Navigating the ever dreaded LOWBALL OFFER When Selling Your Home
Opinions vary regarding the definition of a "lowball offer." Some individuals consider it as an offer substantially below the listed price, while others perceive it as an offer significantly below the market value. In this blog, we will refer to "lowball offers" as those that are considerably below the asking price or below market value.
Receiving lowball offers can be disheartening but it is possible to handle them effectively. Here, we provide our top recommendations:
Understanding the Buyer’s Motivations
Gaining Insight into the Buyer's Intentions Before Responding to a Lowball Offer
When faced with a lowball offer, it is essential to comprehend the motivations driving the buyer. Typically, lowball offers originate from buyers in the following situations:
1. Bargain hunters: Some opportunistic buyers or investors are actively seeking a favorable deal and aim to purchase a property below its market value. They employ lowball offers as a strategy to identify sellers in desperate circumstances.
2. Budget limitations: Occasionally, buyers develop a strong affinity for a property that surpasses their financial capabilities. Although they may recognize the value of your home, their budget restricts them. As a result, they may submit an offer lower than your asking price, hoping for a fortunate outcome.
3. Renovation plans: Surprisingly common, certain buyers intend to renovate the property and deduct their estimated renovation expenses from the asking price. They may fall in love with a house but perceive the need to replace the kitchen and bathrooms, resulting in an offer lower than the listed price. It is important to note that personal renovation plans do not directly influence a property's market value.
4. Negotiation tactics: Some buyers, and their agents, relish the art of negotiation and utilize lowball offers as a means to shift the dynamics of the negotiation process. While their true intention might be to pay the market value, they engage in protracted negotiations as part of their strategy.
5. Lack of knowledge: Many buyers rely on their real estate agents to assist them in comprehending a property's value. Regrettably, not all agents possess extensive experience in property valuation. There have been instances where ill-informed agents have advised buyers to submit offers significantly below the asking price, leading to disappointment and frustration for both parties involved.
6. Genuine concerns about property value: While you may not necessarily agree with their perspective, some buyers may genuinely believe that your home is worth considerably less than your listed price. They may have reservations regarding its value, which drives them to present a lowball offer.
By understanding the motivations behind the buyer's offer, you can engage in more effective negotiations and potentially increase the chances of a successful sale.
Are You Priced Right?
Do you have substantial comparable sales data, indicating nearby properties with similar characteristics that support your asking price? Have you taken into account the prevailing market conditions?
HOMEBUYERS today are SMART! – they can quickly identify an overpriced residence, just as readily as they can recognize an underpriced one. If you're selling your home and have received numerous lowball offers, it may indicate that your price is set too high.
Don’t Take it Personally
While receiving a lowball offer can feel personal, it's crucial to keep in mind that buyers are primarily focused on securing the best possible deal for themselves. I've witnessed sellers react emotionally to such offers, refusing to engage in negotiations—I've even found myself in that position. However, if you can prevent yourself from becoming defensive, you'll enhance your likelihood of achieving a successful outcome.
Counteroffer with a Realistic Price
When faced with a lowball offer, it is crucial to respond with a counteroffer that reflects a realistic price. Take into account the present market conditions, recent comparable sales in the vicinity, and any improvements or renovations you have made to the property. Your counteroffer should be grounded in objective factors rather than emotions or a desire to retaliate against the buyer. Just because the buyer may be engaging in strategic maneuvers, there is no obligation for you to follow suit.
Be Willing to Walk Away
If the buyer demonstrates an unwillingness to engage in negotiations and presents an unfair price, you might need to consider withdrawing from the transaction. Certain individuals who submit lowball offers are solely seeking an advantageous deal and may never intend to pay the property's market value.
