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A Buyer’s Low Offer is Advanced or Accepted

December 4, 2022 by superuser

When I was a seller’s agent, I always asked that offers be faxed to my clients rather than being personally presented to them by the buyer’s agent. Nearly 15 years ago, I adopted this strategy as one of the nation’s first agents. It’s typicalplace now. It gives the seller(s) and agent time to think things over before responding to the offer.

I preferred to make the offer in person when I was speaking on behalf of buyers. Rather than having the intentions of my buyers communicated through the seller’s agent, I wanted to deliver and express them clearly. I could read the sellers’ facial expressions when I presented in person and determine how they would react. My opinion of the property’s value could be shared. In an effort to create the human connection that so frequently influences the sellers’ acceptance decision, I could also share information about the potential buyers.

Presenting a buyer’s low offer

Be ready to provide countervailing benefits when you extend an offer that is below the asking price in an effort to make the offer appealing and worthwhile to the sellers. Alternate redeeming qualities include:

* Solid earnest money

* Buyers with impeccable credit

* Buyers with good, solid employment history

* Buyers with ample funds and a low loan-to-value ratio

* Buyers with the flexibility to close quickly or to wait as long as 90 days

When presenting the offer:

* Before disclosing the price, go over the entire offer. The other conditions of the offer must first be discussed and a compromise reached. After you have agreed to or made adjustments to the other non-price related items, work on the price.

* The difference between the asking and offered prices should be noted when discussing the price, and this number should be the sole topic of conversation. Ask the sellers, “Would the offer have been accepted if the buyers had arrived with cash and the closing was scheduled for a few weeks?” Add that amount to the asking price, then take it away. A $335,000 offer and a $350,000 asking price are not big numbers to deal with. Distinguish between the $335,000 offer and the $345,000 they would accept right now if a buyer paid cash. The actual difference is $10,000. Plan and talk as if the seller and buyer are separated by $10,000.

* Convert the difference’s price to a daily rate. This method has the result of bringing down the difference to an absurdly small amount. Let’s say there is a $10,000 difference. Ask the sellers to take into account the actual effects of the difference. Most sellers become buyers, so what you’re really asking them to think about is the cost of borrowing $10,000 more for their subsequent home. In actuality, that $10,000 costs about $750 annually, $62.50 monthly, or $2.08 per day. With this knowledge in hand, you can ask: Is it worth $2.08 a day to know that your home has been sold and that you are free to move into your next home? The buyer’s offer can be raised using the same strategy, and an agreement can even be reached at a middle ground. To achieve a win-win situation for the buyer and seller, perhaps each party could pay $1.04 per day.

* Describe how the buyers arrived at their offer price. Display current comps to support their reasoning. Even though the property may have been listed months ago, the market may have undergone significant changes since then. An analysis of the current market can be presented to support and convince the offer’s acceptance.

* If appropriate, explain that the buyers have another home in mind, saying something like, “They first sought to cooperate with you.”

* If the offer is the highest one the buyers can make, then express that fact, saying something like, “Although the buyers would genuinely adore the house, they are understanding if there isn’t a chance for everyone to win.” This kind of statement stops emotions in their tracks.

Above all, when offering a low price, make sure the buyer understands that the offer is grounded in a realistic evaluation of the market or the buyer’s capacity, not in a sentimental reaction to the sellers or their house.

Receiving a buyer’s low offer

If you did your job well, your sellers will be aware of the likelihood of a low offer if you did it at the end of the listing presentation. When one comes in, here’s what to do:

* To find out more about the buyers, contact their agent. Inquire about their financial situation, whether they’ve chosen a lender, and their progress in obtaining a loan. Find out if they have a loan approval and are simply looking for the right house, or if they are just getting started and haven’t even met with a lender yet.

* If the buyers have already started the loan application process, ask the agent how much of a loan they have been approved for.

* You might discover that the buyers are eligible for a loan in an amount greater than what is stated in their offer contract. This informs you that they have the ability to pay more but have decided not to. It is then your responsibility to prove that the house is worth more than the price being asked.

* If you learn that the buyers have been approved for exactly the loan amount listed on the contract, ask, “Is this the most they could possibly receive?” You need to know if they are eligible for more.

* Ask the same questions of the mortgage originators the buyers are working with if the agent is unable to give you the loan answers you require. Advice on collaborating with lenders and other partners in the transaction is provided in a later section of this chapter.

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