Is a low offer a good idea?

Imagine this situation: You have decided to sell your home and after receiving some initial interest from a variety of individuals you now find yourself with several prospective homebuyers who are hoping to negotiate with you seriously. The first step to any negotiation is seeing the buyer’s response to the listed asking price of your home. However, you notice that one prospective homebuyer has offered you an offer that is lower than your asking price. You now find yourself wondering how to respond to this offer and asking the question, “Is a low offer a good idea?”

There are many reasons why a prospective homebuyer is offering you a low offer to purchase your home and there are equal amounts of ways that you can react. In circumstances where you feel that your asking price is fair and reflective of both the current local real estate market and the quality of your home, you can usually reject the offer immediately. Often, this low offer is a sign of an individual negotiating with unrealistic expectations of what they should pay for a home of your condition. Consequently, many home sellers in this position just simply avoid negotiating with these types of homebuyers.

However, there are cases when a low offer is actually a good idea. If you are trying to sell your home in a buyer’s market, it is advised that you either accept this offer or make a counteroffer that is higher than the initial offer but lower than your initial asking price. Once again, your strategy will depend on the local real estate market level and whether or not you are trying to sell your home as quickly as possible.

Additionally, a low offer can be reflective of your asking price being too high. Sometimes though, in circumstances where your asking price is appropriate for the local real estate market conditions and the quality of your home, a low offer can still be advantageous. Much like all negotiations, the buyer and seller are trying to reach a deal that is agreeable to their interests. Often a low offer, although monetarily disadvantageous for the home seller, can be balanced with advantages for the home seller, such as the reduction of contingencies attached to the sale.

For example, if your home requires repairs, a low offer that has no contingency requiring repairs may be more appealing than a higher offer for the home that insists on renovations being done and paid for by you. Also, if the lower offer comes with a cash guarantee that would waive the standard financing contingency, you may be more likely to accept this lower offer than a full-price offer with a financing contingency. This is because this offer will speed up the time required to sell your home and also will give you peace of mind knowing that this offer will not fall through due to an inability of the homebuyer to receive a loan from a lender.

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