The short answer – Never.

I sometimes here sellers say things like “That offer is an insult!” or “We’re so far apart that it isn’t worth making a counteroffer”. Dear sellers, please try not to get emotionally tied up in the sale transaction of your home. Here are a few things to remember:

  • The buyer is trying to purchase the property at the lowest price possible. The news they may have been listening to about market conditions influences their belief that properties are worth less than they really are.
  • You are selling a home, they are buying a house. They don’t have the same emotional connection and happy memories inside that home that you do. Is that emotional connection coloring your opinion of actual value as well?
  • Different buyers usually have much different motivations than sellers. That will also effect their opinion of value. For instance, a real estate investor probably has a much different perspective of value than a first time home buyer.
What SHOULD you do when you receive a low offer?

First, make sure you know the actual value of your home. You should research new comparable home sales to be sure your asking price is reasonable.

Next, ask the buyer to provide the basis for his offer. How did they arrive at that offer price? If it’s a really low offer, they may have no basis for the offer at all. They may be testing your willingness to negotiate price.

Finally, In this market, the home you are selling must be the absolutely best value in the area. It has to be the nicest house for the lowest price.

Armed with that information, and based on your own motivation and willingness to close the sale, craft and present a counter offer.

let the buyer decide

It was the buyer who made the offer in the first place. The value of the house is ultimately what a buyer is willing to pay. The price they pay is largely determined by your willingness to negotiate, motivation, and wits. So, let the buyer decide when the negotiations are over. Anything they put on the table signals a willingness to negotiate. Anything you put on the table signals the same thing. I have seen many buyers and sellers who are miles apart at the start of negotiation actually come together and close the deal.

A final note

As outlandish and irrational that an offer may seem to be, please don’t forget that the buyer took the time to visit your home, consider the value, and actually craft an offer. That is a pretty substantial effort and investment of their time. On behalf of my seller clients, I always treat all buyers and their offers with the respect and consideration that they deserve. Try to keep an open mind through the process or the sale of your home will be a very difficult endeavor.

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© 2010, Joe Sheehan. All rights reserved.