If you price your home in accordance with the market, then you have a good chance of selling it at or near asking price. For example, in 2014, the average sales-to-list price ratio in Lethbridge & District was 97% (or “3% off list”). Of course, the caveat here is that we are averaging many transactions with many variances on either side of that 97%.
If an offer comes in that “feels” very low in comparison to the list price, it can be jarring. The key to remember is that pricing is a process… it’s a process for you (and the listing agent) because it’s impossible to predict with 100% certainty how the market will react to your listing. And it’s a process for the buyer because they are trying to gauge the “true” value of the home. In other words, what feels low to you might feel reasonable to someone else.
The buyer may not be trying to steal your property at a basement price either. He might simply be mistaken about market value. Of course, he might also be coming in at a low price in the hopes he’ll get lucky. The most likely scenario? The buyer simply wants to make sure he is getting fair value for his dollar.
In my experience, the majority of people just want to a fair deal.
Keeping that in mind then…
You may never actually know the buyer’s motives. So it would be a mistake to get angry or dismiss the offer out-of-hand. That lowball offer might be the beginning of a negotiation that results in you selling your home on terms that work for you and your family. And in fact, I see this all the time. Both parties feel the negotiation can’t possibly go anywhere. A day or two later, a deal has been signed and everyone is happy.
So, when an offer comes in on your home, the first step is to work with your REALTOR® to determine:
- How serious the buyer is.
- How qualified the buyer is (e.g. is he pre-approved for financing?)
- How to respond (accept, reject, or counter offer?)
- If you are going to counter, what should that look like?
Remember too, that price is only ONE piece of the puzzle. Other terms and conditions are negotiable and may be worth a great deal to you or the buyer. Possession date, inclusions, condition deadlines, or special terms should all be factored in. None of it is easy, but a skilled real estate agent can guide you through the decisions so you can reach your goals and get to where you want to go next!