- The Washington Times - Friday, December 4, 2009

Insulted, angry and devalued are words that may come to mind when someone offers $340,000 for your home that is on the market for $400,000. However, such “low-ball” offers have become common in this buyer’s market and sellers find themselves having to defend their asking prices.

For better or for worse, industry experts say that today’s buyers are looking for bargains. Buyers are tempted to bid low and wish for the best. As a result, it’s no surprise that some sellers are offended by the offers they receive.

“The inventory glut of the early part of 2009 encouraged people to write very low offers initially - especially on short sales,” says Dixie L. Meadows, an associate broker with RE/MAX Sails Inc. in College Park.

Realtors say that a low-ball offer is often defined as offering less than 90 percent of the seller’s asking price.

“Presupposing a property is correctly priced, then certainly 10 percent below the list price is a low-ball offer,” says Ms. Meadows.

Brenda C. Small, manager of Prudential Carruthers Realtors in the District and president-elect of the Washington Capital Area Association of Realtors, prefers to use the phrase “below-list price offer.” She explains that “low-ball” is a relative term, depending on the perspective from which it is viewed. Ms. Small says that even a difference of $30,000 on a $500,000 property can seem low.

“Buyers are cautious and skeptical about overpaying for a property,” says Ms. Small, who added that things have changed a lot since the highly competitive “escalating market” several years ago.

So, how should sellers react to low-ball offers? While Realtors’ opinions vary on this topic, most agree that sellers should not take the low offer as a personal attack.

It’s important for sellers to move the conversation away from something personal to focus on the true value of a home, says Joseph Himali, principal broker with Best Address Real Estate LLC in the District and president of the Greater Capital Area Association of Realtors. He believes that changing the focus is the best way to turn a low-ball offer into an acceptable one.

“If you have a brand new Mercedes and someone offers the price of a Kia, would you accept it?” asks Mr. Himali. “As agents, it’s our job to steer buyers and sellers away from personal issues. There’s a lot of emotion in selling a home, and people can be personally offended and feel insulted by buyers who submit low-ball offers.”

He adds that if buyers can’t find comparables to defend a low bid, there needs to be a conversation about how they arrived at that offer. Mr. Himali often counsels clients that selling a house is a business transaction and that they should not be offended because it’s better to have one offer than no offer. He believes sellers should always counter an offer that is below the listing price.

“Never let the transaction die on your side,” says Mr. Himali. “No matter how low the offer is, there are lots of buyers out there who just don’t know what the market is.”

Ms. Small agrees and says that sellers should always be encouraged to counter offers below the asking price. The listing agent should prepare sellers to review the full benefits of the offer, including a realistic assessment of the market, homes that are for sale and that have sold, the condition and location of the seller’s property, and the buyer’s capability.

She also suggests that sellers identify the difference between the asking and offer price - and focus only on that number. She says it’s easier for some people to recognize that the difference is $50,000, rather than obsess about the fact that the offer was $350,000 instead of $400,000.

Since the purpose of a low-ball offer is often to see whether the sellers will respond with a counterprice of what they “really” expect, Ms. Meadows says sellers should not counter the offer with a new price or any terms.

“By not providing any feedback (in the form of a counter), the message is conveyed that the offer was not even worth discussing,” she says. “They should simply send it back to the buyer with ‘not acceptable’ written on the first page of the purchase agreement.”

However, agents believe that it’s all relative and that each situation may require a different response. Mr. Himali said that the length a home has been on the market plays a large role in how sellers should react to an offer.

“If I put a home on the market at 9 a.m. and get a low offer at 10:15 a.m., why would I accept that?” he asks.

If a home has been on the market for 365 days, he says the sellers may want to “wake up and smell the coffee” when they get an offer.

In some instances, Realtors say that low-ball offers can be a reality check for sellers who have priced their homes too high for this market.

However, price should not be the only consideration. Even low offers can have offsetting benefits that make the offer attractive. For example, Ms. Small says that an all-cash offer with no contingencies and a quick closing date may be appealing even if the offer falls short of the full list price. She adds that other considerations include the credibility of the buyers’ qualifications (the amount of earnest money, an impeccable credit history and ample assets to close on the loan).

Since this buyer’s market will produce offers of all types, it’s important to know that a buyer is serious and truly can afford your home. Ms. Meadows says that a skilled listing agent is the best means of making that determination.

“Even with having a preapproval letter for the buyer, the seller’s agent will often contact the lender to be sure the lender has actually verified the material that relates to creditworthiness and ‘mortgageability,’ rather than merely accepting whatever the buyer states,” says Ms. Meadows.

Some sellers who don’t have to sell right now are taking their homes off the market, hoping values will increase when the market bounces back. Yet, Realtors say that it’s a good time for buyers who’ve been on the fence about buying a home.

“We’re in a blissfully slow market, and the rates are very low,” says Mr. Himali. “If you’re a buyer, this is the time to make it happen.”


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide