You've invested a great deal in this house. So when the time comes to put it on the market, you expect potential buyers to recognize its true value. But sometimes, you get an offer that's so far below your asking price it feels like someone pitched a baseball straight at your stomach.
Should you simply walk away from such a number? Or does it make sense to pause and weigh your options? Here are some points to consider before you decide:
#1 Is It Really Lowball or Just Lower Than You Wanted?
Some agents define a low-ball offer as 25% or more below list. In areas where there's a shortage of available homes, that figure may drop to 20%.
"What defines lowball varies from market to market and even submarket to submarket, but certainly from price range to price range," says Steve McLinden of Bankrate.com.
In other words, an offer of $80,000 on a $100,000 home will likely be more quickly dismissed than a $1.6 million offer on a $2 million home, he says.
#2 Should You Immediately Reject a Lowball Bid?
Although your feelings may be hurt, giving in to the drama monster won't get your house sold. "When the lowball offer comes in, it can be upsetting, but it doesn't have to be," says Bill Gassett of RE/MAX Executive Realty in Hopkinton, Mass. "The fact that someone wants to buy your home is a good thing, and you should deal with every offer -- unless it's just completely ridiculous."
What constitutes a ridiculous offer? Anything significantly less than 25% below your list price should probably trigger warning bells. However, it pays to rely on your agent's expertise to help you decide on the right response.
Countering, rather than ignoring, a low offer is often the smartest strategy. A counter to a lowball offer "shows buyers you're willing to work with them," says Eric Snyder of Tangent Realty in Boca Raton, Fla. After all, he reasons, "it's not about where buyers start, it's where they end up."
And you'll never have a chance of getting to that final number if you allow your emotions to cloud your judgment.
Related: The 9 Emotions of Selling Your House
#3 Is Your Price Too High?
Sometimes when a seller receives one — or more — lowball bids, it may be because the asking price for the home is out of step with the market.
Before you set a price, your agent will provide you with comps — for-sale listings of similar properties in the area — along with a pricing recommendation. Your best bet is pricing that reflects the comps. If you decide to test a higher price, you might have to tweak your price to invite more reasonable offers, which is just going to delay the sale.
#4 What Do You Really Need?
There may be factors involved in selling your home that are more important to you than price. Perhaps you need to sell quickly because you're buying another home. Maybe an all-cash deal would make your life a lot easier. There are a number of potential deal sweeteners that a potential buyer could provide that may make a low offer more appealing. These include:
- A preferred closing date
- A solid mortgage preapproval letter from the buyer (not just a prequalification)
- A larger down payment
- Fewer inspection contingencies
#5 Will You Look Too Desperate?
Don't worry about how your willingness to entertain a lowball offer is perceived. What matters most is the result, says McLinden.
"Some sellers get so wrapped up in righteous indignation following an 'insulting' offer that they tell their agent to refuse all further communication from the offender," he says. And while that may soothe your wounded ego, it won't help sell your house.