What is strategy behind a lowball verbal offer?

BelfastBoundJuly 31, 2014

Realtor verbally presented as follows "We know the house is worth a lot more than our offer but the couple loves the house and can only afford "x". They offered x-25K.

I did not counter but did lower my asking price by 10% or 25K. We are still 50K apart.

The couple has been looking at houses beyond what they qualify for and at the open house the wife's father told me he was motivated to get the couple and their kids out of his house.

Comments anyone on whether I played this wrong by not countering. Thank you for your time.

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talley_sue_nyc

I think the strategy is for them to see what you're willing to come down, and to make themselves feel that at least they tried.
And, the strategy might be that if you tell them no, and then nobody else comes along to pay more, you might come back to them to see if they're still interested.

I would think, in negotiating terms, that the dad being motivated means either (a) he'll help them get the house they want, so he'll loan/give them money--in which case, holding closer to your price might get you more money; or (b) he isn't the one with the money no matter what he -says---HE can be motivated all HE wants, but he's not the one buying.

And if they're consistently looking at houses they can't afford, that means either (a) that they really do have the money, but don't want to admit it, or spend it--in which case, hold firm; or (b) that they don't have the money and are unable to face that fact, in which case, hold firm.

Just because these people want your house doesn't mean they should get it.

I think that whether this is a mistake or not all comes down to this: Is there someone who will buy your house for closer to the asking price? Is your house truly priced correctly for the current market? If so, you should hold firm.

    Bookmark   July 31, 2014 at 11:28AM
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ken_adrian Adrian MI cold Z5

there is no offer until its in writing.. put up or shut up ... dont you think???

whose agent was this.. your selling agent... if so.. he is not acting in your best interest ... he should have set the price.. so why is he now suggesting its worth 25 less????

and the buyers agent.. should not really be talking to you ... he should be talking with your agent ...

and your agent isnt acting in your best offer.. relaying verbal BS ...

thats how agency works ...

unless you are doing this on your own???? .. of which.. you dont happen to mention ...

ken

    Bookmark   July 31, 2014 at 11:36AM
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musicgal

The guy was feeling you out... watching your reaction.
We were lowballed on so many occasions on the sale of our last house, I became a little jaded. It sold for what we wanted after months of being on the market. Don't bite at this stuff if you can wait. Put on your poker face and say buh- bye.

    Bookmark   July 31, 2014 at 12:10PM
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BelfastBound

Ken et al. thanks for taking time out of your day to support me. I am a FSBO and wondered if the buyer's agent who does not "work" my town, telephoned with the "offer" because he didn't want to take the 10 minutes to write it up and 45 minutes to drive it over because he felt the buyers were not serious. I didn't counter to show that I was serious and know my pricing. My entry only realtor says I should have countered.

    Bookmark   July 31, 2014 at 12:25PM
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ncrealestateguy

I agree with your "data base entry person". Give me one good reason why you should not counter? Even if it is at your full price offer. Or counter back at what you are willing to take.

    Bookmark   July 31, 2014 at 1:04PM
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lazy_gardens

Realtor verbally presented as follows "We know the house is worth a lot more than our offer but the couple loves the house and can only afford "x". They offered x-25K.

You know, I would have replied with, "I realize it's easy to get carried away when house hunting, and I'm sympathetic for their financial straits because I was there once, but perhaps you should aim them at houses they CAN afford so they don't keep getting told "No.""

    Bookmark   July 31, 2014 at 2:40PM
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pixie_lou

I did not counter but did lower my asking price by 10% or 25K.

So instead of making a counter offer $25k below asking to these potential buyers, you lowered your asking price by $25k so now every potential buyer benefits?

    Bookmark   July 31, 2014 at 3:01PM
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hoovb zone 9 sunset 23

a verbal offer isn't worth the paper its not printed on.

    Bookmark   July 31, 2014 at 3:04PM
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kats_meow

"a verbal offer isn't worth the paper its not printed on."

I think you mean an oral offer. A written offer that is in WORDS is a verbal offer. That is all verbal means -- in words. It doesn't mean oral. I agree that "oral" offers don't have much meaning.

In the specific situation presented I would have invited that a written offer be made. Once made, I would have responded to the written offer.

    Bookmark   July 31, 2014 at 8:00PM
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sas95

In some states, like NY, offers are almost all verbal. As are acceptances. Real estate practices are so different across states that it's hard to give meaningful advice just based on how things are in your area.

And actually, kats meow, "spoken rather than written" is an accepted definition of "verbal."

This post was edited by sas95 on Thu, Jul 31, 14 at 20:48

    Bookmark   July 31, 2014 at 8:18PM
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Suzi AKA DesertDance Zone 9b

We are in Southern California (a different state than Northern California) but too many stars on the flag already or we would succeed.

My husband and his ex have their house listed with a realtor. Two weird offers have come in. One needs the Chinese parent's approval because that's where the money comes from. Offer was 1.550 mil, just $50K short of asking. The parents will visit in August to view and approve the buy.

The other offer came in at $1.300 mil, but they want him to take it off the market, say it's theirs until they sell their house..

So far, he has not accepted any. The last one has countered up to 1.5 mil. He still won't take the house off until they sell theirs, and they won't list theirs because they want his desperately, and what if they sell, and his is gone?

These are the risks in house buying.

    Bookmark   July 31, 2014 at 8:34PM
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BelfastBound

Pixie, Yes, I had planned to lower the price anyway. I just decided to wait until after their showing to do so.

    Bookmark   July 31, 2014 at 9:29PM
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sweet_tea

You should counter. You are much much more likely to come to terms with them if you counter versus cross your arms and say "no".

Think of a counter offer as bouncing a ball. Kind of like dribbling a basketball. Each bounce(counter) might be lower and lower and lower. But the ball is still bouncing. Once it stops bouncing, then you spike the ball and the bouncing game is over and everyone walks away.

Here's another thing....from an emotional standpoint, the longer you counter back and force, the longer that buyer imagines buying your home. They picture themselves buying it, they think about that home. Even if the back and forth is small increments, you still have their emotional investment/interest. The moment you spike the ball (dont counter) , then their emotional interest immediately stops. You want to stop countering when the deal is ready to be done. Not at the first bounce. It's too soon and they will lose interest and move on. If you had bounced back and forth with them for a few days then maybe they would have come up with a lot more money because they discussed the home for the past few days and realize it really is perfect for them.

There is no rule as to how much you counter. But you should counter offer even if you take $1000 off your $25000 price reduction.

    Bookmark   August 1, 2014 at 9:02PM
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BelfastBound

Thanks sweet_tea for the detailed explanation and gosh, if I had thought it out as you have laid it out, I would have given them my lowest offer which I feel I can get from just about any buyer. Maybe that is the endowment effect but it is also 2 years of tracking the characteristics (sf, assessment, land, time of year, days on market) of my local market.

NCreal - I didn't counter because I was going to lower my price anyway and felt that the reduction was a counter of sorts. If the offer had been in writing I would not have felt put on the spot and with time to think it through, countered with my best offer. Knee jerk reaction and now I feel like a jerk.

    Bookmark   August 2, 2014 at 9:34PM
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cmarlin20

I agree with the statement to counter, always counter, too many times posters come on saying they were insulted, wouldn't even counter, not a good strategy, always counter, until you know the offer is dead.
Don't feel like a jerk, just keep learning and moving forward with your best decisions.

    Bookmark   August 2, 2014 at 10:59PM
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BelfastBound

Update: Buyer's agent called. Couple still interested and wondered how the Open House went. I used the tact that lazy gardens suggested and was sympathetic and told the story of my first house with ex offering 50% of asking price. I gave them my lowest "make me move" price. It seems peculiar to me that they want to be the house by Sep 1 (they have 3 kids) yet waited 37 days after first seeing the house to make an "offer".

    Bookmark   August 7, 2014 at 9:04AM
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ncrealestateguy

Good to hear they are still wanting to deal.
It is a rare occasion that I have a buyer that, after being told for the last 6 years that they can buy a home for pennies on the dollar, do not want to come in too low. They are all hoping for that "deal", but are also willing to pay fair market value.

    Bookmark   August 7, 2014 at 11:36AM
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