Selling home - low ball negotiation

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htdrag11
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Selling home - low ball negotiation

Post by htdrag11 » Thu May 14, 2020 7:56 pm

We've put our house just up about 10 days before the lockdown. There was about an average showing of one visit per day from unique buyer. With the lockdown, there were very few.

So after 2 months of listing (about 8-9 weeks of lockdown), we've got our 1st offer. As some of you who are familiar with eBay, one could set up a threshold where all low bids are rejected. Obviously this criteria does not apply to MLS listing. The buyers are from the same town. Based on their address, the buyers live about 15 miles away. They are putting 80% down with a typical 60 day closing, using a conventional 30-year mortgage. We've no idea what their professions are, yet.

The offer is just below 10%. Working with our realtor, we thought that we were realistic with our listing price, about on par or below Zillow's recommendation. BTW, we did not able to find a smaller house or condo to downsize to (very slim pickings due to the virus), so we're not "dying" to get out. However, our backup plan is to rent for a year.

Should we reject the offer outright or try to negotiate? If it's the latter, how would one go about it? I'm afraid that upon inspection, the buyers could come back with a long laundry list to lower the price again. Thanks in Advance.
Last edited by htdrag11 on Thu May 14, 2020 8:07 pm, edited 1 time in total.

bluebirdy
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Re: Selling home - low ball negotiation

Post by bluebirdy » Thu May 14, 2020 8:01 pm

I'd certainly negotiate and try to move this towards a deal. Part of what you may want to negotiate/stipulate is the house is being sold as-is. So in exchange for you accepting a lower sale price, it would be a pass/fail inspection with no opportunity to ask for more money off because of what they find.

supalong52
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Re: Selling home - low ball negotiation

Post by supalong52 » Thu May 14, 2020 8:02 pm

Counter with your best and final. Expect repair costs too. Sounds like you believe there are things to be repaired anyway. You've been on the market for a good amount of time. If this doesn't pan out and you don't need to sell then plan on delisting.

fabdog
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Re: Selling home - low ball negotiation

Post by fabdog » Thu May 14, 2020 8:03 pm

Your broker should be able to recommend a counter offer strategy. What do they say? They, after all, are working for you, and you've hired them expressly for their expertise in selling a house

Mike

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Kenkat
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Re: Selling home - low ball negotiation

Post by Kenkat » Thu May 14, 2020 8:15 pm

fabdog wrote:
Thu May 14, 2020 8:03 pm
Your broker should be able to recommend a counter offer strategy. What do they say? They, after all, are working for you, and you've hired them expressly for their expertise in selling a house

Mike
Agree, this is what you are paying your realtor for.

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htdrag11
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Re: Selling home - low ball negotiation

Post by htdrag11 » Thu May 14, 2020 8:16 pm

We got the offer about 30 minutes ago, so I will talk to our agent in the morning.

Our house is about 30 years old. Things we would like to fix if staying:
- replaced our 20-year old Trx deck (still fine but showing age)
- MBR, everyone likes the new stuff but this is the original with a HUGE jacuzzi
- roof is also 20 years old
- replaced all upstairs with hardwood flooring

Everything is working from our perspective; even did a radon test in advance. Entire house went thru a Marie Kondo type de-cluttering over 18 month period. The house is kind of neutral, bright and airy but sterile.

Most people moving to our neighborhood did wholesale remodeling.

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htdrag11
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Re: Selling home - low ball negotiation

Post by htdrag11 » Thu May 14, 2020 8:17 pm

bluebirdy wrote:
Thu May 14, 2020 8:01 pm
I'd certainly negotiate and try to move this towards a deal. Part of what you may want to negotiate/stipulate is the house is being sold as-is. So in exchange for you accepting a lower sale price, it would be a pass/fail inspection with no opportunity to ask for more money off because of what they find.
Looking at the contract, it appear that the buyers would accept "AS IS", a good point. Obviously we hope that there is nothing wrong with the house that could not be fixed within $10k.

Afty
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Re: Selling home - low ball negotiation

Post by Afty » Thu May 14, 2020 8:18 pm

Did I read your post correctly that they offered 10% of your asking price?! If that’s the case, I don’t see much point in negotiating. That seems like a bad faith offer IMO.

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Re: Selling home - low ball negotiation

Post by Dottie57 » Thu May 14, 2020 8:20 pm

bluebirdy wrote:
Thu May 14, 2020 8:01 pm
I'd certainly negotiate and try to move this towards a deal. Part of what you may want to negotiate/stipulate is the house is being sold as-is. So in exchange for you accepting a lower sale price, it would be a pass/fail inspection with no opportunity to ask for more money off because of what they find.
I like this way of looking at things.

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Re: Selling home - low ball negotiation

Post by radiowave » Thu May 14, 2020 8:21 pm

OP you may want to do your own home inspection so you know what may come up from a prospective buyer. We did that several years ago and it helped identify things we didn't know/see. You can present that to the prospective owner and say you'll fix X but other items are cosmetic and won't fix those. Sounds like you've done a lot of work to prepare for the move, good luck!
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Re: Selling home - low ball negotiation

Post by livesoft » Thu May 14, 2020 8:23 pm

I would counter with your original asking price rather than just blow them off. It tells them than you are not in a hurry to move unless they motivate you. OTOH, maybe they are not motivated to buy.
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Re: Selling home - low ball negotiation

Post by J295 » Thu May 14, 2020 8:28 pm

If you have a good agent, he/she should be able to help you.

There are important details that just can’t be conveyed in a forum like this so any responses here will be of marginal use.

For example, the local market for homes in your price range is a critical part of your evaluation, as is the reasonableness of your asking price. In our local area, high end homes are sitting for a year or more. Lower-priced homes are generally receiving multiple offers and selling at or above asking price right after listing. Middle range homes may or may not sell quickly…

Nationally, reports are that homes are selling well – – even though supply is down, demand still exceeds supply. Of course, national information means very little to you, as real estate is all locally driven.

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Re: Selling home - low ball negotiation

Post by mrspock » Thu May 14, 2020 8:31 pm

Kenkat wrote:
Thu May 14, 2020 8:15 pm
fabdog wrote:
Thu May 14, 2020 8:03 pm
Your broker should be able to recommend a counter offer strategy. What do they say? They, after all, are working for you, and you've hired them expressly for their expertise in selling a house

Mike
Agree, this is what you are paying your realtor for.
Putting food on the table is contingent on you accepting the offer, and the amount of comp they get isn’t sig. different either way. What do you think they will say? :)

It’s the same problem as investment advisors, they are heavily incentivized in subtle and not so subtle ways to work against their clients.

sharp1aarohead
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Re: Selling home - low ball negotiation

Post by sharp1aarohead » Thu May 14, 2020 8:32 pm

What's the price point? 10% of 500,000 feels a bit different than 10% of 125,000. I'd definitely negotiate. Ultimately you need to decide what your bottom line is and I think it's wise to do so with the knowledge that house prices might drop due to covid. If home values drop 20% for instance in the next 18 months, you might be stuck there or have to sell for a bigger loss. Are you okay with that?

The other question I have is how much you owe? If you are going to profit anyways, I'd negotiate a bit then just get the deal done. As somebody who buys and sells houses for a living, I know first hand the stress of waiting for another buyer is worse than the "loss" of accepting a slightly lower. Best of luck!

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Re: Selling home - low ball negotiation

Post by Watty » Thu May 14, 2020 8:35 pm

Kenkat wrote:
Thu May 14, 2020 8:15 pm
fabdog wrote:
Thu May 14, 2020 8:03 pm
Your broker should be able to recommend a counter offer strategy. What do they say? They, after all, are working for you, and you've hired them expressly for their expertise in selling a house

Mike
Agree, this is what you are paying your realtor for.
+1

All real estate is local.

That said you might consider a counter offer something like 2%(???) percent lower than your asking price to keep the dialog open. They may have just thrown out 10% to see what you would say.
htdrag11 wrote:
Thu May 14, 2020 7:56 pm
However, our backup plan is to rent for a year.
Think long and hard about doing this unless you really want to keep it as a rental for the next 10 or 20+ years.

Renting it will greatly complicate your ability to sell it a year from now. You will not be able to put the house on the market until the lease is over and you will likely have to pay to have the house at least refreshed.

I cannot predict the future but starting to rent during a pandemic while there is a lot of talk about a bad recession or depression would give me pause. I am not sure where it is at but there has been a lot of talk about banning evictions and rent strikes.

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Re: Selling home - low ball negotiation

Post by mortfree » Thu May 14, 2020 8:36 pm

I offered 380k on a 425k house. I knew I was low.

They came back with 420k.

That should be a similar move for you.

Note I didn’t buy that house but it sold eventually for 420k

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Re: Selling home - low ball negotiation

Post by drk » Thu May 14, 2020 9:04 pm

Watty wrote:
Thu May 14, 2020 8:35 pm
Think long and hard about doing this unless you really want to keep it as a rental for the next 10 or 20+ years.
I read that differently. I thought OP was saying their back-up plan in the event the house sells is to rent for a year before buying something different because they have not been able to find something smaller to buy.

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Re: Selling home - low ball negotiation

Post by runner540 » Thu May 14, 2020 9:09 pm

htdrag11 wrote:
Thu May 14, 2020 7:56 pm
We've put our house just up about 10 days before the lockdown. There was about an average showing of one visit per day from unique buyer. With the lockdown, there were very few.

So after 2 months of listing (about 8-9 weeks of lockdown), we've got our 1st offer. As some of you who are familiar with eBay, one could set up a threshold where all low bids are rejected. Obviously this criteria does not apply to MLS listing. The buyers are from the same town. Based on their address, the buyers live about 15 miles away. They are putting 80% down with a typical 60 day closing, using a conventional 30-year mortgage. We've no idea what their professions are, yet.

The offer is just below 10%. Working with our realtor, we thought that we were realistic with our listing price, about on par or below Zillow's recommendation. BTW, we did not able to find a smaller house or condo to downsize to (very slim pickings due to the virus), so we're not "dying" to get out. However, our backup plan is to rent for a year.

Should we reject the offer outright or try to negotiate? If it's the latter, how would one go about it? I'm afraid that upon inspection, the buyers could come back with a long laundry list to lower the price again. Thanks in Advance.
Why did you put the house on the market in the first place? If you need to sell, take the offer (after some negotiation but not hardball).

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Re: Selling home - low ball negotiation

Post by Normchad » Thu May 14, 2020 9:13 pm

With 20+ Million suddenly unemployed, and many millions more in economic distress, I think this is definitely a buyers market. Meaning, your buyers have more houses to choose from, and you're unlikely to find other, better offers. How many equivalent homes are in the area that the buyers could alternate choose from? If it's a lot, they really should be looking for a deeper discount. A 90% offer does not sound "low ball" to me. "Low ball" to me would be something like 30%+ below asking price.

So it comes down to how important it is to you to sell, now. Buyers will certainly expect a discount. And it might be the case that if you "met in the middle", they would be content with 5% off. The suggestion above to agree to "as-is" is an excellent starting point as well. With a 20 year old roof, they could be asking for consideration there.

I think if you agree to 95% of what you were asking for, you are doing well, all things considered.

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Re: Selling home - low ball negotiation

Post by adamthesmythe » Thu May 14, 2020 9:13 pm

What Zillow says doesn't matter. Since circumstances have changed you may not be able to insist on a price based on comparables, because all of the comparables will have sold before the troubles.

Your agent should advise you on negotiation, taking into account your circumstances.

I think I would advise a counter, maybe significantly below listing price but not meeting the prospective buyers. If you feel that is giving too much, and you don't need to move, then counter very close to listing price. And expect a likely rejection.

About inspections- you always have the option to say no to any further requests. The buyers will need to spend on an inspector in order to get to that point, so they do have a bit of skin in the game at that point.

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Re: Selling home - low ball negotiation

Post by adamthesmythe » Thu May 14, 2020 9:16 pm

bluebirdy wrote:
Thu May 14, 2020 8:01 pm
Part of what you may want to negotiate/stipulate is the house is being sold as-is. So in exchange for you accepting a lower sale price, it would be a pass/fail inspection with no opportunity to ask for more money off because of what they find.
In my opinion, there is never a reason to do this, because the seller can always decline to do any repairs.

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Re: Selling home - low ball negotiation

Post by 8foot7 » Thu May 14, 2020 9:18 pm

If they truly offered you 10%, that is, they want to buy a 500k house for 50k, then I wouldn’t even bother responding.
10% off asking (500k house, 450k offer) is something I’d explore. It’s a big discount but it was an opening salvo. Perhaps as others say if they waive an inspection contingency and close quick.
But you should figure out what your lowest number is, what number below which it wouldn’t be worth it to move, rent for a year, etc.

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Re: Selling home - low ball negotiation

Post by Jack FFR1846 » Thu May 14, 2020 9:35 pm

You need to decide if you're going to be able to find some place you like for a lower cost first, in my opinion. If you end up agreeing on a price and everything acceptable is 20% more and your goal was to downsize, then you did yourself no favors.

On the negotiation, all's fair. I bought our house at way more than 10% below asking.

When selling a house, we got an offer 10% below asking. We settled on $200 (two hundred dollars) below asking.

Those are not going to be realistic in every situation, obviously.
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Re: Selling home - low ball negotiation

Post by htdrag11 » Thu May 14, 2020 9:44 pm

Afty wrote:
Thu May 14, 2020 8:18 pm
Did I read your post correctly that they offered 10% of your asking price?! If that’s the case, I don’t see much point in negotiating. That seems like a bad faith offer IMO.
No. They offered around 89% of the asking price.

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Re: Selling home - low ball negotiation

Post by htdrag11 » Thu May 14, 2020 9:52 pm

Normchad wrote:
Thu May 14, 2020 9:13 pm
With 20+ Million suddenly unemployed, and many millions more in economic distress, I think this is definitely a buyers market. Meaning, your buyers have more houses to choose from, and you're unlikely to find other, better offers. How many equivalent homes are in the area that the buyers could alternate choose from? If it's a lot, they really should be looking for a deeper discount. A 90% offer does not sound "low ball" to me. "Low ball" to me would be something like 30%+ below asking price.

So it comes down to how important it is to you to sell, now. Buyers will certainly expect a discount. And it might be the case that if you "met in the middle", they would be content with 5% off. The suggestion above to agree to "as-is" is an excellent starting point as well. With a 20 year old roof, they could be asking for consideration there.

I think if you agree to 95% of what you were asking for, you are doing well, all things considered.
Good point. The market in our area, even before the virus, was slim picking. It got worse since fewer people want to list and have strangers walking in. Being a buyer and seller in the same high rent county, we are in a no win situation. As someone suggest, we could counteroffer at 100% or just a token $5k off to see how it goes.

BTW, the buyer's other half is pregnant (kind of hard to hide even from a distance) and would like to move in within 60 days. On the 2nd visit, brought their contractor with them contemplating remodeling the house regardless.

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Re: Selling home - low ball negotiation

Post by Normchad » Thu May 14, 2020 10:02 pm

htdrag11 wrote:
Thu May 14, 2020 9:52 pm
Normchad wrote:
Thu May 14, 2020 9:13 pm
With 20+ Million suddenly unemployed, and many millions more in economic distress, I think this is definitely a buyers market. Meaning, your buyers have more houses to choose from, and you're unlikely to find other, better offers. How many equivalent homes are in the area that the buyers could alternate choose from? If it's a lot, they really should be looking for a deeper discount. A 90% offer does not sound "low ball" to me. "Low ball" to me would be something like 30%+ below asking price.

So it comes down to how important it is to you to sell, now. Buyers will certainly expect a discount. And it might be the case that if you "met in the middle", they would be content with 5% off. The suggestion above to agree to "as-is" is an excellent starting point as well. With a 20 year old roof, they could be asking for consideration there.

I think if you agree to 95% of what you were asking for, you are doing well, all things considered.
Good point. The market in our area, even before the virus, was slim picking. It got worse since fewer people want to list and have strangers walking in. Being a buyer and seller in the same high rent county, we are in a no win situation. As someone suggest, we could counteroffer at 100% or just a token $5k off to see how it goes.

BTW, the buyer's other half is pregnant (kind of hard to hide even from a distance) and would like to move in within 60 days. On the 2nd visit, brought their contractor with them contemplating remodeling the house regardless.
Well, that is some good information to have. In a lot of families, the wives are the primary drivers in real estate purchases. So they are probably very interested, and very eager to reach a deal; doesn't mean they will pay full price, but I'm sure they're open to a counter offer. Best of luck to you!

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Re: Selling home - low ball negotiation

Post by kennaster » Thu May 14, 2020 10:13 pm

mrspock wrote:
Thu May 14, 2020 8:31 pm
Kenkat wrote:
Thu May 14, 2020 8:15 pm
fabdog wrote:
Thu May 14, 2020 8:03 pm
Your broker should be able to recommend a counter offer strategy. What do they say? They, after all, are working for you, and you've hired them expressly for their expertise in selling a house

Mike
Agree, this is what you are paying your realtor for.
Putting food on the table is contingent on you accepting the offer, and the amount of comp they get isn’t sig. different either way. What do you think they will say? :)

It’s the same problem as investment advisors, they are heavily incentivized in subtle and not so subtle ways to work against their clients.
This is exactly my thinking too. Realtor cut is about 2%, so +-10% on the sale price really doesn't matter to them. They want that house sold. Taking a 10% hit on asking is a tough call as a seller.

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Re: Selling home - low ball negotiation

Post by delamer » Thu May 14, 2020 10:23 pm

sharp1aarohead wrote:
Thu May 14, 2020 8:32 pm
What's the price point? 10% of 500,000 feels a bit different than 10% of 125,000. I'd definitely negotiate. Ultimately you need to decide what your bottom line is and I think it's wise to do so with the knowledge that house prices might drop due to covid. If home values drop 20% for instance in the next 18 months, you might be stuck there or have to sell for a bigger loss. Are you okay with that?

The other question I have is how much you owe? If you are going to profit anyways, I'd negotiate a bit then just get the deal done. As somebody who buys and sells houses for a living, I know first hand the stress of waiting for another buyer is worse than the "loss" of accepting a slightly lower. Best of luck!
This is very good advice. My belief is that the economy is going to get a lot worse before it gets better, and that should figure into your decision making.

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Re: Selling home - low ball negotiation

Post by Momus » Fri May 15, 2020 12:41 am

I'd counter 10k above asking price. They mocked you and they should know.

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Re: Selling home - low ball negotiation

Post by Northern Flicker » Fri May 15, 2020 12:58 am

Dottie57 wrote:
Thu May 14, 2020 8:20 pm
bluebirdy wrote:
Thu May 14, 2020 8:01 pm
I'd certainly negotiate and try to move this towards a deal. Part of what you may want to negotiate/stipulate is the house is being sold as-is. So in exchange for you accepting a lower sale price, it would be a pass/fail inspection with no opportunity to ask for more money off because of what they find.
I like this way of looking at things.
I think it is meaningless. I think it just means that if something too big to accept comes up in the inspection, they will terminate the deal unless the seller is willing to relax the selling as-is condition, which puts the seller in the same boat as if such a clause does not get put in.
Risk is not a guarantor of return.

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Re: Selling home - low ball negotiation

Post by whoshighpitch » Fri May 15, 2020 7:19 am

Momus wrote:
Fri May 15, 2020 12:41 am
I'd counter 10k above asking price. They mocked you and they should know.
Oh c'mon now. They put in an offer, If seller doesn't like it they can just ignore it. It looks to me like the potential buyer offered more money for the house than anyone else on earth so why be offended? When I bought my house in 2012 my initial offer was 24% less than the listed price. A little back and forth and ended up closing at 13% less than asking price. Often times sellers think there house is worth more than the market does.

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Re: Selling home - low ball negotiation

Post by simas » Fri May 15, 2020 7:30 am

htdrag11 wrote:
Thu May 14, 2020 7:56 pm
We've put our house just up about 10 days before the lockdown. There was about an average showing of one visit per day from unique buyer. With the lockdown, there were very few.

So after 2 months of listing (about 8-9 weeks of lockdown), we've got our 1st offer. As some of you who are familiar with eBay, one could set up a threshold where all low bids are rejected. Obviously this criteria does not apply to MLS listing. The buyers are from the same town. Based on their address, the buyers live about 15 miles away. They are putting 80% down with a typical 60 day closing, using a conventional 30-year mortgage. We've no idea what their professions are, yet.

The offer is just below 10%. Working with our realtor, we thought that we were realistic with our listing price, about on par or below Zillow's recommendation. BTW, we did not able to find a smaller house or condo to downsize to (very slim pickings due to the virus), so we're not "dying" to get out. However, our backup plan is to rent for a year.

Should we reject the offer outright or try to negotiate? If it's the latter, how would one go about it? I'm afraid that upon inspection, the buyers could come back with a long laundry list to lower the price again. Thanks in Advance.
Talk to your realtor.
let him/her guide you on what you need to do - whether respond with the same price or do something else.

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Re: Selling home - low ball negotiation

Post by galawdawg » Fri May 15, 2020 7:37 am

Whether it is a "low ball" offer is subject to interpretation. When you and your realtor set the asking price, presumably based upon comps, how much consideration was given to condition of the comps? You've got a 20 year old roof, the master bath is original to the house, and so forth...did the comps have a 20 year old roof and dated master bath? With the current financial crisis, home sales have plummeted so while inventory may be low in your area, the pool of interested, willing and able/qualified buyers may be even lower.

If they are putting a substantial amount down on their mortgage (you mentioned 80% down, maybe you meant 20% down), plan to remodel, have brought their contractor out to look at the house, and are making an as-is offer, it sounds like a serious offer worthy of a serious counter-offer with the hope of coming to a win-win middle ground. Just make sure you know where you need to be when the sale closes financially and leave some buffer above that "just in case". During the negotiation, they may still have an inspection clause and come back seeking repair concessions. So I'd recommend aiming for a point between where you need to be and where you want to be when the sale is completed.

Good luck.

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Re: Selling home - low ball negotiation

Post by Kenkat » Fri May 15, 2020 7:41 am

kennaster wrote:
Thu May 14, 2020 10:13 pm
mrspock wrote:
Thu May 14, 2020 8:31 pm
Kenkat wrote:
Thu May 14, 2020 8:15 pm
fabdog wrote:
Thu May 14, 2020 8:03 pm
Your broker should be able to recommend a counter offer strategy. What do they say? They, after all, are working for you, and you've hired them expressly for their expertise in selling a house

Mike
Agree, this is what you are paying your realtor for.
Putting food on the table is contingent on you accepting the offer, and the amount of comp they get isn’t sig. different either way. What do you think they will say? :)

It’s the same problem as investment advisors, they are heavily incentivized in subtle and not so subtle ways to work against their clients.
This is exactly my thinking too. Realtor cut is about 2%, so +-10% on the sale price really doesn't matter to them. They want that house sold. Taking a 10% hit on asking is a tough call as a seller.
In your jobs, do you not really care whether you do a good job or not because you’re going to get paid anyway? A realtor or financial advisor who’s attitude is “who cares, I’m getting my money” isn’t going to last long and I don’t think most think this way.

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Re: Selling home - low ball negotiation

Post by galawdawg » Fri May 15, 2020 7:46 am

whoshighpitch wrote:
Fri May 15, 2020 7:19 am
Momus wrote:
Fri May 15, 2020 12:41 am
I'd counter 10k above asking price. They mocked you and they should know.
Oh c'mon now. They put in an offer, If seller doesn't like it they can just ignore it. It looks to me like the potential buyer offered more money for the house than anyone else on earth so why be offended? When I bought my house in 2012 my initial offer was 24% less than the listed price. A little back and forth and ended up closing at 13% less than asking price. Often times sellers think there house is worth more than the market does.
A number of years ago a family member saw a house outside of Atlanta that she was interested in but she believed the asking price was substantially higher than warranted. Over her realtor's objection, she put in an offer almost 30% below asking. The offer was declined with no counter-offer. Four months later, the seller reached out through their realtor to see if she was still interested and willing to purchase for the amount she offered. She was and she did.

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Re: Selling home - low ball negotiation

Post by SchruteB&B » Fri May 15, 2020 7:50 am

Momus wrote:
Fri May 15, 2020 12:41 am
I'd counter 10k above asking price. They mocked you and they should know.
Mocked? I don’t see that at all. This strategy is very common where I live. You list, they offer 90-92%ish, you negotiate and it usually winds up somewhere around 95% of ask.

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Re: Selling home - low ball negotiation

Post by ScubaHogg » Fri May 15, 2020 7:54 am

Kenkat wrote:
Thu May 14, 2020 8:15 pm
fabdog wrote:
Thu May 14, 2020 8:03 pm
Your broker should be able to recommend a counter offer strategy. What do they say? They, after all, are working for you, and you've hired them expressly for their expertise in selling a house

Mike
Agree, this is what you are paying your realtor for.
The broker (notice I didn’t say “your broker”) isn’t incentivized to get you the best deal. They are incentivized to sell the house quickly. I wouldn’t rely on them at all for your offer/counter off strategy.
“There is no problem so bad you can’t make it worse.” - Chris Hatfield, Astronaut mantra

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Re: Selling home - low ball negotiation

Post by New Providence » Fri May 15, 2020 7:55 am

+Realtor's job is to find you a buyer by listing your house on the MLS. They are not your financial or legal advisor; don't expect much from them.
+You always negotiate. A good buyer will low ball expecting the counter and 10% off is not too bad; offer a reasonable counter. House should have been priced with these expectations.
+Don't know where you live, but "as is" will never fly in my area. Too much risk for the buyer.
+Inspection will pick structural and cosmetic issues. You are only responsible for structural ones.
+Background of buyers is irrelevant. It only comes into play if you have competing offers and one buyer makes an offer with too many contingency vs someone paying cash.

Again, offer a counter. Go thru the inspection, most likely it will require only a few minor discounts. The buyer likes the house; that's why they made the offer.

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Re: Selling home - low ball negotiation

Post by Sandtrap » Fri May 15, 2020 7:55 am

Questions:

1. Did the prospective buyer give "earnest money" with the offer?
2. Is the offer, if accepted, a "binding offer"? (or just talk)
3. Do you want to sell the property? (yes or no)
4. Accept the offer "sold as is" "cash sale" "30 day close". Can you do that? Are you willing to do that?
5. Do you have a "must have" sales price that is non negotiable? What is it?
6. Make a fair and reasonable counter offer without losing the sale. Can you do that and keep things simple?
7. "Zillow" property valuation estimates are only in a broad range estimate. It can be very inaccurate. Did you have a good property appraisal done? By who?

*The true value of a property is how much you can get for it, how much someone is willing to put cash in your hand for it.

Your property does not seem to be in high demand so you have to make the most out of any sincere offer you get.
Consider your alternatives if this property is not sold. You seem to already be accepting that. So, either sell it and walk away, you will recover whatever price difference between "hem and haw" over time. Or. . .don't sell the property and rent it out until you decide you "really" want to sell it.

Keep things simple. It doesn't matter what the buyers do for a living or what their professions are.

If you have a broker/realtor, then they should be negotiating for you in your best interest. Or, are you doing it yourself?

Remember. The first and last goal of selling a property is to "sell it".

j :happy
Last edited by Sandtrap on Fri May 15, 2020 8:01 am, edited 5 times in total.
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Kenkat
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Re: Selling home - low ball negotiation

Post by Kenkat » Fri May 15, 2020 7:56 am

ScubaHogg wrote:
Fri May 15, 2020 7:54 am
Kenkat wrote:
Thu May 14, 2020 8:15 pm
fabdog wrote:
Thu May 14, 2020 8:03 pm
Your broker should be able to recommend a counter offer strategy. What do they say? They, after all, are working for you, and you've hired them expressly for their expertise in selling a house

Mike
Agree, this is what you are paying your realtor for.
The broker (notice I didn’t say “your broker”) isn’t incentivized to get you the best deal. They are incentivized to sell the house quickly. I wouldn’t rely on them at all for your offer/counter off strategy.
Brokers with this attitude don’t last very long in the broker business.

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Re: Selling home - low ball negotiation

Post by Nowizard » Fri May 15, 2020 8:06 am

Make your best offer and include any limitations to inspection repairs you consider reasonable. Alternatively, in our area, many have a handyman inspect and make repairs before listing. Common things are stuck windows, doors that do not close completely, drywall cracks and plumbing/electrical/roofing questions.

Tim

ScubaHogg
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Re: Selling home - low ball negotiation

Post by ScubaHogg » Fri May 15, 2020 8:08 am

Kenkat wrote:
Fri May 15, 2020 7:56 am
ScubaHogg wrote:
Fri May 15, 2020 7:54 am
Kenkat wrote:
Thu May 14, 2020 8:15 pm
fabdog wrote:
Thu May 14, 2020 8:03 pm
Your broker should be able to recommend a counter offer strategy. What do they say? They, after all, are working for you, and you've hired them expressly for their expertise in selling a house

Mike
Agree, this is what you are paying your realtor for.
The broker (notice I didn’t say “your broker”) isn’t incentivized to get you the best deal. They are incentivized to sell the house quickly. I wouldn’t rely on them at all for your offer/counter off strategy.
Brokers with this attitude don’t last very long in the broker business.
And yet they do. I think it was Malcolm Gladwell who compiled some data that agents leave their own houses on the market longer and sell for more, controlling for everything else.

Real Estate agents are incentivized the same way stock brokers are. Transact transact transact. The real skill is making the client feel good (or at least ok) about it.

I once offered a unique compensation scheme to an agent where they would make a lot more money for selling my house at the top of the range they gave me (ie, quite a bit more than the standard 3%) and an okay amount for the bottom of the range (don’t remember exactly, but it somewhere in the 2% range). They didn’t even consider a performance based plan and immediately rejected it. Turns out they were terrible. Should have fired them then and there.
“There is no problem so bad you can’t make it worse.” - Chris Hatfield, Astronaut mantra

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Re: Selling home - low ball negotiation

Post by snowman » Fri May 15, 2020 8:10 am

Normchad wrote:
Thu May 14, 2020 9:13 pm
With 20+ Million suddenly unemployed, and many millions more in economic distress, I think this is definitely a buyers market. Meaning, your buyers have more houses to choose from, and you're unlikely to find other, better offers. How many equivalent homes are in the area that the buyers could alternate choose from? If it's a lot, they really should be looking for a deeper discount. A 90% offer does not sound "low ball" to me. "Low ball" to me would be something like 30%+ below asking price.

So it comes down to how important it is to you to sell, now. Buyers will certainly expect a discount. And it might be the case that if you "met in the middle", they would be content with 5% off. The suggestion above to agree to "as-is" is an excellent starting point as well. With a 20 year old roof, they could be asking for consideration there.

I think if you agree to 95% of what you were asking for, you are doing well, all things considered.
I would just caution against using simplistic comments like "this is definitely a buyers market". It is definitely not true in my area. We don't know where OP lives, and since all real estate is local, we really don't know what kind of market he is facing.

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Re: Selling home - low ball negotiation

Post by 8foot7 » Fri May 15, 2020 8:14 am

Kenkat wrote:
Fri May 15, 2020 7:56 am


Brokers with this attitude don’t last very long in the broker business.
I think one good thing about a real estate crisis, if this actually ends up becoming one, is that it generally drives out these part-time "realtors" who are only keen on scalping 6% off a transaction that was already going to happen -- you know the type, the ones that don't come out during the work week or on Sundays and are never around but show up at the closing to get their check, the ones that when you ask for advice they say "I think you should just do it, give in" or "let me ask my lead broker what he has seen," your neighbor's friend's out of work husband or the stay at home mom, etc. These people weren't ever real estate experts and brought precious little value to a transaction and when the easy money goes in a crisis, so will they. Of course, they'll be back in a boom time.

A good real estate broker/realtor would have already told you what they thought of the offer, how it compares to other deals he or she is seeing right now, and how she advised you respond.

With all of that said, OP, I would not count on your broker doing any sort of hard bargaining. In our area contracts and closings are hard to come by and above all your agent is incentivized to get the deal closed, a goal that means more now than it did several months ago. Prices have not yet started to fall but that's apparently because inventory remains tight, but I still think the pool of buyers shrinks every day. Perhaps your area is different.

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Re: Selling home - low ball negotiation

Post by randomguy » Fri May 15, 2020 8:21 am

SchruteB&B wrote:
Fri May 15, 2020 7:50 am
Momus wrote:
Fri May 15, 2020 12:41 am
I'd counter 10k above asking price. They mocked you and they should know.
Mocked? I don’t see that at all. This strategy is very common where I live. You list, they offer 90-92%ish, you negotiate and it usually winds up somewhere around 95% of ask.
Some people read it is 10% of list price (10k for a 100k house). Others read it as 10% below list (90k). A 10% offer isn't worth replying to. At 10% below list this is a pretty standard offer. You take a couple thousand off and counter back. How much to take off depends on how important it is to sell your house now and if getting less in the future is an OK outcome. As other people have pointed out these are abnormal times. Nobody can predict where real estate will be in 6 months.

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Re: Selling home - low ball negotiation

Post by bloom2708 » Fri May 15, 2020 8:23 am

I would either not reply or come back at $415k.

If they walk away at $415k, then they weren't serious. They might counter at $410k or $405k. Or not reply again.

The OP does not have to sell and time is not a problem. People will be looking for deals. Both sides have to agree.
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htdrag11
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Re: Selling home - low ball negotiation

Post by htdrag11 » Fri May 15, 2020 8:25 am

Lots of good advice here.

I let it sit overnight and will call our realtor today.

Additional facts and factors - we own the house so there is no issue of having a mortgage or problem of negative equity.
- There are very few houses on sales due to the virus. This is not helping us or the buyers since we both are looking in the same county.
- Virus is the wild card. Actually it's a plus for our county, per our realtor as people exited from NYC.
- On that same day when the buyers were making the 2nd visit, another couple also came back for the 2nd one with the whole family and grandparents, plus a brother in the construction business. We're hoping for their bid to come in this week.

My wife suggested do nothing (is actually a good strategy than doing something) while I would counter with $5,000 less. Lets see what the realtor suggests.

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Re: Selling home - low ball negotiation

Post by bovineplane » Fri May 15, 2020 8:26 am

I don't consider 11% off asking to be a low-ball offer. We still don't know the price range of the house. 11% off is a feeling the waters before our best and final offer.

Your realtor will be zero help in counter. They only get paid if a deal closes. Realtors are incentivized to close a deal, not the best deal. We never consider the realtor thoughts/hopes/dreams when buying/selling a house. 6% of $500k is $30k split. Broker takes thier part leaving the rest to the Realtors. 6% of $450k is $27k. $1500 difference for each party. After broker fees and such the realtor might be out a couple hundred bucks by selling your house $50k under asking. Not enough to make your realtor get that last penny.

Markets are all local. If you aren't happy at the offer you can counter. You can do this a few thousand at a time or just come up with a number that works and send best final offer. Buyer can take it or leave it.

You can also negotiate with the realtor. Some may not like this but we have done this with each house purchase/sold. If you are at a 6% split, and the deal is close, knock 2% off the split. Your realtor won't like it but whatever. They only get paid if the deal closes. If you gave up some skin, so can they if they really want to get it done. You will see your realtor true motivation as soon as their pocket gets lighter in the deal and puts that money in your pocket. If they balk, "so your asking me to give up 10% to close but you won't consider 2% to make this deal happen?"

The only person incentavized to negotiate is you. My plan would be:

Talk to wife. Decide what our number is. Send back offer at that number.

If they decline or counter. Send back best final offer but pull 1-2% from the Realtors to make your number.

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htdrag11
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Re: Selling home - low ball negotiation

Post by htdrag11 » Fri May 15, 2020 8:28 am

Nowizard wrote:
Fri May 15, 2020 8:06 am
Make your best offer and include any limitations to inspection repairs you consider reasonable. Alternatively, in our area, many have a handyman inspect and make repairs before listing. Common things are stuck windows, doors that do not close completely, drywall cracks and plumbing/electrical/roofing questions.

Tim
That was all done in the last 18 months. Thanks.

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Re: Selling home - low ball negotiation

Post by livesoft » Fri May 15, 2020 8:35 am

To follow up on my previous comment: We bid on a house 25 years ago. We figured out our own comps and bid 10% below asking price. The seller came back with the asking price. We found out that their asking price was the buyout they would get from their employer if they could not sell the house. Thus they had little incentive to negotiate. Se we waited until the the corporate relo service bought the house and put it back on the market. We put in the same bid. Their counter offer was about 2% lower, so we went up 0.5% higher than our original bid and they accepted our offer which was about 9% off the original asking price.

My main point is that I often read of this "meeting halfway" thing. People only want to buy and sell at what they think is a fair price for them. It may have nothing to do with what you think is a fair price for you.

You should be able to come up with solid reasons why you priced your home at the value you chose and use those reasons to convince any buyers why your home is worth at least that much. And they should be able to come up with solid reasons why they are offering less. This is not a "because we feel like it" kind of situation.
Last edited by livesoft on Fri May 15, 2020 9:09 am, edited 2 times in total.
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