Got a Lowball Offer on Your House? Here's How to Respond

You've kept the house spotless, left for showings, and waited. Finally an offer comes in, and it's well below your asking price. Your first reaction is probably something like, "Are they serious?"

That reaction is completely normal. As Mike Pillow from our team put it on a recent training, a lowball offer can feel like an insult not just to you, but to your whole family and your memories. A home is much more than brick and mortar.

But a low offer isn't the end of the conversation. Often it's the beginning of a deal. Here's how to handle one without letting emotions cost you.

Your agent controls the temperature

Buying and selling homes is emotional. When my wife and I were house hunting, she walked through the front door of the home we live in now, took one look, and said, "This is it." My logical brain said, "You haven't even seen the house." We bought it.

Emotions drive real estate decisions on both sides. The problem is that negative emotions lead to illogical decisions. That's why your agent's job is to stay calm and objective. A friend of mine used to call it being the sanity rope.

Your agent sees every offer first, so they set the tone. A good agent won't hand you a low offer and say, "Can you believe how low they came in?" They'll say something more like, "Good news, we have an offer. It's a little low, but that's why you hired me. Let's go through it, and then we'll work on getting these buyers to a number that works for you."

Make the buyer explain their number

Here's one of the most effective responses to a lowball offer, and it's one Mike Pillow shared from the real estate trainer Brandon Mulrenin. Instead of immediately countering and chipping away at the number, your agent goes back and says, "Your offer is well below our list price. We know how we arrived at our price. How did you come up with yours?"

That puts the burden on the buyer's side to justify the offer. Mike Pillow did exactly this recently with an offer that came in low and also asked for a large amount in closing costs. Instead of arguing, he asked how they came up with those figures. The buyers ended up raising their price to cover the costs they'd been asking for.

Ian Jones on our team adds that your agent can ask the buyer's agent for their comps. Sometimes they saw something you missed. Often the honest answer is, "We were just fishing to see what you'd say." Either way, you learn something before you respond.

Price isn't the only thing to negotiate

Buyers and sellers both tend to fixate on the number. But plenty of deals come together because of other terms:

• Closing date flexibility. If you're building a new home or still looking for your next place, time after closing may be worth more to you than a few thousand dollars.
• Closing costs. A buyer asking for help with closing costs may be strong and well qualified and simply want to keep cash for things like a fence for their kids and dog.
• Convenience. Some sellers care most about a smooth, simple sale with fewer moving parts.

I have sellers right now who are building a new home. The buyer who won offered them a lot of flexibility on the closing date, and that mattered more to them than squeezing out a higher price.

Don't let the list price become your measuring stick

People tend to anchor on the first number they see. For sellers, that's usually the list price. If a home is listed $20,000 higher than the market supports, dropping to a lower number can feel like losing $20,000, even though the market never saw it at that price.

The better question isn't how far an offer is from your list price. It's how the offer compares with what similar homes have actually sold for and what you're competing with right now. A good agent should show you that side by side.

Think about what the alternative costs you

Losing money on a sale feels painful. That's human nature. But there's a cost to saying no, too.

Mike Pillow recently had sellers whose new home was finishing in October. He asked them whether they wanted to be paying two mortgages or move in with a clean slate. That reframed the decision, and the home went under contract.

Before you reject an offer outright, ask yourself a few honest questions. What was my original goal? What happens if we say no? What's my next best option? What would waiting another 30 days cost me?

Fair doesn't mean everyone is happy

Negotiations fall apart when one side feels they've given much more than the other. Even a reasonable counteroffer can get rejected if the buyer feels the process has been unfair.

The goal is a deal that works for both sides. In my experience, the best negotiations end with both parties feeling like they gave a little too much. That usually means you landed in a good place.

Tell your agent how you want to hear about offers

Ian Jones made a great point. Before any offer arrives, talk with your agent about how you want offers presented. Do you want an email with the key points? A phone call going through it line by line? Someone sitting down with you at the kitchen table? Knowing that ahead of time helps your agent represent you better.

You don't have to decide on the spot

Years ago, agents sometimes presented offers in person. I once had a buyer's agent ask to present an offer directly to a seller who was a good friend of mine. I told my seller exactly what would happen. The agent would try to charm him, explain why the offer was great, and push for an answer on the spot.

That's exactly what happened. When the agent asked, "So, what do you think?", my seller said, "Great. I'll talk it over with Mike and we'll get back to you."

As Mike Pillow put it, you're not buying a car. Nobody is driving your house off the lot today. Take the time to review the offer with your agent and respond with a plan.

If you're selling in Northeast or central Ohio and want an agent who will negotiate calmly and keep your goals front and center, schedule a time to talk with me or someone on our team at 21mike.com.

Want to see the full conversation? Watch our training on negotiation strategies and psychology.

Mike Ferrante
The Mike Team at LPT Realty
www.21mike.com
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