Unless you are inundated with many offers, you should respond to every offer to purchase real estate, even if you get a “lowball” or contingent offer. Read on to learn why.
Bad Offers Can Turn into Good Offers:
If you don't respond to an offer or if you outright “reject” an offer, you have effectively stopped future communications with the buyer who submitted it and they will most likely refrain from reaching out to you again. Don't shut down potential buyers! At Home Bay, we see low offers come way up and turn into closed sales, so we recommend you keep your opportunities alive.
Think of your job as keeping the ball being passed back and forth. If you respond to the offer by coming down just a thousand dollars in price, you've thrown the ball back to the other side while simultaneously demonstrating your firmness. You're likely to get a much better outcome by responding if you leave the door open for the buyer to return to you with a reconsidered, higher price.
You Gain Valuable Insight by Interacting with Buyers:
Let's say you list your home for $680k and after 30 days, you've had no offers come in. Then, a buyer puts in an offer at $500k. You know the offer is unrealistically low, but it's the only offer you've received after 30 days of active marketing. In this case, you should take advantage of the opportunity to learn from the buyer.
Remember, national stats show that on average home owners believe their home is worth 8% more than it actually is. Interacting with buyers submitting offers is often a good way to see if you fall into that national statistic.
Think of it this way – the buyer making the offer is providing you with a free opportunity to see what someone other than you thinks about your home relative to other homes for sale. Counter, perhaps even very close to your original asking price, and ask the potential buyer:
- If you counter my counter offer, can you send me what comps you believe justify the price you submitted?
- If the buyer responds, look at the comps provided with an open mind. If it makes sense to do so, share comps of your own that you believe justify a higher price. Through the exchange of comps, you and the buyer may come closer to an agreement. Even if you never agree, the exchange will give you insight that you can apply to future buyers.
Rejecting an offer or not responding is easier in the short run. However, in the long-run, it is in your best interest to almost always counter.
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