit. - If a buyer submits a low ball offer with a low deposit it may appear as though the buyer is living paycheck to paycheck and may have trouble obtaining financing. A higher deposit is a sign of good faith and indicates to the seller that they are serious about wanting to purchase the home.
3. Submitting the offer with a plea for acceptance. - Sellers don't want to read a hardship letter from a buyer and don't particularly care if a buyer has fallen in love with a home they can't afford. Telling a seller that a buyer doesn't qualify to pay the asking price sends a signal that the buyer should be writing offers on others homes that would fit their price range. It makes the buyer appear weak and uninformed.
4. Submitting the offer with fake comparable sales. - Unless the home is ridiculously overpriced, the listing agent has already pulled comparable sales to support the sales price. Sending the listing agent a list of sales from another area insults the agent's intelligence and suggests that the agent is incompetent. It also shows that the buyer's agent doesn't know the neighbourhood or its surrounding properties. Ideally, a buyer's agent wants to win a listing agent's cooperation, not alienate them.
5. Submitting the offer with concession requests. - If it's not bad enough to irritate the seller with a lowball offer, some buyers want to toss in concessions on top of an already low price. Some ask for major repairs to be made, unreasonable closing dates or lengthy and unneccessary conditions. If price is the most important thing to the buyer, then they will need to give a little in other areas in order to sell their low price.
In conclusion, low ball offers are not great for buyers or sellers. They typically end poorly for both sides. Common courtesy and being reasonable always go a long way towards achieving your ultimate goal whether it's to buy a home or to sell one.
For more information on Ajax real estate, Whitby real estate, Oshawa real estate, Courtice real estate or Bowmanville real estate, please call (905) 619-9500 or send an e-mail to LindsayH@sutton.com.
