Don’t be insulted; it’s just the market…

I get offers these day (and make some, I must admit) that the sellers get insulted at and just reject outright. When the sellers are insulted there is no negotiating with them. In fact many try to say that they won’t even entertain any further offers from the buyer, because the buyer in their minds is obviously trying to steal their house and is not a serious buyer.

I suppose that there are some cases of buyers out there running around lobbing low-ball offers at everything, to see if they can steal a house or two during this recession. For the most part, however, these are just normal buyers who are trying to buy a house, but who have been conditioned by the market to low-ball. After all, all of their friends and family keep telling them that they should do that, because obviously every seller is desperate and on the edge of (if not already in) foreclosure.

In fact there are lots of foreclosed and short sale houses at very attractive prices on the market, some of which might also be in fairly good condition. And, there are a number of sellers who undoubtedly are near the edge and may be getting desperate. However, the majority of the owner-occupied homes on the market are being offered by sellers who want to move and may even need to move, but who do not need to take a loss on a sale, at least not yet.

What has happened is that the buyer pool has read a lot about desperate sellers and heard a lot about great deals being offered by those sellers and maybe even seen a few short-sale deals go through. So, now, they are conditioned to treat every sale as if it is a short sale or foreclosure sale. They always want to start of their bidding at 15-20% off the asking price. They believe that the sellers will meet them half way, or maybe better.

That’s not happening these days. Banks have gotten much better at pricing the homes that they own to the market and they expect to land somewhere between 95 – 97% of asking price – more if the buyer is also asking for seller concessions to cover closing costs. Owners are also expecting bids above 90% of asking price and hoping to get into that same 95% range, especially if they have to give concessions, too.

Certainly it’s still possible that the owner is overpriced for the market, even though he/she has likely been getting advice and even pressure from the listing agent to lower the price to better reflect the market. In those cases maybe offering 10-15% off is the only way to get the negotiations started near where they should have been in the first place.

So, don’t get insulted if you get an offer for 15-20% off asking price. That’s just the nature of the market these days. Instead take the opportunity of having to respond to this offer to have a serious discussion with your agent about your asking price and about the worth of your home in the current market. You may not like what he/she has to tell you and it may be time to re-examine your reasons for selling to see if it is really what you want to do.

The market is unlikely to come to you if you are overpriced. You can stomp and rage and bellow and pout about the market and all you will get is a big yawn.
If you absolutely cannot sell for what your agent tells you is the current market value for your house, then take it off the market and either wait for a market recovery (likely a decade) or start negotiating with your bank for a short sale or deed in lieu foreclosure.

In the meantime, remember that every offer, no matter how ridiculous it may initially look to you, is the starting point for negotiations that may lead to a sale. Nothing limits the negotiations like a flat out rejection. Don’t do that. Calm down, talk it over with your agent and make a sensible counteroffer or counter proposal (using a Seller’s Response to Offer instead of a counteroffer).

You may have to remind the buyer of all of the features of the home and of it’s condition when compared to a typical foreclosure home to help him understand why your home is worth something more than what he would have offered for that lesser, foreclosed home. The main thing is to try to come to an agreement on what that something extra is and both sides will likely have to give on that point.