How should I counter a lowball offer on my house?

Question

My 100-year old house in an older, inner-ring suburb with good schools and generally high property values, has been on the market for three weeks now. Traffic has been steady, with agents' appointments averaging about four a week. However, buyers have said while they think the house has a lot of curb appeal, the interior needs too much work: the basement, for starters, is seeping water, and the bedrooms are small with little closet space. Last weekend, we got an offer from a developer: $30K below the asking price, and he wants to tear down the house in order to build a McMansion on the lot. I'm upset and insulted by the offer but am concerned that in a slow market we will not receive anything better. Also, the new property tax rates take effect in two months, and I can't afford them. Should I make a counteroffer or tell the developer to jump in a lake? If I counteroffer, what should I ask for? My realtor, by the way, is pressuring me to accept the offer and has offered no advice.

THANK YOU to everyone who left an answer the first night. I got more advice in one hour than in three weeks with my realtor. The house was priced to sell, $279K. Comparable houses were running at $305K. However, since we got the offer, appointments have dried up, which has been a shock. From four appointments a week we have gone to zilch. Friends have told me that realtors discourage their shopping clients from looking at houses which have offers on them because they don't want to deal with the hassle of bargaining and counter-offering with another realtor and buyer. So the lowball bid has killed all traffic. Following the advice many of you gave, I countered the developer's offer at $270, then 265; I'm now waiting for the buyer's reply. I don't want to put any more money into a house that might be torn down, so I am now willing to work with this buyer. It's discouraging, but I feel like I have a little more control over what's happening with my house now. Thanks again to you all.

Answer 1

All are good answers! But the sentence I keyed on was the one in which the buyer was going to tear down the house. It seems to me the buyer is valuing the land and not the house when he offered you a price $30,000 below your asking price. I doubt the buyer will offer significantly more as the house has no negotiating leverage. Consider this price the basement price as it is for land only. To expect this buyer to significantly raise his /her offering price is like whistling against the wind--not very rewarding.

In most, if not all, areas of the country it is a buyers' market. Since you are getting steady traffic which averages about four a week, you must a good curb appeal. Unfortunately, if you get 10 showings without an offer (not counting the developer's offer), the property has problems, either overpriced or not in good condition or both. If you are unwilling to lower the price, you need to make repairs to entice an offer from a buyer.

The best time to make repairs or refurbish is before you list the property. To wait until you get no offers is to court disaster--the house becomes stale on the market and showings will slow to, at best, a trickle. And still no offers will come in.

The advice I give my sellers who are unwilling to make repairs is to seriously consider price reductions after the house has been listed for 30 days without an offer. How much price reduction? I recommend no less than 5 percent.

As an aside, please don't be insulted or upset by this offer. Be upset with those lookers who don't make an offer. And hold your agent's feet to the fire for advice. If you are not satisfied with the professionalism exhibited by your agent, fire the agent and get a new one.

Answer 2

I know what you mean by a slow market! The problem is that the Buyers are not there. It really isn't a buyer's market cause there re no buyers. The banks are really being tight with the mortgages and so many people just can't get financing like they used to. Also many people are afraid to put ther homes up for sale. So they may want to make an offer but now they can't until they sell their home. It's becoming a vicious cycle. The rest of the buyers are waiting to buy cheap and flip the house. So the prices will be going up again eventually. All this said you sound like you would be better off making a counteroffer of 15,000.00 higher and he may eventually counter that. The house sounds like it could start costing you if you hold out for a better price so be conservative. Either accept the offer or counter no more than 10 or 15,000 more. Good luck to you!

Answer 3

You didn't say how much you were asking for the house. A rule of thumb use to be to offer at least 10% lower than the asking price and the seller usually inflated the price anticipating a lower offer. Now, you already know that you aren't going to get your asking price, especially with a house that has problems. What you have to determine is what is really reasonable.

If there is a chance that you can lose the house to back taxes or the bank, take the offer and don't play around. You can also counter offer about $15000 less and see if the developer is still interestd. But remember, and my sister in law did just that, the offer can disappear just as easily as it appeared (she lost the buyer and still has the house 6 months later).

Answer 4

There's a cute little trick that some people employ when they want to buy a house at a bargain in a slow market.

First you send in your friend Joe, to make an offer at $50,000 below your asking price. He gets rejected. Then you send in your friend Jim, to make an offer at $45,000 below your asking price. He gets rejected. Finally, the guy who really wants it comes in with an offer $30,000 below asking. You're so distraught at the lowballs you've been getting, that you jump at the offer, thinking it's $15,000 or $20,000 better, rather than $30,000 below.

There's no reason to be upset. There's no reason to be insulted. He offered you a deal that's great for him. Why should you expect him to offer a deal that's great for you? That's YOUR job.

You might want to hire an expert to appraise your house. Maybe the $30K low price is a fair price after all.

But it would probably pay to fix the seeping basement. That's not a hard fix. You just coat the basement walls with hydraulic cement. Spending $5,000 on that could increase your property value by $15,000.

You can't afford the taxes? Surprise. You're going to have to live *somewhere* and taxes are going up *everywhere*. So get a second mortgage if you need to, and fix what you can reasonably fix. Nobody wants to buy a house full of known problems, because there are always hidden problems as well.

Answer 5

Make a counteroffer - the worst that can happen is that the buyer goes away. If you tell the developer to jump in a lake without even trying to negotiate, then you don't even have a chance of closing the deal.

In your counteroffer, ask for something above your bottom line acceptable price - that'll still leave you some negotiating room to move your price even lower.

Of course, since your realtor only gets paid if you successfully sell, he'll eventually pressure you to accept any offer.

Answer 6

if you dont want to sell for that price, tell your agent and the developer to FO. dont forget, agents and developers "work together" more so then owners and agents etc..

So I would say..maybe come down no more then 5-10K *depending on what you built into as an overage*, get an assessment against your property and house to determine what the REAL value is, and base your "acceptable offer" price on that number..what some mc-developer and mc-agent say you can get etc..

Also, it IS a slow market right now anyway, the fact that you are getting visits is promising, however this is your first offer in a slow housing market after three weeks. there are other Fish out there..

Call other realtors and ask around to find out how long houses in your area/city are on the market for...and what kind of prices they are netting etc..
but yah..never go below a number you specify, *unless it's been a year or two*..and NEVER let your agent talk you below that number.

Answer 7

It's really hard to answer a question like this not knowing if your price is in line with the competition. Although investors tend to make lowball offers.

Here's what you do:

Ask your agent to pull up the listings that are on the market and similar to yours. You want to know what else is out there that the buyers have to choose from. You also want to know what other properties have sold for.

It sounds like the buyer just wants your lot. So, your home isn't what he wants. Also, if he's going to tear it down anyway why would he be concerned about the condition?

Don't let your agent make the decision for you.

Good Luck.

Answer 8

Is your house priced to market, or priced to sell? Do you have comparables to judge what the market can bear in your neighborhood? One source you may want to check is www.trulia.com. It can provide some comparable asking prices and recent sales. If you imagine that a buyer (owner/occupier) were to make an offer, they may offer the same $30k lower than ask just to cover all the necessary internal improvements.

It's a probability game at this point. If you think the $30k off your ask is too much of a discount, then counter with something you think is reasonable. If you don't think there are any better offers, take it. A bird in the hand is worth two in the bush, afterall.

Answer 9

This has a two sided answer. To make a counter offer. You asked for 100k and he offered 70k then counter offer with 130k. yes you may not get what you want in the slow economy and regardless of taxes you will still have to pay taxes for the portion of the year you spent in the house or owned it. so your stuck anyway. The other end of the spectrum is the repair that it would cost you to meet building codes and the house will be inspected so take that into consideration when thinking about what you want to do. Sounds rather confusing but put it to paper and pencil to figure out what you will NET after the sale both ways. Then pick the one that gives you most profit or the least loss.

Answer 10

You have to make a counteroffer, drop the price 3-5000.00, for developer 30000.00 in a mortgage it's a few hundred per month, for you it's a 30000.00. He knows he will make money on your house, so be strong. Specially if you have so heavy traffic 4 showing per week, it's mean you have a unique place. And tell your Realtor, it's her job to negotiate the best price for you, she even didn't try and already telling you to accept. Good Luck!