offering less than list price

turtleshopeMay 5, 2012

Buyers, when you offer less than list price, do you give reasons -- list the comparables, estimate the work required, etc?

Sellers -- if buyers give reasons when offering significantly less than the asking price, what is your reaction? Do you prefer just to have the number with no reasons?

My DH & agent (whose experience I respect) think there is no point in offering reasons, I'm not convinced. What works?

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Sophie Wheeler

There is zero point in offering reasons unless your offer is significantly below the asking price. Offering 475K on a 500K house? Don't bother. Offering 350K on the same 500K house? You'd better include some documentation of the comps that cause you to think that's a fair offer or else you will get no response. You still may not get a response, but at least you've introduced the possibility of them living in 2005 in their heads in the equation.

    Bookmark   May 5, 2012 at 6:30PM
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azzalea

Our buyers just made an offer--they didn't include any criticisms with it. We countered with a number that was halfway between their offer and our listing price. They accepted.

I think offering explanations (Unless as noted above, is a SERIOUSLY reduced offer) is unnecessary, and really sort of insulting. You're saying, we like your house well enough to want to buy it, but here's a list of things that are wrong with it. No, not cool, really. Everyone knows how the game is played, that the listing price is just a starting point, and isn't what the buyers truly expect to get for their home.

    Bookmark   May 5, 2012 at 7:04PM
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weedyacres

I think it depends. As hollysprings said, it can cushion the blow of a low offer, by saying "here's how we got to the number." For me, if someone's got some rationale behind a number I appreciate working with them more than someone that's just pulling numbers out of the air. But I don't think most people are as anal about the numbers as I am. :-)

When we recently sold a house, the first offer was about 15% less than the asking price. We countered back with a small price drop, and included a list of the comps we had used to determine the listing price. I don't know what it caused the buyer to think, but our intention was to say, "look, we did our homework and the house is priced fairly." We came to terms at about 95% of asking.

    Bookmark   May 5, 2012 at 7:44PM
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brickeyee

"really sort of insulting"

It is a business deal.

Applying feelings is inappropriate.

Do you worry a car dealer will be insulted if you offer less than the list price?

    Bookmark   May 5, 2012 at 8:22PM
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ncrealestateguy

What Holly said...

    Bookmark   May 5, 2012 at 9:44PM
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turtleshope

Thanks, this is really helpful.
Is there a cut-off % of list below which a buyer should give the comps? Like 90%? 85%?

    Bookmark   May 5, 2012 at 10:45PM
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mike_home

There are no rules about buyers justifying the offering price. Make the offer and wait for the response. Buyers don't expect to get a full price offer.

    Bookmark   May 6, 2012 at 4:30PM
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Billl

"It is a business deal.

Applying feelings is inappropriate. "

Letting your emotions get in the way of rational decision making is never a good idea. That is NOT the same as anticipating a likely emotional response from a seller. Most people do make it personal, so you should be prepared to deal with that.

    Bookmark   May 7, 2012 at 9:46AM
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trilobite

I don't see any point in offering reasons and here's why.

When the seller sets the price, they've (hopefully) given some thought to it. Either they've purposefully gone high and will expect lowball offers or they are looking at different comps and will counter or ignore. They may be wrong or foolishly optimistic, but they probably need to come to conclusion on their own.

    Bookmark   May 7, 2012 at 10:54AM
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cmarlin20

"It is a business deal.

Applying feelings is inappropriate. "

Letting your emotions get in the way of rational decision making is never a good idea. That is NOT the same as anticipating a likely emotional response from a seller. Most people do make it personal, so you should be prepared to deal with that.

Exactly, you can use those emotions to your advantage.

    Bookmark   May 7, 2012 at 11:28AM
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ladybuggy

I received an offer house tonight lower than asking price. The agent presented the offer in person with an explanation and a list of comps. I live in a highly desirable area and our market is very strong (Canada). I was extremely insulted because the comps she presented weren't in my area and some were from last year. We had two strong sales in my area in the last month and she didn't present those comps. I didn't want to sign back but my husband was more reasonable and suggested we signed back a little lower than asking. The agent was much better off to present the offer without any explanation, all she did was make me livid. I know emotions shouldn't be involved, but let's face it, selling your house is emotional. I say present the offer and let the buyer decide if they want to accept or counter offer. An explanation is not necessary, most sellers understand the market in their area, and/or have their own agent advising them.

My agent was also mad as the buyers agent should have never come into my home to basically insult me. Usually offers are faxed to the office and not presented in person.

    Bookmark   May 8, 2012 at 9:11PM
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ncrealestateguy

If a buyer's agent deems it beneficial to present the offer in person, the listing agent can not refuse the request, only the seller cvan. Sounds like to me the buyers have a good agent that is doing everything to get her clients a good deal. Why not just present your counter with your comps?

    Bookmark   May 9, 2012 at 7:15AM
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brickeyee

"the comps she presented weren't in my area and some were from last year"

Those are not compts.

    Bookmark   May 9, 2012 at 12:46PM
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weedyacres

Why not just present your counter with your comps?

My thoughts exactly. Don't get emotional, fight back with logic.

    Bookmark   May 9, 2012 at 6:40PM
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ladybuggy

We countered back with a reduced price and a list of recent sales in my immediate area and gave them until 7 p.m. tonight to respond. My agent presented the counter offer last night. She left a message for the buyer's agent today to follow up, and didn't hear back at all. She was not impressed with the agent's professionalism. At 7:30 this evening she received a text from the agent saying her buyers are willing to "sweeten" the deal 10K, still well below recent sales for comparable homes. The buyers didn't bother to put the offer in writing so I told my agent I am not interested. If they are serious, they can put in a reasonable offer in writing. The house hasn't been on the market long enough for me to take such a low offer and we are getting a steady flow of showings. We had a second showing this evening which lasted an hour. I'm hopeful we'll see another offer soon.

    Bookmark   May 9, 2012 at 9:06PM
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mike_home

When a buyer makes a low offer, it is assumed that they are trying to squeeze the seller and get a good deal. I have learned from my own experience that this is not always the case. There are times people are trying to buy a house that is beyond their means. Their offer could be the most they can afford in order to secure the financing they would like to get.

All offers need to be made in writing. The buyer's agent may not want to go through the effort of putting in offer which she thinks the seller would reject. The buyer's agent may also be giving the buyers bad information about comps and your willingness to accept a low price.

If these buyers are serious they figure out they are not offering market value and need to adjust. In the mean time keep showing the house to other potential buyers.

    Bookmark   May 10, 2012 at 2:38PM
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ladybuggy

The buyers came back today with an offer, 25K more than their original offer but still too low. I was really surprised, I really thought the deal was dead. The second showing from last night called and are coming back on Monday with a contractor. They are interested in the house, but need to get a quote as they are planning on extending the back. Also, a new listing came up on the next street which is listed considerably higher than mine.

We countered back close to original counter offer. Hopefully something will come of all this. It's a very stressful process.

    Bookmark   May 10, 2012 at 9:54PM
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ladybuggy

The buyers came back today with an offer, 25K more than their original offer but still too low. I was really surprised, I really thought the deal was dead. The second showing from last night called and are coming back on Monday with a contractor. They are interested in the house, but need to get a quote as they are planning on extending the back. Also, a new listing came up on the next street which is listed considerably higher than mine.

We countered back close to original counter offer. Hopefully something will come of all this. It's a very stressful process.

    Bookmark   May 10, 2012 at 10:26PM
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ncrealestateguy

This is where the art of foot dragging comes in handy. Play the timing right, and you could have multiple offers. Let the second buyer's agent understand that you are negotiating an offer and need to hear from your folks ASAP.

    Bookmark   May 10, 2012 at 10:31PM
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loves2read

I watch House Hunters and some of the other HGTV and cable shows--
I think there are some people who just think they can force a seller to give them a good deal on a home--what they consider a good deal--rather than what comps or a professional opinion might say is a market price...

Everyone is under different set of circumstances though when they put their home on the market...some people might have no reason to sell for less than "their" price and plenty of time to wait out the offers...
some people might have to take what they can get...
I think there are also plenty of uneducated buyers/sellers/agents in the RE business who cause problems for themselves and others when they won't listen to reason...
The RE agent who offered the misleading comps--maybe s/he is feeding those clients the same inaccurate info...
I bet they don't make a market price offer...

    Bookmark   May 13, 2012 at 1:13AM
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ladybuggy

Just wanted to provide an update on my situation. The original buyers did not budge on their price so we did not bother signing back, and let the deal die. Two days later we received an offer from the second set of buyers who brought in the contractor. Offer was close to list price with only a building inspection as a condition. Anyway, we had the inspection today and the house is sold! I would love to see the expression on the agent's face who showed me misleading comps. I hope her buyers are smart enough to find a new agent.

    Bookmark   May 17, 2012 at 6:02PM
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mike_home

The first offer in this case was not the best offer. I am glad to hear things worked out well for you.

    Bookmark   May 17, 2012 at 6:29PM
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ncrealestateguy

Has anyone ever thought that the buyers agent was NOT incompetent in providing misleading comps. Maybe she was doing exactly what her buyers wanted... trying to get the sellers to sell to her buyers for a great price.
Also, your home is under contract but far from sold! Take one step at a time until you walk out of closing. Good Luck.

    Bookmark   May 18, 2012 at 7:11AM
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