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Today's homebuyers are venturing into territory that was considered off-limits a year ago. In last year's hot seller's market, there wasn't much point in making an offer on a listing unless you were willing to pay the full asking price or more. Now buyers are routinely offering sellers less than the list price-in some cases, a lot less.
As disappointing as this might be for sellers, a low offer is better than no offer at all. A low offer, in most cases, should be viewed as the beginning of a dialogue with the buyer-a dialogue that might result in a mutually acceptable purchase agreement.
Often a preliminary dialogue between the buyer's and seller's agents is helpful in determining whether the buyer and seller are flexible. However, verbal agreements to sell real estate are not binding, so any counter proposal to the other party—called a counteroffer—should be in writing.
Countering an offer from a buyer who doesn't have the financial wherewithal to buy your home is a waste of time. So, before you and your agent draft a counteroffer, make sure the buyer can perform. Your agent might want to talk directly to the buyer's loan agent or mortgage broker. If the buyer hasn't developed a relationship with a mortgage lender, make any counteroffer contingent upon the buyer providing you with a preapproval letter within several days of contract acceptance.
HOME SELLER TIP:
Make sure the buyer has accurate information to support your counteroffer price. Recently, a homebuyer in the Oakland Hills offered a price that was significantly lower than the list price. She based her offer price on comparable sales information that she found by herself on the Internet. Her agent took a look at the comparables. They were not, in fact, properties that were similar to the listing in question. The buyer's agent provided legitimate comparables. After reviewing them, the buyer was willing to raise her price to a level that was acceptable to the seller.
Sellers often wonder what happens if another buyer comes along during the counteroffer process and offers a higher price. A seller can withdraw a counteroffer as long as the buyer hasn't already signed it and delivered it back to the seller. If the buyers issue a counteroffer to the seller's counter and another buyer comes along with a better offer, the sellers are free to negotiate with the second buyer. Great care should be taken when withdrawing a counteroffer to make sure that you don't enter into agreements to sell your home to more than one buyer.
Real estate purchase offers are complicated legal documents. They encompass all the terms and conditions of the home purchase agreement, not just the price. The contract should reflect your needs and intentions. But, try to avoid countering on insignificant issues.
Recently, a seller in the Montclair section of Oakland received a low offer. A lender had preapproved the buyer. But, the buyer included a loan contingency in the contract just to be on the safe side. Last year, preapproved buyers often made offers without including a loan contingency, particularly if they were in competition with other buyers.
In this case, the seller's agent advised the seller to issue a counteroffer that removed the loan contingency from the contract, even though this was the only offer on the property. The buyers thought that this was unreasonable and walked away from the negotiations.
THE CLOSING:
Make sure that your agent isn't making decisions for you, or negotiating against your best interests. You are the decision-maker in the transaction.
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