Offers and Negotiation
When a buyer makes an offer on your home he’ll do so using a standard contract that has been developed by the Greater Lansing Association of Realtors. The contract will include the buyer's offering price, desired closing and occupancy dates, contingencies (such as home inspections, and securing financing), proof of funds or mortgage pre-approval letter, and an earnest money deposit.
Responding to an offer
The buyer’s agent will deliver the offer to your agent. Before presenting it to you, your agent will prepare a "net sheet" detailing your selling expenses and provide an estimate of how much cash you will receive should you accept the buyer's price and terms. You can then accept the offer, reject it, or counter it with price and terms you feel are more acceptable.
If countered, successive counter-offers or addendums, with deadlines for responding and meeting various conditions and contingencies, will be exchanged between you and the buyer until a mutually-satisfactory pending agreement is reached or the negotiations collapse.
Avoid emotional decision making
Buyers generally offer less than the asking price and/or have closing and occupancy requirements that may differ significantly from your own. Worse, you may have been presented an unexpectedly low offer and/or the buyer could be asking you to pay his closing costs.
A low ball offer, or one asking for closing costs, can be upsetting, but it doesn’t have to be. This is a common way of doing real estate business. Realtors know how to deal with it.
Understanding Low Ball Offers
The most common reason why buyer’s submit low ball offers is because they feel the home is not worth what it’s listed for. Sometimes this may be true, other times it may not be true. Other reasons why home buyer’s make low ball offers include:
Counter the offer - don't reject it
Most sellers find a lowball offer insulting and would rather ignore it, but you are better served by acknowledging the offer and beginning the negotiating process. Keep in mind that the buyer, after visiting all the properties matching his/her criteria, has chosen to make an offer on yours. The seller wants to purchase your home. Countering with price and terms you'll accept will most likely keep negotiations alive and often motivates the buyer to pay your price.
It's not only about the price
It's easy for a seller to fixate on the offer price, but other aspects of the offer are just as important.
Sellers don't actually pay the buyer's closing costs
First time home buyers often have great credit and money for a down payment but lack the funds to pay their closing costs. Lender rules allow sellers to pay buyer's closing cost, so it's become standard practice for buyers to request as much as 6% of the purchase price as a seller concession for closing costs.