The Offer:

The offer and negotiation of the sale of a home is one facet of the real estate business that is often mishandled. Sometimes, a prospective buyer will make an initial offer that is out of line with the value of the home. Instead of treating this low offer as legitimate, the seller gets angry and refuses to even acknowledge it. This is assuming the Realtor has presented it to the seller.

First of all, many states require a Realtor to present ALL offers to the seller, regardless of whether it is considered legitimate or not. The seller makes the decision, not the Realtor.

Let's say the seller has her home on the market for $200,000 and it is priced at market value. A potential buyer offers $165,000. Nothing wrong with that except it is considered low by normal standards. Realtors try to advise their clients to make their offer within at least 10% of the asking price. In this case, $180,000. The buyer obviously is trying to get the house for rock bottom price. Happens every day.

The seller now has some options:

•   Get angry and ignore it
•   Counter Offer at the $200,000 list price
•   Counter Offer at a slight decrease in price, say $198,000
•   Counter Offer at a higher price. For example $210,000

Looking at these options, ignoring the offer will get you nowhere. The buyer may be legitimate and testing the waters. GETTING ANGRY WON'T GET YOUR HOME SOLD!

Countering with the current list price is an acknowledgement of the offer but is not thought to be legitimate. The seller is leaving the door open for a better offer from the buyer before making any concessions on price.

Countering with a slight decrease is essentially the same as countering with the full price. A slight decrease does give a signal to other Realtors that the seller is flexible on the asking price.

Option four is kind of interesting. If the buyer offers the seller $200,000, they have to agree to sell their home for that price. If they don't they may end up with lawyers involved and the house off the market. However, if the seller is offered anything other than the asking price, the $200,000 is now off the table. The seller is free to counter with any number they want. After all, the buyer has requested that the asking price be negotiated. I have seen this tactic used a couple of time with effective results.

If the potential buyer is not serious, all options will go nowhere.

Other Negotiable Items:

When a seller receives an offer, there may be items other than the selling price that need to be addressed:

•   The settlement date
•   Assistance on closing costs
•   Inspections
•   Is the buyer unencumbered with his existing home?
•   Is the buyer qualified for a mortgage?

Obviously, the first thing a seller wants to know is whether the buyer is qualified for a mortgage. This information should be provided by the buyers Realtor when the offer is presented.

Another item of great importance is whether the buyer is using a contingency that their current home be sold before they can close on your home. A seller should try to avoid any contingency that has to be performed before the buyer can close on the contract. I have seen situations where several buyers were changing residences, the sale of which all were contingent upon the buyer selling their existing home. If the sale of the first seller in line collapses, the rest fall like dominos.

The number one rule as stated above is that the seller should never get rattled at any offer. Creating an air of animosity doesn't help get your home sold.

The second important rule is to make the counter offer as soon as possible. If you wait two or three days the buyer may move on. You have a fish on the line - reel it in!