Poll: How to Handle a Low Ball Offer

[Midpack]

If you were selling a big ticket item, how would you deal with a low ball offer way below anything you’d accept (e.g. 20%+). For purposes of discussion (if you’re so inclined), assume you’ve asked 10% over your “bottom line” and that’s market reasonable.*** From what I’ve read there are three schools of thought.

1. No counter, no reply - sends the message the low ball is an insult, come back with a “serious” offer and we’ll talk...
2. Offer a counter 1-2% below asking - sends the message I’m willing to negotiate but I’m NOT meeting you half way...
3. Counter at 10% below asking and tell the potential buyer, that’s it, take it or leave it.

*** Of course if your asking price is unrealistic, that’ll become apparent in time.

 

[bUU]

Decline the offer.

Period.

 

[braumeister]

I won’t waste my time on a real lowball offer.

 

[travelover]

I had this problem when selling my house. I countered with an offer I'd accept, but told the agent that brought the offer that he'd have to cut his commission. The agent accepted as did the low baller.

 

[Another Reader]

What's the item?

In real estate, you are looking at an offer from a flipper, wholesaler, or other non-retail buyer. The answer is you are looking for a retail buyer. No need to counter.

If you are selling a car or other item that has comps or references based on comps, you are probably dealing with the same situation. If the item is sold less often and/or there is not an established market, some additional research and negotiation is possible. I might start with a counter slightly under the original asking price and see what you flush out.

 

[CardsFan]

By your definition, an 80% offer (20% less than asking ) is low ball.

But you also defined your asking price as 10% above FMV (Fair market value), which means the offer is really only 10% below FMV.

I would drop 7% or so, and see what happens.

Of course, All bets are off if neither one of you really has a handle on FMV.

 

[FlaGator]

Decline the offer.

Period.

+1

I like to make deals where I'm happy and the other party is too, even if it is not as high/low a price as one might get when one party is an @$$hole. I don't deal with those types anymore.

 

[OldShooter]

When I am working on a deal, I put huge effort into learning whatever I can about my buyer. Negotiation is first about ego, then about needs. Experience is important, too. Incompetent buyers are, in the end, often more trouble than they are worth. Same story with buyers who simply don't have enough money to do the deal at an acceptable price. Different kinds of egos react differently to counter-offers. Time pressure? Does the buyer have some urgency to do the deal? (He who is in a hurry loses.) If it's a house deal, the buyer's agent will help you understand the buyer because the agent want a deal to happen. If it's some other kind of deal, you might want to have your attorney run a background check on the prospective buyer. These days, social media should also be checked. Only after you understand your buyer as thoroughly as possible should you be asking your question.

 

[Huston55]

Well...it depends.

It depends on the things others have already mentioned: how anxious are you to sell the item, how well you've priced it, how "low" is the offer, what do you know about the offeror, etc. But, of the choices you list, I selected #1 in the poll. I might also do 1a: respond with something like, "I will respond to a serious offer if you make one." I've done this before several times, especially on Craigslist.

In my experience, most really low ball offerors just melt away.

 

[Dawg52]

When selling I've normally countered as described in #2. I did purchase my coastal condo by throwing out a low offer. Ended up coming up on my final offer but got it for less than I thought I would. So I don't blame someone for trying as you never know....

 

[Scrapr]

Never lower your price without getting something in return. Low price/fast close/cash money?

Frankly I would not respond until i know something about the offeror

There are people that start off taking a bite, then another bite, then another. Each stage of the negotiations are lower. First you settle on 5% under. Then the furnace needs repair/replace. They ask that. Then they want to change closing companies. Because my BIL is there. Then the deal doesn't close on time because the check doesn't show up. On & on

 

[Huston55]

Never lower your price without getting something in return. Low price/fast close/cash money?

Frankly I would not respond until i know something about the offeror

There are people that start off taking a bite, then another bite, then another. Each stage of the negotiations are lower. First you settle on 5% under. Then the furnace needs repair/replace. They ask that. Then they want to change closing companies. Because my BIL is there. Then the deal doesn't close on time because the check doesn't show up. On & on

Absolutely agree!

When we sold one of our houses, I accepted a price ~5% under asking from the current tenants (it was rented) in a market that was heating up. We could have held on & got a little more $$$ but, at what price right? Knowing the typical pattern described above, we accepted the offer with the condition that the sale was "as is", meaning the buyer owns all that upon accepting our counter. The buyer accepted. But, we did have to have our agent remind them during the inspection/closing period that we had a written deal of "as is."

In the end, all were happy.

 

[brett]

We had this experience with a real estate transaction.

We simply countered with a full price counter offer which deleted a number of their onerous conditions. We fully expected never to hear from these time wasters again. We did not.

In my working career as a GM a few of the very best deals I did were deals that I walked away from because of a combo of price and t's and c's. A competitor took the deal. They lost their shirt on the deal. The client never achieved the desired results. No one was happy.....except my boss when he realized how very bad the clients offer was.

 

[BeachOrCity]

Always situation dependant.

Assuming this is RE. know who the buyer is retail or investor.
If investor, i would assume they are spraying and praying and decline offer as “not realistic”

If retail i would counter below your asking by a few percent min.

 

[Aerides]

Depends on item/price:

20% less than asking price on a house? seems like a non-serious buyer
20% less than asking price on a $50 item on eBay with a "make an offer" button: fair to ask
20% off at a craft/art fair, when the seller is the artist? cheesy...
20% off at a flea market? fair to ask

 

[pb4uski]

I would just calmly reply that the item is fairly priced and that the offer is not in the ball park.... puts the ball back in thier court but the reply encourages them to become realistic.

We had this happen with our house... buyers did a second tour with their grandparents who were financing the transaction... I was traveling and DW was doing the showing... grandpa suggested a low-ball offer... DW made it clear that wasn't near acceptable... less than a week later the buyers came back with a more reasonable offer.

I have had similar things happen with craigslist sales... and I just explain why the item is fairly priced and that I'm willing to wait.

 

[GalaxyBoy]

Keep emotions out of the deal. Counter with a few % off to send the signal that they're way off base. I had this happen when I was selling my late father's house earlier this year. The agent was going on about the offer being "insulting," etc. What insult? They figure if you sell it at that price they've got a good deal. If not, then they either move on or counter with a higher price.

 

[Jerry1]

Never lower your price without getting something in return. Low price/fast close/cash money?

I would just calmly reply that the item is fairly priced and that the offer is not in the ball park.... puts the ball back in thier court but the reply encourages them to become realistic.

Both great points. If you can get something for lowering the price, then you're negotiating. But for me, I love it when I can get someone to negotiate with themselves.

I also like a line I hear on American Pickers (from a buyer's perspective) when the seller is trying to get them to negotiate with themselves. Mike is known to say - give me a number "I can buy it and sell it" work with me.

Basically though, if you know the value of what you're selling and the offer is clearly low ball, my response would be to just say no.

 

[MarieIG]

Barring unforeseen circumstances, I don't think I would counter a low ball offer.

 

[ERD50]

The only reason I can see to respond is if you think that response will encourage them to return with a suitable offer. If not, why bother? Seems pretty straightforward.

That said, without knowing something about the buyer, I think it's impossible to know if the "message you are sending" (or not sending, as the case may be) is the message they will hear. And I doubt all buyers are the same. So yep, "it depends".

The poll should include "Not enough info to advise".

-ERD50

 

[Another Reader]

When I am working on a deal, I put huge effort into learning whatever I can about my buyer. Negotiation is first about ego, then about needs. Experience is important, too. Incompetent buyers are, in the end, often more trouble than they are worth. Same story with buyers who simply don't have enough money to do the deal at an acceptable price. Different kinds of egos react differently to counter-offers. Time pressure? Does the buyer have some urgency to do the deal? (He who is in a hurry loses.) If it's a house deal, the buyer's agent will help you understand the buyer because the agent want a deal to happen. If it's some other kind of deal, you might want to have your attorney run a background check on the prospective buyer. These days, social media should also be checked. Only after you understand your buyer as thoroughly as possible should you be asking your question.

It's amazing to me that real estate agents are shocked that you would include an investigation of the other party's capability, motivation, and history before proceeding.

 

[brucethebroker]

Helped put together 450+ deals as a Realtor. So, if we are talking houses...

My take:
If you are motivated to sell (some aren't-just want to test the water), always counter. I advise a very high counter offer just to see if the buyers are serious. You could drop your price $1,000 to make your point-but at least it keeps the negotiation going.

We (sellers) rarely know where the buyers are coming from. Many times, a trusted family member (Dads are famous for this) is giving advice on coming in low-"you can always come up!". By countering, even a little, you show "Dad" that you aren't desperate and you aren't going to give the house away. This also allows the "kid" buyer to say "tried it Dad-did not work". ("Dad" could be a spouse, attorney or just advice found on line).

If, however, the counter offer from the buyers matches your hard counter, you are dealing with people who aren't serious. Counter and tell them it is your final offer. Or write rejected on it and send it back. If you reject it, they then know you received it (Some suspect that the Realtor may not have presented it). Better than just letting it expire.

When my sellers would get upset about a low-ball offer I would suggest that those people at least took the time to seriously consider the home, and write an offer. Save the anger for the "lookers" who just waste sellers time and never offer anything.

 

[Bamaman]

We are selling the house our daughter was living in. She didn't properly take care of it and rehab would be a 4 month project.

A real estate agent and her plumber/brothers offered 80% of what we paid for the house. We were cordial and nicely turned them down. Two weeks later, they came back with a reasonable offer, and we close the deal on Monday.

It never hurts to negotiate in good faith and communicate. I could have made $25k flipping the nouse, but just don't have the will of energy to take on another project right. Kw.

 

[traineeinvestor]

The only time I received an insultingly low offer on a property I was selling, I sent it back with an extra zero on the price. I never heard from the guy again.

 

[Philliefan33]

I can tell you why people make lowball offers—sometimes it works.

When we bought our vacation home, our offer was about 10% below asking price (and the sellers had just recently lowered asking price). When I called our agent on the drive home from seeing the place for first time, there was stunned silence on his end when he heard my offer. I told him “hey, let’s smart from here and negotiate”. DH and I fully expected a counter offer. The sellers accepted the offer the next day.

Granted, we were cash buyers willing to settle on the seller’s timeline. The house had been on the market for five months, heading into slow season. The sellers got a sure, quick transaction in return for lowering the price.