Is your blood boiling? Reeling at the sheer cheek of your buyer? Surely that offer is a joke?!
You might also be looking sideways at your agent wondering if your suspicions that they never were really working for YOU have just been confirmed…
Should you negotiate or tell that buyer to shove it?
Read on to identify the FOUR types of buyers who make stupidly low offers. And how to manage them…
Buyer One: The Trier
It’s all a game and this buyer just likes to try it on. These buyers can range from cheeky and charming to obnoxious and insufferable.
You’ve probably overheard them order a Ford Freakout at Burger Fuel and ask the bewildered 16-year-old behind the counter ‘Is that your final price?’.
Are they going to walk away if they don’t get their burger for $5? Nope.
And this is why it’s not in your best interest to dismiss The Trier…at least initially.
This buyer is normally pretty easy to deal with because they only pretend not to know what your home is worth and there isn’t a solid reason behind their low offer – just the compulsive desire to haggle. They can’t help themselves.
Keep a level head and indulge their little game. Give them a small concession with each counteroffer until you reach your limit and then go back at the same level again to show them you mean business this time.
“But I’m a busy person and don’t have time for games! I’m not interested in going back and forth 20 times!”
Respectfully, as long as you are moving north you are making progress.
Your agent can handle the early stages of this negotiation on the phone and meet with you and the buyer in person when the numbers start getting real. For you, this part of the process is more annoying than time-consuming.
Note on lengthy negotiations: A lengthy negotiation with a Trier buyer just gives you time to attract other buyers. And any agent worth their salt will be hustling to make this happen. Multi offer anyone? If your low baller walks away and makes an offer on a house up the road what have you actually lost other than an offer you weren’t going to take anyway?
Now if your buyer is taking ‘piss taking’ to a whole new level and creeping up in $500 increments or trying to put the acid on you with sunset (deadline) clauses or the like you can find out if they mean business by giving your agent written instruction not to write up any more offers below X (X = a round figure below your absolute minimum). All this does is politely give the buyer a bar that they must exceed before you and your agent will invest your time negotiating with them.
And suddenly you are much closer to Game Over. One way or another.
Buyer Two: The Uninformed Buyer (also referred to as The Out-Of-Towner)
The good news is that this buyer often can afford your home and, if they don’t buy yours, they will probably end up buying a very similar home for the money you want. Possibly more. Their low offer is only due to lack of familiarity with values in your area. This might be your buyer!
Buyer Three: The Budget Buyer
These buyers love your home. They adore your suburb. But they can’t afford it. Plain and simple. No amount of negotiation is going to make their $720,000 max stretch to your $850,000 absolute minimum let along your $875,000 asking price.
Explore whether or not they can lift their game. I usually ask if their limit is bank imposed or self-imposed? Or could the Bank of Mum & Dad help? (Sorry parents – karma will eventually get me on this one).
If more money is just not going to happen, again, as with the Trier, instruct your agent not to write up any offers below X (choose a round figure below your absolute minimum). Give the buyer a bar they must exceed before you and your agent will invest your time negotiating with them. Next!
Buyer Four: The Investor (or the Flipper)
Buyers with purpose, this lot are buying with their calculator
However, there are situations where the Investor buyer will pay fair market value and, if
Establish the reason they are buying. Is there something about your property that will suit their purpose at a price point that will move you on? If there isn’t, no amount of sweet talking from you or your agent is going to make a difference.
Are they buying a long term hold? Are they looking for a certain % yield? Or are future Capital Gain and location their main considerations? Or are they looking to buy under market, tidy up and flip immediately? Do they own
The answers to these questions will tell you if there is a chance in hell they are going to get within a stones throw of a price that will move you on.
Ask questions, carefully consider the responses and deal with the Investor Buyer as you would the Trier.
Note to stressed sellers.
If you are selling to relieve financial stress it can be worth exploring whether there are terms an Investor Buyer could offer you that would make a lower sale price acceptable to you. Experienced investors are often very creative at crafting win-win’s. A very quick settlement, an unconditional offer in a market where homes around you are taking 6 months to sell (and you don’t have 6 months to sell) or the option to stay on in your (former) home as a tenant are a few that come to mind.
A few don’ts…
- Don’t take low offers personally. They are not a dig and there is always a reason for them. Find out what the reason is. See if you can work with it.
- Don’t refuse to negotiate. This is a common reaction from sellers who have been low balled and it’s always the wrong one because it prevents you from finding out what a buyers ‘walk away figure’ is.
- Don’t counteroffer above your asking price. It’s a tit for tat move and people are much harder to negotiate with if you make them dislike you.
- Don’t forget the goal.
A final consideration…
If all the offers you have received have been low it is possible that your price, rather than your offer, is out of line with market value. There is nothing wrong with wanting an unprecedented price – it’s just good to know that that’s what you are chasing.
You make quicker progress in negotiation by attempting to understand the other party than by challenging them.
You may also be interested in.
Breaking Up With Your Agent. Is it them or is it you?
RV’s (or CV’s). Are they reliable indicators of market value?