All the decisions have been made. The house has been prepared like a model. Advertising and marketing has begun. The listing is in the MLS and the showings are in full swing. Now it is time for the reason that all the work has been done: an offer.
An offer in Real Estate is a bit different than it is in many businesses. If a buyer asks a shopkeeper, “could I buy this for $10?” and the shopkeeper accepts the offer, the buyer can still change their mind and walk away. Not so when you are dealing in Real Estate. When a buyer makes an offer, it is in the form of a legal contract. If you, as the seller, accept the offer, the house is sold. If you counteroffer, negotiations may continue. It is important to understand that all of the offer and counteroffer activity that you will engage in is framed legally.
This is why it is so important that a seller never gets involved in oral offers and negotiation. If you have a house listed at $175,000 and the buyer asks “would you sell the house for $165,000?” Almost any response you make –short of “put it in writing”– can cause problems. If you verbally accept the offer, not only does the buyer have no obligation to actually buy the house, many will say to themselves, “Gee, that was easy …. I wonder if $150,000 would work?” This is why an agent will never deal in verbal offers.
Some important points regarding offers:
- If you intend to accept an offer (or make a
counteroffer), do it as soon as possible. At any time prior to your
acceptance or counteroffer, a buyer can withdraw their offer.
EXAMPLE: Seller Jones receives an offer from Buyer Brown. The acceptance date on the contract is the next day at 6:00 PM. Seller Jones knows that he is going to counteroffer at a price just a bit over Buyer Brown’s offer. At noon the next day, Buyer Brown, in a cold sweat, withdraws the offer. Seller Jones is out of luck.
- Any changes made on the contract require written
approval of all parties for the contract to be enforcable. Even
seemingly minor changes open the door for either the seller or buyer to
change their mind.
EXAMPLE: Seller Smith receives an offer on his house. He accepts all of the conditions of the offer (selling price, financing agreements, etc.) except for one. He changes the occupancy date from July 31st at 12:00 noon to July 31st at 6:00 PM, wanting to give himself a bit more time for moving. If the buyers agree (in writing), there is no problem and the contract is valid. If the buyers change their mind about buying the house, however, the contract is not enforcable. There has been a change (the occupancy time) that has been approved by only one party to the contract.
What about low offers?
No matter how well you have prepared your house and how certain you are that it is priced at fair market value, there is always the possibility of receiving a low offer. It could be simply a shot in the dark, or it could be due to a limit in the buyer’s mortgage qualification ability. No matter what the case is, though, the most important thing to remember is do not take it personally. Many home negotiations, if they had just been allowed to run their course, very well may have come together acceptably for all concerned if the negotiations hadn’t fallen into a “grudge match”. Yes, it is your home, and yes, you have put a great deal of love and effort into it, but taking a low offer as a personal affront solves no purpose. Reject the offer or counteroffer it and move on.
If you do get a low offer, it is far more important to try to get as much information as you can relative to the offer. Why was it at the price that it was? What was the motivation of the offer? (Be aware, though, that if the offer has come from a Buyer’s Agent, the information you receive will only be as much as the Buyer’s Agent wants you to know. They owe their loyalty to the buyer and cannot disclose any information that may put their client at a disadvantage.) There still may be information that will be revealed to you, which will help you as you structure a counteroffer.