Handling Low Ball Offers

Even in Middle Tennessee’s thriving real estate market, you may find that you’ve been too optimistic with your initial listing price for your property. The next reasonable step is lowering the price. Sometimes, this will draw buyers like bees flocking to blooming lavender, but there are at least as many instances of nothing happening, even a week or two later. 

But wait: who is that buyer emerging from the shadows? Is this the moment you’ve been waiting for?

No. This is a lowball sniper, the buyer who sees your home languishing on the market and thinks this is their opportunity to offer you a full eight to ten percent less than your asking price. At least, that’s what you will observe during your first interaction.

How are you meant to handle lowball offers? Let’s get into it.

Prepare to Negotiate

If you’re like most homeowners, your knee-jerk reaction will be to reject this insulting offer immediately. However, we generally encourage our clients to remain calm and present a neutral front to any potential buyer. 

Were this buyer not interested in purchasing your home, they would not have approached you. This first offer should be viewed as an opening to negotiate. Consider that this buyer has likely had their finger on the pulse of the market for months. They have reviewed dozens of properties, and their agent has agreed that your home is one worth pursuing.

Refresh Your Market Analysis

Ask your Parks Real Estate agent if anything has shifted in the market that may have altered the value of your home. You can also conduct your own comparative market analysis and compare results with your agent.

As robust as the market has been, it’s inevitable that prices will fluctuate over time. If your property’s value has dipped, you may not need to worry. Are you moving to a home in a nearby neighborhood? The value of the homes in that area have likely dipped as well, in which case you may feel better about accepting a lower offer. 

Clarify Your Ultimate Goal

Reconvene with your Parks Real Estate agent and review your goals with respect to your current property. Is this property your primary residence? If so, what is the price point that would help you move into your next home comfortably?

Are you selling a home that you purchased over a decade ago as an investment property? It’s time to reexamine your retirement target. How is your 401k performing? Have your S&P 500 investments risen to a level that allows you flexibility in the price you’re willing to accept?

Once you have a clear idea of the price you must secure for your own financial health, it’s time to officially open the negotiation phase. 

How to Negotiate 

You should know that negotiations can take time to navigate. You won’t be working alone, of course. Your agent will stick with you throughout this process. 

Your goal is to engage the buyer until you have closed the deal. Begin by barely budging. Remember, you will only be reducing the price as far as the market indicates, and you can’t begin where you hope to end. Perhaps you can agree to cover their closing costs rather than reducing the overall price. This will still take a healthy chunk out of the final price but won’t be a drastic jump. 

Let’s assume that your first attempt at negotiation is countered. Consider what they have now offered in terms of the final price you have to secure. Is this offer close to your goal? Ideally, it will be. However, if it isn’t, stay calm and upbeat in every conversation you have with this buyer. The two of you are working toward a deal that benefits you both; even if you feel adversarial in the moment, it’s wise to keep your focus on the end game.

Your agent, the buyer’s agent, and any involved negotiators should continue to communicate that you are happy to work together, and that you look forward to the moment you strike a deal. You have spent months working to secure a buyer; it won’t do to discourage this clearly motivated party from pressing forward at this crucial juncture. 

Your Final Offer

You and your agent will know when your counteroffer is either your penultimate or final offer. This is the time to offer encouragement to both the buyer and their agent.

“This is excellent! We are nearly there. We’ve all worked so well together to reach this point. Once we’ve closed this deal, let’s have a toast to our success! We have goals we’ve established, just as you must. Let’s make this final push, and I’m sure we can agree on terms that will make everyone happy.”

By now, you can be entirely confident that this buyer wants your home, and you likely can’t wait to put this entire process behind you. Still, whatever the firm price you and your agent have set, you must remain unmoving. The buyer may test your resolve, but if you aren’t willing to reduce the price any further, there is no point in entertaining offers that don’t reach your goal. 

At this juncture, either the buyer will capitulate, or their agent will clearly communicate that they have no flexibility, either. If you reach an impasse, you should retreat and consult with your agents. 

The Takeaway

Whether you close and celebrate or cut your losses and regroup, it’s important to be as calm and patient as possible. Negotiating with a low-baller can make the process longer but it may end well! It’s normal be stressed during the back-and-forth portion of the negotiations, but if it drags on too long for your liking, you can always wait for the next interested party to make an offer.