It happens: the buyer submits an extremely low offer and the seller, shocked and offended, reacts with anger and resentment. Only on occasion does a seller respond in a calm and detached manner. Here are 6 typical seller retorts:
- Abruptly and summarily reject it,
- Refuse to do business with the buyer,
- Write “rejected” on the offer,
- Direct that seller won’t negotiate with offers below a specific price,
- Order not to present any offers below a certain amount,
- Counter the offer at full or close to full price.
It’s advisable for the seller to counter the buyer’s offer as on the second go around the seller can better ascertain the buyer’s sincerity and a deal can be struck.
Predatory Buyers Are Out There
But what is this about given the current seller’s market where listings are tight and homes can attract competitive offers? Well predatory buyers/investors exist even in a high demand, low supply market.
Here is an example scenario:
An out-of-town buyer called the listing salesperson on a home just listed for $259,900 and on making an appointment to view, his wife showed up alone. The wife liked the home and would talk to her husband. Shortly thereafter, the buyer called the salesperson wanting to submit a verbal offer of $225,000. The salesperson explained that verbal offers are invalid in Ontario, the listing is only a couple of days old and the offer is far too low. After talking to the seller, the salesperson called the buyer back stating the seller did not want to negotiate with offers below $240,000.
Then the salesperson had to courteously and firmly turn down the buyer’s demand for a rebate on commission if he had to pay more than $240,000.
Offer Got Submitted and Accepted
The buyer submitted a written offer to the seller and, after negotiating, got acceptance at $250,000 with the following typical conditions: obtaining a mortgage, home inspection and insurance. A couple of other conditions were inserted as well: on the buyer viewing the property and on the buyer submitting the deposit within twenty-four hours from acceptance, otherwise stating the offer would be null and void.
Unreasonable Negotiation Killed the Deal
The home inspector found some issues, some of which the buyer was aware. The buyer now wanted $35,000 off the price, reducing the price to $215,000, less than he originally wanted to offer verbally. The seller proposed a reduction of $10,000, the amount a contractor quoted the seller to correct the deficiencies. This killed the deal and the seller refused to do any further business with the buyer should he return.
In some instances, a predator buyer might agree and firm up the offer. Then on the buyer’s final inspection of the home before closing, claim more deficiencies and demand more money be deducted from the price on the threat of not closing, leaving the seller with some hard choices.