When is a low offer an insult?

Usually Sellers want as much as they can get for their home and Buyers want to buy the home at the lowest price they can get it for. This probably why so many people make and negotiate offers. I get that.

What I don't get is how some people offer pennies on the dollar on regular homes, not homes in trouble, and act suprised when the Seller feels insulted.

How low is too low? When is a low offer an insult? -Thomas

It's too low or insulting when the client says it's too low or insulting. It's a subjective not objective measurement. -Jolly Roger

"What I don't get is how some people offer pennies on the dollar on regular homes, not homes in trouble, and act suprised when the Seller feels insulted."

Do you feel that these type of buyers are within or out of market?
Before you answer this trick question, I'll answer by saying that all
buyers are within market because the market consists of all buyers.

It takes two to tangle (buyers and sellers) in a market and it'll probably get worse as I heard a spokeman say that the price of houses may drop over the next few years.

A professional doesn't let his feelings get in the way of doing business. When I worked in the carpet cleaning business, my second firm was doing less business due to an improving economy
(not surprising when you realize it's a repair business - when the economy improves and people start to make money, they'd rather get new carpets than have the old ones cleaned). Yet even during
a hard industry time, I kept on exceeding the quota by 25% which
is high for that industry and I wasn't bothered by those who held onto their money tight, just part of the game. -Wonderboy

Yes because before the price is set I look up comps or the Seller gets an appraisal. When the home is priced right and someone comes in and offers pennies on the dollar yes I think that's out of market. -Thomas

Any thoughts as to how these low-ballers are arriving at their prices? -Wonderboy

Low-ballers. That's a good word for it. thmbp2;

I hear alot of reasons like we're from Canada and so it costs us more or where I'm from you could buy the same thing for less or we want to buy as cheap as we can get it. -Thomas

I'm venturing a guess that many of these low-ballers have a preconceived notion as to what the price should be, based on what they hear from their friends and relatives or what they get from the news.

You'd be encountering resistance because many feel it's simply in YOUR best interest to get the highest price possible. I gave you an example where I faced an even harder situation at Best Buy due to a shirt I was wearing (fortunately I solved that problem).

I would suggest that you think of a way to give this group a choice. This would show the prospect you're really on their side and gain some respect from them. -Wonderboy

That could be tough. Any ideas? -Thomas

I don't know if this would be permitted in your job. If someone is low balling you, show them an ad with a house that's closest to their range and suggest they have a choice to go with that house (presumably with some undesirable features) or going with what you have to offer.

This avoids arguments and my guess is some will settle on the spot and some more will get back to you later on. -Wonderboy

The offers come after the showing and the people have decided which home they want. I can't tell them NOT to make an offer either. I have to present any offer they write up. There has to be an answer for this. ;bl -Thomas

coming over from another thread...

wouldn't this be one of your never-to-be-used rebuttals wonderboy?

Pat -toolguy_35

My statement:

" don't know if this would be permitted in your job. If someone is low balling you, show them an ad with a house that's closest to their range and suggest they have a choice to go with that house (presumably with some undesirable features) or going with what you have to offer.

This avoids arguments and my guess is some will settle on the spot and some more will get back to you later on."

My assumption in this scenario with Thomas is that Thomas made
his offer and the prospect then responded with his own low-ball offer. Thomas would then repeat his offer to let the prospect know that he's not going any lower or go somewhere else (the picture of the house with the undesirable features, but with the price the prospect wants - by the way part of my assumption is that the prospect is really making an unreasonable offer).

Note that this isn't a total no or turndown on the part of the prospect, but still in the negotiating stage so Thomas is saying it's not open to negotiation, but on a take it or leave it basis while giving the prospect an option at the prospect's price, but different features as the market may dictate in this scenario (by the way,
qualifying the buyer in this case would save time). -Wonderboy

That's what rebuttals ARE wonderboy, part of the negotiation.

Pat -toolguy_35

I'll take Sales Resistance/ Negotiation for $100. ;st

-Jolly Roger

LOL.

Toolguy,

In a negotiation, there's give and take. Thomas made it clear that he wasn't accepting the lowball offer so the negotiation stopped at that point. My suggestion to him to show the prospect another house in the lowball range with features that would be different is simply to demonstrate to the prospect that he wasn't in the market and to suggest he try elsewhere as the prospect wasn't ready to do business at Thomas's price (just a way of politely dusting off a non-prospect - if that person was interested, then he'd return later although that rarely happens).

Again, in a negotiation, there's give and take so there's no definite
yes and nos until both sides settle on their final price which means a deal if the prices match up. Since minds haven't been made up in a negotiation as adjustments may still be made, then there's nothing to rebutt (check my definition). -Wonderboy

The problem here is often people toss out figures without any
justification for how they arrived at those numbers. -MaxReferrals

I see that too. I ask the buyer what he wants me to tell the seller when the seller asks me why the offer is so low. Some buyers give reasons but even more don't. crp1; -Thomas

I agree with you Jolly Roger -Ray47

In my field when a potential customer tries to get away with a low ball offer it shows that I did not do sufficient pre-qualification in the form of open ended questions.

I'm not going to spend enough time with someone like that to allow them to even make an offer unless ...

If during the pre-qual I determine the guy/gal is sincere, has money to back it up, and I know enough about the seller to know that the offer will be graciously looked at.

Now we get into negotiation skills 101. If the seller wants $300K for example, and my buyer wants to pay $200K you present the offer. The next step is called "nibbling"....which is to say the counter from the seller will be for $295K and a decision in four hours or less.

Chuck -Sales Pro 1000

Jolly Roger,
Do you think a Customer will tell you that they are insulted by the offer? -dodobird

Buyers are Liars.

If the pope had a $5 Watch and you asked him what he wanted for it (although he knowing that it is now worth $1.25) he will ask for $10. -dodobird

When you can see the persons eyes go as big as a Dinner plate - then you know the offer was to low -Jabber

When the client lets you know that it is. -Wowsap

At the end of the day - I have to take anything back to the owner - When they tell you it is to low then you know - it is too low. -Snowboy

Yes I think the customer will tell you when they are insulted. Some might be more vocal than others. :cr ;st -Jolly Roger

Good point Jolly -Snowboy

There is no insulting offer. Ofcourse a buyer is going to lowball. Just like a Seller is going to highball their offer. It's all part of the sales process and negotiation. Thats why we have a negotiation process. It goes to the same principal as when you are selling a product. You never know how much you can get unless you ask.. Just like you never know how little you have to pay unless you ask. -jrboyd

Since this question was first framed in mid 2007 it's interesting to consider how much better the economic conditions must have been back then.

Nevertheless, any buyer is doing themselves a big disservice by giving too low an offer to a seller. Where real estate is concerned, they are also giving their broker an awful lot more to do.

If you're a broker would you be keen on pushing boulders up a hill with your nose?

There is much to be said about where to open (price-wise) in a negotiation concerning real estate, and also in negotiations in general. Too much to get into within this little box.

As a basic rule of thumb, whatever offer you wish to open with (as a buyer) you should be able to find some justification for it. This does not preclude a 'tough' opening offer, but you must have something of substance to back it up.

If I were a broker, I would council any buyer who wished to present a very low offer to a seller to think twice about what message it is going to send. I would also question the mentality of the people I'm representing, and whether they may be ideal clients for me, and how serious they really are (if I've qualified them properly).

Fundamentals of negotiation aside, if you're acting as an agent in a situation like this, you may decide to be more picky about who you wish to represent with your valuable and limited time.

Going one step further, more experienced Realtors may even pass on working with buyers (to someone else in their office) as they choose to focus more on the listing side of the business.

From a pure negotiations perspective, I would spend more time working on improving the initial offer from my buyers than on trying to close the gap on an overly low initial offer from them to a prospective seller; assuming the property is priced at market to begin with.

To answer the 'insulting' quotient part of the question, people do not always act as you'd expect them to.

If mathematics were a human event, then 2+2 would be 4 today, 5 tomorrow, and a banana next week! Homo sapiens aren't just unpredictable, they're often completely irrational.

Negotiation training models must accommodate irrationality to operate successfully. (Sadly, the predominant 'conventional' ones do not) -ThirdForceNegotiator

I haven't read all the responses yet but this situation is more of a personal one. Anyone could laugh at an offer as much as they can feel insulted. I don't think there is some sort of rule of thumb that would tell you when an offer will be insulting and when it won't as not everyone chooses to take offence to these things.

However I'm sure there are rules of thumb to give people an idea on what realistic ranges are and then they can work with that. Like a benchmark. I could bid 100K lower than the asking price but then I know that I would be dreaming to expect they will go for it. But I may bid 40K below the asking price and feel ok (on homes around 250K) -Andrea