Selling Soulfully with Jennifer Allan

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How Do I Talk My Buyer Out of Low-Balling?

So, you have a buyer who is bound and determined to get a killer deal on some real estate, huh? He’s heard-tell of this here “buyer’s market” and wants to get himself a piece of that action. Even if it takes all year…

Sigh.contract

We’ve all been there. Worked with buyers who, in our opinions, were unrealistic about the extent of this here buyer’s market and the depths to which sellers are willing to go to offload their properties. They’ve listened to late-night seminars or their Uncle Charlie who provided “expert” advice on how to properly offer on a property (asking price MINUS repairs needed MINUS profit desired MINUS margin for risk MINUS 25%-for-good-measure) without regard for whether or not the asking price is reasonable or not.

They want a deal. And they want you to help them get a deal.

So, you find them exactly what they say they’re looking for. A well-priced home in a good location that needs just the right amount of work to satisfy their need for adding value with cosmetic upgrades.

Yay, sez you! Yay, sez your buyer!

You head for the offer table and the buyer wants to offer low. Really low. Obnoxiously low. Ridiculously low. Unreasonably low. (I’ll stop now, you get my drift).

What do you do?

Write ‘er up.

Yep, write it up as per the instructions of your client. No fussing, no arguing, no defending the asking price. If your buyer wants your opinion, he’ll ask for it. Not to say you can’t provide market data if he seems at all interested, but in most cases, especially early on, he won’t be. He wants a deal and he’s certainly entitled to go after it.

Why shouldn’t you try to talk him out of low-balling?

  • The buyer is the boss. It’s his money and he has the right to spend it (or not) the way he sees fit. 
  • You never know what the seller will accept. If you tried to talk your buyer “up” and the seller accepts his low offer, you’re toast in the credibility department.
  • The buyer hired you to be on his team. His wants are your wants. His preferences, your preferences.
  • If you argue with your buyer over offer price, he’ll wonder if you’re in cahoots with the seller or listing agent, again, jeopardizing your credibility.

Of course, it’s up to you to decide if you want to continue working with the low-balling buyer! You are certainly entitled to end the relationship if it’s not satisfying to you, just as he’s entitled to make whatever ridiculous, unreasonable, obnoxious offer he wants to. But before you fire a low-balling buyer, consider this…

Think of all the good that can come of this experience!

Um….what good, Jennifer?

Tell ya what – I’ve overstayed my welcome on this blog today, so I'll open the floor to your comments. Any thoughts on why you might not want to fire that bottom-feeding, low-balling buyer o'yours?

 

It's Here!

 

The More Fun You Have Selling Real Estate, the More Real Estate You Will Sell! 
(True Story)
Order Your Here!

 

 

 

 

 

 

 

 

Comment balloon 23 commentsJennifer Allan-Hagedorn • August 08 2011 08:01AM

Comments

I do write them up but with a twist. I tell them what I think it goes for in a soft way that plants some seeds for the future offers.

Posted by Chuck Carstensen, Minnesota Real Estate Expert (RE/MAX Results) over 8 years ago

They still run the risk of offending the seller and losing the potential of getting a deal on that property, but I write them up too. I try to show them what their offer is compared to the market. There are those that know better or their Uncle Charlie, who frames houses for a living, knows better.

Posted by Than Maynard, Broker - Licensed to List & Sell - 405-990-8862 (Coldwell Banker Heart of Oklahoma) over 8 years ago

Write it up and prepare the buyer for a counter offer which will put them into negotiations on the sale.  That is what the "Deal" buyers want.  They want you to work for them and negotiate for them the best deal.  In my market we have homes sitting for over a year..I say offer anything, you never know.

Posted by Michael J. Gallo, Florida Luxury Realty - Gulf Home Sales Team (Florida Luxury Realty) over 8 years ago
I just had this happen, went ahead and wrote up a very low offer...and lo and behold the seller took it. My buyer looked at me like I was the best thing since sliced bread even though you and I know it was luck. And I am cool with that, if my buyer is happy, I am happy.
Posted by Lindy Taylor over 8 years ago

Jennifer, could not agree more. The client is the boss, and most of us have had bosses... even misguided ones :). I do hate it, however when the seller rejects and sends the message not to come back. However... all offers are to be presented.

Posted by Bill Saunders, Realtor®, www.BillSellsHotSprings.com (Meyers Realty) over 8 years ago

Honestly, it depends on how badly they want the house - as it's my responsibility to let them know, gently and kindly, that they might lose the deal.  Once I give them that piece of information, you're right, you write up the offer.

This just happened on one of my listings - the people who had been looking for a year - loved the house, but made a low-ball offer on house that was fairly priced. I wasn't their agent - my sellers turned down the offer - per my direction. The next day, we got a much stronger offer and it's pending. The agent representing the low ball offer said her clients are just sick over losing the house. I'm sorry for them, but that's how it goes sometimes.

Thanks for a good conversation Jennifer. 

Posted by Debb Janes EcoBroker and Bernie Stea JD, REALTORS® in Clark County, WA (ViewHomes of Clark County - Nature As Neighbors) over 8 years ago

I am not going to try and talk my buyer out of anything...but I will give them the data with comparables and let them know the possible implications.  At the end of the day, it's their decision and we are supposed to be there for them.  If the seller counters and we don't end up reaching a meeting of the  minds, all we can do is move on. 

Posted by Brenda Mullen, Your San Antonio TX Real Estate Agent!! (RE/MAX Access) over 8 years ago

I don't try to talk them out of it, but do explain what we should expect to happen, one way or the other.  We're helping a fellow agent while she's on vacation, her client called and wants to see 7 properties in a neighboring town.  Thing is, they want to write a lowball offer on each one.  We've not met them yet, just spoke with him on the phone.  It would appear that it's "all about the deal" and has nothing to do with "the house".  What would you do in this case?

Posted by Billie Hiser, A Different Way to do Mohave County Real Estate (Hiser & Co) over 8 years ago

I give them facts of closed sales if they want what they want because they want it I let them know that they may insult the seller, yes this could still happen in a buyer's market if the buyer is unreasonable. I will always have a discussion with my buyer clients and try to have them understand the seller's perspective and with my sellers I reverse that and talk to them about the buyers perspective. No matter the market a property has a verifiable selling number; you could also remind them that pigs get slaughtered.

Posted by Edward Peterson, eDrake; CT (eDrake) over 8 years ago

So far, it sounds as if all of you handle this situation very professionally! What I do want to caution against is doing anything that would give a suspicious buyer (who may have had a bad experience in the past with another agent) any reason to think you're trying to "talk him up" with anything but his best interests at heart. Buyers know how we're paid (or they should) and so it's easy for them to assume that we might be more interested in making an easier sale or a higher sale than in doing what's best for them.

I'm not saying that's what we ARE doing, but sometimes it's better to err on the side of saying too little rather than too much. If a buyer wants your opinion, he'll let you know; if he doesn't, anything you say may be used against you ;-]

Billie and Gary - yipes. I can certainly understand the strategy and if that's what they want to do, they should do it. The question for you is... do YOU want to do it with them? I might be tempted to charge some sort of upfront fee here (if that's allowed in your market) since you're obviously going to put in a lot more work in writing up, explaining and presenting multiple offers at once. Let me know what you decide on this one - and others - please chime in!!!

Posted by Jennifer Allan-Hagedorn, Author of Sell with Soul (Sell with Soul) over 8 years ago

When they do not ask me and give me the offer I write it up. I have to bite my lip . Because I am thinking , when did you become the expert? How many comps have you seen? How would you feel if you were the seller? Now if the seller tells us to take a hike( they do not respond) I ask my buyer if he/she would like to look at comps and maybe re offer if they like the house. If they say no because they usually blame the seller for killing the deal, I wil work one more dela with them. if re preat the experience i drop them 

Posted by Charlie Ragonesi, Homes - Big Canoe, Jasper, North Georgia Pros (AllMountainRealty.com) over 8 years ago

That's what I do, just write it up. Because you never know. I had an investor once that would put in 6 or 8 half price offers at a time. Once one was turned down, but a month later they called and accepted. Finally had to quit working with that buyer, though. She was just wearing me out.

Posted by Ann Cordes, Home Ownership is Not a Distant Dream (Century 21 Randall Morris and Associates, Waco) over 8 years ago

Jennifer, You are so right.  It's their game, and they know what they want to do.  I try to remain as neutral in my opinions as possible, unless they ask for it.  If they lose a few, they usually ask, because real life isn't like the late night infomercials.

Posted by Jeanne M. Gavish, Keller Williams Realty Elite Partners - CIPS,GRI,S (Jeanne Gavish, Keller Williams Realty Elite Partners) over 8 years ago

I have the "kick yourself" technique.  I ask the buyer if they would kick themselves if they lost the home.  If the answer is no, I write it up and let the chips fall where they may.  If the answer is yes, then I ask at what price wouldn't you kick yourself if you lost the home. 

Posted by Nancy Pav, Nancy Pav, Your "GottaHave" Realtor (Century 21 Redwood Realty) over 8 years ago

Jennifer - I warn my clients that a too lower offer may offend the seller and there is a chance that they won't do business with you, but if they want to take a chance, I write it up.  I don't take on clients that continually make lowball offers.  Every once in a while one does get accepted.  I know because that's how I bought my first house.

Posted by Gail Robinson, CRS, GRI, e-PRO Fairfield County, CT (William Raveis Real Estate) over 8 years ago

Love the "kick yourself" technique! It's similar to something I use with my sellers if they want to overprice - I say "So, what will you do if the house doesn't sell?" And then shut up.

In my experience - the more you support your clients' wishes about low-balling - the more you're on their team, the more likely they will ask for and listen to your opinion. But if you're always arguing with them about it, their ego will get involved and they'll probably dig in their heels.

Posted by Jennifer Allan-Hagedorn, Author of Sell with Soul (Sell with Soul) over 8 years ago

I write them up..but also make sure they understand what I think the true value is based on the comps. They need to know I'm in their corner, but also that I know what I'm talking about....this is an opportunity to do both

Posted by Karen Fiddler, Broker/Owner, Orange County & Lake Arrowhead, CA (949)510-2395 (Karen Parsons-Fiddler, Broker 949-510-2395) over 8 years ago

Hi Jennifer - It depends on how low it is and how much they want the home.  If they really are in love with a property I think it is my job to warn them that they seller may choose not to even work with them.  It happens.  I just encouraged a buyer to come up just a little on an initial offer.  The fact was it was waaaaay too low.  I think the bump up helped them come to terms and smoothed the way to a better escrow period. The offer was about 15% below fair market value.  However, the home was  beautifully modernized. The type of home that flies off the shelf.  The final price came in below market - but by starting at somethig just a bit more realistic - I think I spared the client problems down the road.  Now, the client knew they were never going to get the home for that price.   They were just lowballing so they wouldn't have to go too high.   But I had a bad feeling about going in that low - and felt I had to say so.

Posted by Ruthmarie Hicks (Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605) over 8 years ago

    Telling stories.  If you are working with a couple. Tell stories about some  past clients that wanted to squeeze the last dollar out of a seller with alow ball offer.  While we were negogiating, another offer came in that was three thousand dollars higher.  the seller took it.  That was four years ago.  The low ballers wife stills rides by that house every once in a while and wishes she lives there. 

Posted by Ron Climer (Keller Williams Realty Mountain Partners) over 8 years ago

It is a buyers market right now. Buyers feel empowered . I write the offer. however I explain that  it is just an offer. The seller make say NO and you lose. If it is THE house maybe you should rethink the offer. But if they feel like they can move on then ok make the low offer and see. really it is black and white to me.

Posted by Sharon Harris, Realtor (Keller Williams Keystone Realty) over 8 years ago

While it is my job to write up the offer, it is also my job to make sure the buyers are well educated from the beginning.  In this situation I would redirect them to our first buyer's consultation to remind them of what we discussed, I would show them the comps and what this house is worth and I would make sure they understand the possible consequences of a low ball offer.  THEN they can decide what they will!

Posted by Jayne Esposito, SRES, GREEN (Coldwell Banker ) over 8 years ago

Too many agents forget who is incharge of the situation.  Thanks for the post people should read it twice.

Posted by Phil Hillerman, Crye-Leike Realtors® (Crye-Leike Realtors®) over 7 years ago
Yes.. it is safe. Many people would be leary of this.. but if you go about it a way that is buenisss savvy and will protect you as the homeowner, you should be fine. You need to have a VERY clear cut precise lease agreement with them. Nothing is too trivial to spell out in the lease agreement. In fact you should be sure to indicate in the lease agreement that the tenant (soon to be homeowner) will make NO improvements to the property prior to them closing escrow. That means no painting, no changing out appliances, no knocking down wall or even driving nails through the wall to hang family photos. You have to protect your home as IF they won't close. It sounds like their deal is solid and they most likely will but in the event that they don't.. you don't want to have to go back in and make a bunch of repairs (at your cost and time) to put your home on the market again. You need to collect rent from them as well. Or you could require a certain lump sum of money due upon the move in and say that they can have it back once escrow has closed. However you want to work it. The bottom line is to always protect your self and put everything in writing.Also.. to address the answer above me. I would be sure they have a very solid deal put together.. meaning loan approval, etc. You as the seller and the landlord, can require a copy of their credit report AND a copy of their FULL loan approval before agreeing to sell or rent to them (not pre approval and not an approval with conditions.. a FULL approval). If all appears in good standing.. you should be okay.
Posted by Sofi over 7 years ago

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