How to Respond to a Lowball Offer

After all the hard work it takes to ready a home for sale, it can be so discouraging to find the first offer you get is a lowball offer. Regardless of the market, there are buyers who write offers 10%, 20%, even 30% below list price. While most of these offers are just “throw-aways,” it’s still possible to turn it into a successful sale.

Before you do anything, take a deep breath and stay calm. There are many reasons why a buyer throws out a low offer. It could be they are getting bad advice from a family member or nervous first-time buyers afraid of leaving money on the table. It’s also possible that they are working with a new or poor real estate agent. The one thing you know is that they were interested enough in your home to write an offer, and they expect to negotiate.

The next step is to send a counteroffer. Be respectful and thank them for the offer. If you do have room to negotiate, then offer to reduce your price to a reasonable level. If you have priced the home well to start with, then explain how you arrived at the list price and present any available comps. Remember to look at the other terms offered and be flexible where you can. For example, they may have asked for a longer escrow period, and you can accommodate their timetable. You may also want to ask that the home inspection is “information only” that removes the option of repairs.

A lowball offer may take the wind out of your sails, but it doesn’t mean that there is no opportunity for moving forward. Working with your agent, send a reasonable counter offer back to the buyer and you may find that there is still a successful sale down the road.

Overall Market Update – 5 Realities for Sellers Now

Over the past few years, most of the US has been in a strong seller’s market. Historically low interest rates coupled with rising incomes resulted in buyers who were ready and able to buy a new home. It was a crazy time when sellers needed to do little more than put a sign in the yard to attract multiple offers.

However, the post-Covid housing market is quite different. The uncertainty in the economy has slowed the pace and rising interest rates have caused buyers to reconsider their purchase, and the amount they are willing to pay. As a result, sellers must go back to the tried-and-true methods of selling a home, debunking the myths of the past few years. 5 “New” Realities for Sellers

1. Price the Home Realistically –Now sellers must be more careful and price the home realistically to avoid losing the precious early days of a listing when buyer’s interest is highest.

2. Make Repairs – Buyers have more choices now and they will be more careful about buying a home that needs a lot of work.

3. Consider Making Concessions – Buyers often ask for reasonable concessions; sellers should weigh the offer before rejecting.

4. Staging is Back – Make sure the home is show-ready and sellers may consider some simple staging to make the home more appealing to buyers.

5. Be Prepared to Wait – The pace has slowed. In a “normal” market, most homes take 30-45 days to enter escrow.

Finally, sellers should pay attention to their local market and determine the right time to list. Balance has returned to the housing market.

Short-Term vs Long-Term Rentals

Over the past few years, there has been a lot of excitement about owning a short-term rental as part of an investment portfolio. This marks a dramatic change from the traditional long-term rental model. As more travelers utilize vacation rentals instead of hotel chains for their trips, you may be wondering if owning a short-term rental may be the right situation for your needs.

Short-term rentals have caused a stir in many communities. Many full-time homeowners do not like having these properties in their neighborhood. Unruly vacationers often bring a party atmosphere to their quiet streets and some cities have banned them completely. In other areas, they are severely restricted in their use.

Another consideration is the amount of time a short-term rental will take to manage. Unlike their long-term counterparts, short-term rentals often require more repairs and maintenance as the tenants do not treat these properties as their homes, as long-term tenants do. Short-term rentals also require someone to be available 24/7 to address any needs of the guests. Of course, you can hire a property management company to handle these issues, but that will cut into profits and average 20%-30% of rents.

Short-term rentals can have a larger return on investment than long-term rentals, but they come with more work. They also have significantly higher vacancy rates, advertising costs, cleaning, and maintenance costs. On the other hand, having a vacation property you can enjoy yourself may tip the scale. There is no one-size-fits-all approach to real estate investing. Consider what works for you and make the best choice for your goals.

Are the bidding wars over?

Let’s face it, it’s fun to have a home listing during a seller’s market. When inventory is tight, even less-than-perfect homes invite the frantic bidding wars seen over the past few years. But as the economy slows down and interest rates increase, sellers are wondering if the bidding wars are over, and what that means for them.

First of all, bidding wars have occurred in every kind of real estate market. Well-positioned homes have always garnered attention and offers. What’s different in a seller’s market is that buyers are so desperate to find a home, that multiple offers seem to be normal on every listing. As the pace slows down, sellers need to adjust their expectations and avoid costly mistakes.

Seller Mistakes to Avoid in a “Normal” Market

· Bad Curb Appeal – Curb Appeal is once again important to making a good impression.

· Delayed Response – Don’t wait to respond to a buyer’s offer because you hope to have a bidding war.

· Unreasonable Demands – Buyers have choices now, be reasonable with the counter and contingencies. · Highest Offer – Don’t assume that the highest offer is the best offer.

· Priced too Low or too High – Price the home correctly. Don’t play games with the price.

Finally, be patient. In a typical market, an average home is on the market 30-45 days. This is a change from the past few years, but a healthy real estate market benefits all parties.