No one wants to feel like they’ve been taken advantage of in a housing transaction. In most markets these days, prices are rising and inventory is still tight, which means that tossing a lowball offer isn’t just bad form, it’s also a sure-fire way to kill any hopes of getting a seller to accept your offer.
But many buyers may not realize how much the market has recovered, and their price expectations may not be rooted in reality. It’s your job to set them straight and help guide them when it comes to determining what offer will get them a great deal without totally turning off a seller.
Here’s how to set your clients up for success and keep them from making a lowball offer.
1. Give them a market reality check
Banish any misconceptions about market temperature from the get-go by giving buyers the lowdown on how homes in the area are actually selling. Instead of focusing on what’s currently on the market, show them what has sold in the last few months and highlight the difference between the list price and the sale price. That should give buyers a good sense of market temperature and how much they should offer below or above the asking price. After all, they can’t argue with facts (and if they try, it might be a cue to reassess whether you should be working together).
2. Set them straight with comps
Sit down with buyers and show them similar properties that are on the market now or that have sold in the past two months. By showing them how a home stacks up against like properties, you’ll help them understand how factors like square footage, lot size and age can affect the price. This data should help reinforce everything you’ve already been telling them.
3. Keep them from dragging it out
If your buyers are already fatigued from a few months of house hunting, don’t let them blow it with a lowball offer. Help them avoid wasting even more time and money by reminding them how long homes stay on the market and how much time you have both invested in this process. Research shows that a typical home search takes 12 weeks, so remind them of that fact before they make an offer that will likely send them all the way back to square one.
4. Don’t let them insult the sellers
Most sellers have an emotional attachment to their homes. It’s a place where they’ve invested time and quite a bit of money making it their own. Maybe they’ve raised their family or celebrated major life events there. You get the idea: The value is sentimental as well as monetary. So if buyers disregard this complex relationship with a lowball offer, they risk insulting the sellers and losing out on the home.
Even if the buyers’ plan is to get a counteroffer and settle somewhere in between, starting off with a too-low offer can be so off-putting to the sellers that they refuse to work with your buyers. Tell them to put themselves in the sellers’ shoes: How would they feel if they got such an offer? Remind them that when it comes to buying someone’s home, it’s not strictly business. There’s an emotional element, too. Reasonable buyers should understand this, and with your help they should be equipped to make a fair initial offer.
Tell us! How do you handle buyers who are set on tossing a lowball offer?