Hasn't happened but I wonder how it gets dealt with. Do you respond or just ignore the offer?
Like being prepared,
If it is totally rediculous, then counter back at a buck more than list price... otherwise, just treat them like any other offer and counter accordingly.
All we see around here are low-ball offers. Everybody assumes Florida is having a fire sale and everything is 1/2 off.
Heck, I just made an offer yesterday nearly $50K below list price. What the seller may or may not realize is that my offer is within a couple of thousand of the one comp that sold two weeks ago (nearly identical condos, so not lots of adjustments here like you would have with some single family homes).
Find out if there are reasons behind the low offer - I pointed out that the condo I'm looking at wasn't upgraded nearly to the level of the comps, less desirable garage location across the street (think carrying groceries), closer to noisy road. I'll find out today how motivated the seller is.
So I say, if you get what seems to be a low-ball offer to you, try to step back and take an objective look at how low the offer really is.
It might be a mortgage issue too - take a look at the news on HVCC and how it's affecting appraisals. Another sale in the same complex is probably going to fall apart because the appraisal came in at the comp (no surprise there), and that's $22K below contract price. The appraiser took the only other comp within the past year, from 3 months ago, and dropped it $5K/2% each month.
If market trend continues, are you ready to drop 24% this year? (according to appraisers estimates)
Just trying to give you some factors to think about in this market. Good luck, and hope ANY offer comes your way.
In the early 80's we received a low ball offer on a home we were selling. I was so insulted, I just wanted to reject the offer out right. My hubby, the voice of reason, thought it better to counter the low ball offer. So we countered at above asking price, but we'd pay their closing costs. Essentially financing their closing costs. It worked in that instance because it was a young couple that needed help with closing costs.
What I learned from that is to counter any low ball offer. You never know what you can work out.
counter the offer just like you would counter ANY offer. Buyers first offer is usually to test the waters to see if there is any desperation. Once you counter and they realize there isnt any, they get reasonable if they are really interested in the house.
You also have to consider that maybe a "lowball" offer is really closer to market price. A couple of years ago we made an offer on a house at about 85% of listing price. The seller was so insulted that he refused to counter at all. This was not an issue of us not being able to afford the house. But, I looked at comps closely and just felt that the house was way overpriced. I would have paid more than my office but still way below his listing price.
We moved on and found another house we really like (at twice the price FWIW). Almost 2 months after we had made the offer on the first house our agent told us his agent had come back and wanted to know if we wanted to make another offer. By then we were under contract on the second house so we declined.
The point is that the seller's price was too high for the market so the lowball offer was low but much closer to market value.
Good points, I'll keep them in mind.
Exactly. Our last sale, the eventual buyers started the bidding with a lowball offer. We responded with a miniscule drop in price on our counter to indicate 'not desperate' and they came back with a miniscule increase. We went to our broker and said, look, if they're really interested in the place and not just playing games, we need to see a substantial increase in their counter or we're not going to budge because it is a waste of everyone's time (this was pre-credit meltdown and we had bids at full price with more fickle buyers). Lo and behold, they came up with a reasonable counter and we did the deal.
It may be a state thing but I believe I saw that a seller does not have to respond to any offer that is less than the asking price.
When my current house goes up for sale in a few months and the low-ball offers come in (hopefully) I will just bite my tongue and swallow my pride because I low-balled in an extreme way to get the house I'm moving into. I'm sure it will be painful and disappointing but buying and selling property is a business transaction so you just have to keep you emotions in check.
NEVER ignore an offer if your property is still actively for sale. If you are not happy with an offer, simply counter offer just as you would any offer.
Offers/counter offers are like a bouncing ball that you want to get into a goal. You want to keep that ball bouncing and get it closer and closer to the goal. The closer it gets, the more likely the goal occurs.
If you simply ignore an offer, you stop that ball from bouncing toward the goal.
Just make sure you don't get insulted. It can be hard not to when you get an offer lower than the market price. Some folks might make low offers where you know for sure the place is worth a lot more. That's ok - folks have different ways to negotiate. It is very common for buyers to start out way, way lower than they will go. Especially in today's market. You cannot blame them.
Also realize this - you always want to counter because it keeps the ball in play. And all the time the ball is in play, the buyer is thinking about buying the home - wanting it more, falling in love with it more. The longer this goes on, the better the liklihood of a deal occurring.
Also, if you are currently going back and forth with a buyer, a new buyer could come along. Guess what - you let them know you have another offer on the table. And they might move faster with an offer or offer higher initially (plus want the place more since there is interest). I had this occur to me and it worked to my advantage of a seller. The 2nd buyer offered higher than the offer on the table, knowing there was an active offer (there really was). I sold to the 2nd buyer.
As far as I know, a seller doesn't have to respond to any offer, but it seems foolish not to. The only way to come to any agreement and get your house sold is to respond to offers, low ball or not. I like sweet tea's analogy to a bouncing ball.
We've been on both sides. We made a very low offer on a 2nd home, but backed it up with solid reasoning & a nice letter. We accepted their counter - which was in line with what we expected.
We recently got a very low offer on a property we have. We countered with a firm/final price & they're thinking about it. Nice people - couldn't blame them for trying. It might not work out - but we certainly weren't offended. Happy to have the interest in the property.
"We countered with a firm/final price & they're thinking about it."
Just keep in mind that the counter remains open until accepted or withdrawn.
Or until the date/time that you wrote on the counter (i.e. "This offer good until 4:00pm on July 15, 2009")
guvnah-"We made a very low offer on a 2nd home, but backed it up with solid reasoning & a nice letter."
We have done the same thing. Less insulting and keeps the lines of communication open.
"Or until the date/time that you wrote on the counter (i.e. "This offer good until 4:00pm on July 15, 2009")
That is why you put an expiration date in.
Many folks fail to do so.
"Just keep in mind that the counter remains open until accepted or withdrawn. "
No contract was drawn up. Verbal/email only.
So, here's my take on low ball offers. We received 3 lowball verbal offers within a few weeks of our listing. The first was very low and our agent dismissed it right off the bat. Truthfully, I felt it might be workable so put it in writing, but she honestly just got a phone call from someone who was fishing when we first listed and they never did anything anyway. The next offer was also an off the cuff offer which was not bad, but they had a house to sell, were just looking, and really were not motivated. The third was also a verbal and was not serious but a workable offer. We have also had these type of offers on my Mom's house we are selling in NY. People just love to talk and throw out numbers, but get them to put it in writing and it's a whole other story.
On our own home we were listed for 12 weeks, dropped the price right after a month by 25K and then more, for a total of 10%, after 12 weeks (because we just were not getting enough showings). Since our market is just going nowhere at our price range, that's what we have to do to get the buyers to take notice. We did get an offer from buyers who saw the house in the fist price drop and came back right after the second drop. They lowballed but we told our agent if they are serious buyers and have sold their home, we can work with this. After a bit of back and forth and giving them several things they asked for (a 6 year old expensive front load washer - it kills me because now I have to go out and buy another at about the same price!), we finally agreed and got just about asking price!!! Should be happy, right??? Well, NOT SO FAST! Enter the inspector. Everything went very well..........except for..........the FURNACE. They wanted, no, demanded a NEW ONE!!!! Ours is 30 years old, as old as the house and it has been working well for the 6 years we have lived here. He found it needed repair which we were willing to do, but he still said it was old and might stop working "at any time". And the buyers were spooked because we called the furnace co. out three times in the last 7 months (two in the winter) as it was all written on the paper next to the furnace! True, the oil company did come out and fix several things that a 30 year old furnace needs and those were covered by the contract, and one time recently because I thought I smelled oil after a delivery - they change a valve and all was well!!!!
Long story short, the buyers would not go through the deal until we bought them a brand new furnace. Nothing else would do. Put in the new furnace they wanted or the $$$$$ for their way high estimate so they could do it themselves. So, we are now giving the $$$$$ for a new furnace, but with our estimate, and contracts are signed.
We honestly thought about putting in a furnace and putting the home back on the market because we were not happy about how our buyers were acting (there were several other things they balked about and demanded that we do and other things they became concerned with and came back in the middle of the ongoing negotiations way after the inspection was done!) but with the market the way it has been, who knows what would have happend if we relisted and what other things another inspector might have decided needed to be done or having to deal with another buyer that might have been really bad!! Just crossing our fingers that this deal closes in 4 weeks!!!
"No contract was drawn up. Verbal/email only."
Then you did not have an offer at all.
All contracts for real property must be reduced to writing under the Statute of Frauds.
Verbal means nothing.
The e-mail might push closer, but it would be a touchy issue since it may not have a valid signature.
In some states, you can have offers be verbal and everyone can go to closing and finalize the deal, with no offer or contract that were ever put in writing.
The issues is - if nothing is in writing, it can't be enforced if someone backs out or if someone wants to enfore something that was agreed upon.
Often folks start off with verbal back and forth (offer, counter), but then decide to write it up in a contract when a price is agreed upon. Problem here is if someone changes there mind before it is put in writing, they can get away with it.
A lot of times folks throw out verbal clues to see if they even want to go through with a formal offer in writing.
For example, when we were selling several years ago there was a serious buyer and he asked how much we were willing to go down in price. We said we would go down some, but not a whole lot. This buyer then proceeded to the next comparable property in same subdivision and bought it for quite a bit lower. He realized we would not come to terms so he didn't waste our time or his time with the paperwork. It worked out well for him (he got a great deal) and it worked out well for us (we sold for a higher price to someone else.)
Yes - exactly - we've always been clear that it is an informal verbal negotiation to see if we are even close. We do not assume that it is in any way legally valid or binding, but are happy to approach it this way to save everybody's time. If we can verbally agree on a price, we will write it up & go from there.
"Often folks start off with verbal back and forth (offer, counter), but then decide to write it up in a contract when a price is agreed upon. Problem here is if someone changes there mind before it is put in writing, they can get away with it."
And anyone can refuse to complete the transaction right up until a real contract is signed.
You could be 'negotiating' for weeks, with no end in sight.
I have refused to do business in states like that.
It is a cultural thing, but I will not participate.
Even when I used agents and had initial offers in writing - I have seen where the counter offers are handled verbally until the final agreement. This usually only takes a couple days.
Also note - the initial verbal negotations can be very beneficial to the seller. This is because a new offer can come in, and the seller can basically be dealing with 2 open negoatiations at the same time. If this is done in writing, a seller would not want 2 counter offers to 2 different buyers open at the same time -since both could accept and then you only have 1 house to sell. But with verbal, you can manage this.
I have uused several ways in prior deals - 1) verbal initially then in writing to finalize contract once price is agreed- 2) initial offer in writing and then verbal back and forth counters and then final contract in writing. 3) I also have done where initial offer and all back and forth is in writing. They all worked out fine. I have never done 100% verbal all the way to closing.
In NY, offers are not in writing. It is all negotiated orally, and the home inspection is done prior to signing any papers or putting any money down. There is also no inspection contingency. The buyer will do the inspection prior to any signed contracts, and whatever terms are agreed to between parties regarding inspection remediations will be written into the contract. The contract is written and presented by the seller's attorney.
Regarding the original question. I ignored a seemingly low ball offer and came to regret it becuase that offer fell away and then the market crashed and I ended up taking less than that "lowball offer". I recommend that you come to terms on price with any offer, even if it is low, negotiate the buyer to the highest price you can get them. You will have plenty of time during the inspection period to decide you do not want to present the actual contract. If you are doing this, you should inform your real estate agent exactly what you are doing (i.e. getting them to a price in order to think it over).