Why Sellers Should Counter All Reasonable Offers

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I just got off the phone with an agent who claims to have three offers on the property, but he doesn't want to counter the offer. He just wants my client to voluntarily throw more money (or more something) onto the table.

We're going to decline to do that.

The offer we made was good. The other agent, if they knew what they were doing, would just be fishing - or rather, hoping to get us to go fishing voluntarily, adding more and more bait until they finally decide they had better hit it. Not really a horrible strategy, but wickedly vulnerable to agents who understand negotiation. The only reasonable way to respond is to ask the other side to take it, leave it, or tell you what they really want. Someone who understands negotiation is going to tell them exactly what I did - which is "You can take it, leave it, or counter. But we're not going to go on a fishing expedition. Tell us what you want and we'll talk about it."

However this particular agent either didn't know what they were doing or were pretending not to know. As a rationalization for his actions, he said, "I've had multiple offers and lost them all when I countered."

So?

Every listing agent gets desperation checks. Sometimes they're flippers looking to turn a quick buck. Sometimes they're serious investors. Sometimes they are even people who intend to live there forever and ever. What all three of these (and many other situations) have in common is that they say to themselves, "Let's see if we can get it for that."

The intelligent way to respond is usually to counter offer. Below a certain point, of course, you want to respond with, "Offer rejected - do better!". But if they're in the right general ballpark, the way to get what you want is to tell them what you want. You won't get everything. That's what negotiation is all about. But you would be amazed at how often terms that are quite important to one party are something the other party can meet without any downside.

Furthermore, you don't want to sell to a "Let's see if we can get it for that" offer. Yeah, some folks will walk away if you counter. Those are the folks that you don't want to sell to anyway. Even if every single one of ten offers walks away, you haven't lost anything - because those people weren't willing to offer a reasonable price. If you price the property correctly, it will get offers, and you will be able to sell to one of them for right around the market price. If you over-priced your property, desperation checks are all that you're likely to get. If you underprice the property, you will get hordes of offers, but it's unlikely to be bid up as far as where it should have been in the first place.

(How can a consumer tell if their property is over-priced or under-priced or priced just right? By the offers you get and their timing, of course! It's one of those zen things like the chicken and the egg. It's also why the discussion of list price should not be easy for anyone - because by the time it becomes apparent you went with the wrong answer, fixing it will only repair some of the damage)

You never know which offer is and isn't going to come back with something better. So you give them a reason to offer you something better by telling them what you really want. Yeah, number one on the list is usually money. But sometimes it isn't. And sometimes subsidiary concerns can make all the difference, even getting the property for fewer dollars than another offer.

Being unwilling or unable to counter without losing good offers is the mark of a very weak agent. Unfortunately, by the time you find out they're a weak agent in this fashion, it's probably too late. When I'm the buyer's agent, I don't really want the first offer accepted, and those few of my clients who've had it happen can testify that I really am mortified when it happens. I want to talk about what my client wants, and how we can go from the first offer to something both sides are happy with. Whatever happened to "never take the first offer"? Don't they teach that anymore? The first offer is just an opening, like "hello" in a conversation.

One legitimate fear is that an unqualified buyer may sign a counter exactly as it is, creating a purchase contract that ties the property up for months while you find out they can't really qualify. That is the only situation where I delay the actual counter until I am certain the buyer can qualify. But I do call the offering agent and ask for more evidence the buyer will be able to qualify. This is in line with the precept of "ask for what you want, and explain why they should give it to you" precept. After they provide information that persuades me these folks will qualify for the necessary loan, they'll get a counter.

If a qualified buyer signs one of several counters I make, that's not a disaster. That's exactly what I want. Every counter I put out there is something that would make my client happy. Do I care which offer gets signed? Well, sometimes when something about their situation (like having a known problem agent representing them) makes me hope it isn't them. But that doesn't stop me from putting the offer back out there. It's my clients needs that are important, and if my client needs me to deal with these issues, that's part of why I'm getting paid.

Not being willing to counter is like hoping the fish is going to jump right into the boat. Yes, you know they're out there in the lake, but you haven't hooked them and you definitely haven't landed them yet. The counter is the hook - it lets them know exactly what you want, and why they should give it to you. You're more likely to get what you want by telling a buyer what that is.

Caveat Emptor

Original article here

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About this Entry

This page contains a single entry by Dan Melson published on January 21, 2014 7:00 AM.

Real Estate and "Priced for Perfection" was the previous entry in this blog.

Adding People to Title for Multiple Residence Property is the next entry in this blog.

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