Read More: How to make a low ball offer that works, How to negotiate the sale of your home
When you list your home for sale, you envision a final sales price that is a blend on your hopes, recent area comps, and your overall motivation. However, when a potential buyer submits an offer that is well below your worst case scenario, how should you react?
Keep in mind that your next step should be part of a negotiation strategy. If you're able to do it, emotions have no place here. It's simple math. You want "x" and you've been offered "y." But, most buyers who start low are willing to come up. As much as they hope you'll accept their first offer, protocol says that this is just a starting position.
There are three possible responses you and your agent can put together:
- Ignore the offer number and counter back at a number that makes sense to you, based on the market and your agent's recommendations.
- Respond back at nearly your asking price or at asking price. This is the least favorable path because it sends a very strong message that you're not willing to negotiate. We sometimes refer to this response as an "FU" response. This doesn't mean the deal is dead, it just tells everyone that there's a lot of emotions driving the decision making process
- Reject the offer without a counter. On page 8 of the Residential Purchase Agreement is a spot for the seller to reject the offer outright. If it's particularly low, some agents will scrawl "Rejected" across the page to send the potential buyers a loud message. Unlike the "FU" option above, this response sends three messages: 1) you're not willing to waste your time with this particular offer; 2) that you and your agent believe this buyer will NOT step-up and negotiate to a middle ground that is acceptable to both sides; 3) that if you, the buyer are really interested in this property, come back with a real offer. This option is only appropriate in situations where you're sure the buyer is playing a game or simply testing you.
Because every deal and offer are unique, it's important to weigh-out all of your options before you respond or reject. We prefer to keep the ball in the air with most offers, especially those that are backed by solid financing. In most cases we would encourage you to make a good faith counter, which then puts the offer back into the buyers hands to respond. If they respond back at the same low starting position, then maybe it's time to cut bait.
