My New Outside Blog

NEWS FLASH: Listing Agent & Seller Lose Self Control Over Less-Than-Full-Price-Offer!

The topic involving what to do when presented with a less-than-full-price offer seems to have made the roundsNEWS FLASH: Listing Agent & Seller Lose Control Over Less Than Full Price Offer! in the ActiveRain forums lately. Notice I avoided the use of the terms, "low offer" or "low-ball offer", replacing such description with the correct and appropriate term, less-than-full-price offer. The reason is, as I'll explain in further detail in this post, that such terms are subjective and we, as Agents, are NOT the ultimate decision makers in a purchase transaction.

A recent post by Liz & Bill Spear's entitled, "Mr. Home Buyer Your Champagne Tastes Don't Entitle You To Price Reductions" offers one viewpoint that Buyers should not base their offering price on a home's lack of amenities or upgrades. Another humorous poke by Lenn Harley, "How To Handle Unreasonable Offers - Sometimes We Just Have To Have Fun." offers a tongue-in-cheek response for Sellers to counter a low offer by adding the cost of upgrades back into the purchase proposal and thus raising the sales price. *NOTE: These posts were merely an inspiration for my topic; the only correlation involves the subject matter of less-than-full-price offers. They've been included ONLY to encourage the community to visit and read these terrific blogs.

I'm often bewildered and bemused that Listing Agents, and their Seller clients, tend to lose all self control when presented with a less-than-full- price offer. Time and time again I've listened to agents wail over a low price offer received on a listing. I've watched them writher in agony, bemoaning the injustice of it all, and working themselves into a frenzy. In this state of mind they make contact with their client and, directly or indirectly, pass NEWS FLASH: Listing Agent & Seller Lose Self Control Over Less Than Full Price Offer!along these emotions and attitudes. In the blink of an eye, unnecessary tension and adversity are created between the Seller and the Buyer!

When Agents become emotionally involved, or take the offer personally, the results often include Sellers who become defensive and unwilling to proceed with the transaction. Suddenly the buyers are viewed as "the enemy" and it's not uncommon for Sellers to refuse countering the offer, an act which is detrimental to their goal of achieving a sale.

Perhaps our profession should mandate a hefty dose of classroom education or training in sales psychology and negotiation skills. Agents must learn to divest themselves of all emotion, set expectations for their Seller and Buyer clients, and encourage a practical counter-offer without cynicism or sarcasm.

Buyers yearn for a bargain whether they are purchasing a product or a piece of property. It seems we are genetically engineered to avoid paying full price whenever possible. In addition, it is not uncommon for Buyers to approach the transaction with little, if any, emotional attachment. It is often their perspective they are purchasing a house, a place to live. Sellers on the other hand, tend to view the exchange differently; this involves the sale of their home, a place filled with personal memories. The Seller typically hopes to receive every penny (if not more) of the home's worth. This natural disparity will almost assuredly exist between Buyers and Sellers until the end of time and the sooner Agents realize and recognize this, the better off we will be.

As real estate professionals, it is our responsibility to present any and all offers and then simply zip our lips. It is then the Seller's task to either accept or decline an offer based on the merits of the proposal. Should an offer be declined, whether due to price and/or terms, it is in the Seller's best interests to communicate a willingness for negotiations to continue. The objective of a counter-offer is to encourage the Buyer to revise the initial offer, making it more appealing for the Seller to accept.

Agents who fail to properly set the expectations for Buyers and Sellers, relative to the existing market conditions, provide a disservice to their clients. Buyers should always be prepared to make their strongest offer whenever presenting a purchase proposal. Real estate does not operate on a first-come, first-served basis. It is possible to lose out on a desired property to a competing offer that the Sellers find more agreeable. Likewise, Sellers who refuse to counter any unacceptable initial offer risk losing their goal of achieving a sale.

Neither side should not lose sight of the given objective: to reach acceptable price and terms for a successful sale!

 

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Comment balloon 33 commentsMike Mayer • May 24 2011 04:54PM

Comments

Mike, to the point post!

Why should we get emotionally involved in the price - while representing buyer or seller? My first session with buyer, I tell them that I may tell you a lot of negatives about a home and at times, I may recommend to pay full price for the home! (And it still does not work!)

Posted by Praful Thakkar, Andover, MA: Andover Luxury Homes For Sale (LAER Realty Partners) over 6 years ago

Mike - Thank you for this post.  I have always presented all offers to sellers regardless of the terms and conditions as I am required to.  If a seller is insulted, I simply explain the options available to the seller such as accept, counter or reject the offer.  I encourage the seller to respond with an intelligent and firm counter offer.  Cutting off communication or responding with sarcasm does not benefit any party involved. 

Posted by Mary Sitton, Realtor® - Hendersonville, NC and WNC Area (Mary Sitton Real Estate Team -) over 6 years ago

You are dead right.  We should not interject our feelings into any negotiations and definitely not take things personally.  We can advise and our advice should be to keep the door open.

Posted by Jane Peters, Connecting you to the L.A. real estate market (Home Jane Realty) over 6 years ago

Mike, Just to be PERFECTLY clear since some people seem to be having trouble understanding our post that is referenced, neither we nor the sellers got emotionally involved nor "lost control" of the negotiations. By being referenced here some may form an implication that happened, and that couldn't be further off the mark.

The buyer used faulty logic to predicate reducing their offer.  This home actually ALREADY had granite counter tops, custom tile backsplash, primo master bath suite, etc., all unexpected items at the price point.  The list price is more than appropriate for the neighborhood, and if anything already below what it should be.  The buyer's agent and buyers did not respond to the 2nd counter and chose to discontinue the negotiation.  Either their "wish list" was a ploy to get the home price lower, or it was beyond their price range to start with and when our sellers didn't come low enough to meet them, the buyers chose to decline to pursue. We did NOT nor do we EVER insert ourselves as part of the equation emotionally to influence the sellers.  We recommend negotiating strategies to the seller and execute them, PERIOD.

Posted by Liz and Bill Spear, RE/MAX Elite Warren County OH (Cincinnati/Dayton) (RE/MAX Elite 513.520.5305 www.LizTour.com) over 6 years ago

Its a business transaction, don't get emotional. I look at each offer and consider the merrits.

Posted by Scott Fogleman, New Home Team (New Home Team 804-573-9592) over 6 years ago

I beg to differ - there are "low-ball" offers, sometimes laughably "low-ball" offers.  Nature of the business.  Everyone wants a deal and some think starting at the very bottom is the best way to get one. 

Emotions are used in negotiations all the time.  We use them to sway the other side into seeing things our way, the best negotiators know how to do this and do it well. A list of things the buyer will need to update along with an offer is one way of using the "needs" (emotions) of the buyer to get the seller to see things their way.  Buyers agents have used the letter from the buyer about why they want the house.  I do agree that Agents need to keep their emotions out of the equation, it's not their house or their money.

I read Bill & Liz's post and in no way do I see where they "lost control" and let emotions dictate the negotiations.  It was an attempt to educate buyers.  No more, no less.  It's a shame it has been so mis-interpreted.

 

Posted by Cinnamon Wright, Assistant to Tish Lloyd (Wilmington Real Estate 4U 910.547.1446) over 6 years ago

Great post. .I have enough years on me where I saw this emotion get the best of many agents. . .

Posted by Fernando Herboso - Broker for Maxus Realty Group, 301-246-0001 Serving Maryland, DC and Northern VA (Maxus Realty Group - Broker 301-246-0001) over 6 years ago

Interesting post, I've just read the prequels you linked to.    I've had emotion interfere in many transactions.  It's unavoidable since we're human, although it's a desireable goal to leave it out.

Posted by Ann Bellamy (Hard money lending for investors in NH and MA) over 6 years ago

While your post has many salient points, I do believe you may want to go back and re-read ALL of Liz & Bill Spear's post.  Perhaps your emotions got a bit in the way before you finished reading it fully.  I know there is not a single, professional Agent dancing here in The 'Rain who would intentionally cast aspersions on a fellow Agent (sorta against our Code of Ethics, for one thing) and to add a negative spin isn't what we're supposed to be about.  I hold you above such actions, and if you follow The Liz Spear Team, you know they always take the high road.  See, I think you may have gotten my emotions a bit riled . . . goodness, where are my manners.

Posted by Tish Lloyd, Broker - Wilmington NC and Surrounding Beaches (BlueCoast Realty Corporation) over 6 years ago

Mike...

I always tell my sellers: "We have an offer an it's a great starting point!" I don't care if it's 50% off of the list price, the buyer WILL get a counter offer!

Posted by Richard Weisser, Richard Weisser Retired Real Estate Professional (Richard Weisser Realty) over 6 years ago

Mike. I couldn't agree more. I'm primarily a listing broker and have certainly seen my share of low offers. I just present them and then my sellers and I prepare a counter. We've closed HUGE gaps in price over the years. There are some buyers that due to cultural traditions MUST come in low. We don't take it personally.

Posted by Bryant Tutas, Selling Florida one home at a time (Tutas Towne Realty, Inc and Garden Views Realty, LLC) over 6 years ago

Great post! Looks like you are getting people to think, and that is a good thing!  

We present all offers high, low and whatever.  We go over the pro's and con's of each offer.  Then the seller tells us how they want to proceed.  

Case in point, we presented a low offer to our seller who had refused to drop the price of his home.  We were sure he would counter offer even before we presented the offer to him.  Wrong, circumstances had changed that he did not share with us and he accepted the offer.  

We are only the messenger, hopefully advisor in the transaction. the decision makers are the seller and buyer. Our job is to get them agree to the transaction or not agree.  

Posted by Phil Hillerman, Crye-Leike Realtors® (Crye-Leike Realtors®) over 6 years ago

Good stuff, Mike.  I receiver a lower than list contract last night.  I'll get a chance to practice self-control when I submit it to my seller this morning.  Actually, I thought the house overpriced all along.  So, the offer is probably about right.  Keep posting!

Posted by Mike Cooper, Your Winchester, VA Real Estate Sales Pro (Cornerstone Business Group Inc) over 6 years ago

Mike, I inform my sellers to never reject an offer even if you have to counter at full price. Good discussion.

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA over 6 years ago

Mike...Fabulous and provocative post. 

Due to the influence of the media, many buyers feel it would be naive not to begin a negotiation with a much less than full price offer...even if they genuinely are willing to come up quite a bit eventually. 

The outrage by listing agents, as well as the need to "educate" buyers seems like overstepping at the minimum. This brings to mind a recent featured blog regarding listing agents lecturing buyer's agents about the feedback they have left them. 

Additionally, a "low-ball offer" presumes that the listing is properly priced.  The market is the market and a property is worth what a buyer is willing to pay and the seller is willing to accept.

It's important for the listing agent to always keep in mind....even if there are currently stronger offers....is my action in the best interest of my client? 

 

 

 

Posted by Howard and Susan Meyers (The Hudson Company Winnetka and North Shore) over 6 years ago

It's a starting point not the ending point in most negotiation cases.

Posted by Cheryl Ritchie, Southern Maryland 301-980-7566 (RE/MAX Leading Edge www.GoldenResults.com) over 6 years ago

Great post, it's just business and should not get personal but a lot of times people's emotions get the best of them.

Posted by Austin Herbert (DNJ Gateway Mortgage) over 6 years ago

Mike, thank you! You took the words right out of my mouth. You are right. Even many of the responses were somewhat emotional and painted the buyers as the enemy. Also, by association - they are making the Buyer's Agent appear to be incompetent simply for carrying out their client's wishes. Offers should not reflect poorly on the agent when buyers are the true boss. I'm not trying to impress or befriend the agent or seller, I'm simply taking care of my client. 

When I write offers for less than list price, I feel I have an obligation to try to justify where the buyer is coming from. I ask my buyers to think it through and give me the reason they are offering what they're offering. That in itself is a great exercise for them. Perhaps there is a reason that the seller didn't think of that actually may matter to them. We don't know what impact it may have on them. Plus, it is what it is. What is the seller thinking as you point out how silly the buyer & offer is? They may become buyers one day on the other side & want to write a less than full price offer. Will they want to work with you?

Instead of us demonizing the agent and buyer, as listing agents we should just present it professionally, then work on making the counter-offer with terms that they want. Period. By the way, the property is worth what a buyer is willing to pay for it. Great thinking, Mike!

Posted by Stacey Johnson-Cosby, Selling Kansas City-Real Estate & City Blog (Reece & Nichols Realtors-Kansas City) over 6 years ago

While making valid points, I think your original assumption is without basis or merit. How might one know whether or not any listing agent infuses their emotional reactions into their presentation of any offer to the seller?

Sellers, in my experience, are far more likely to feel offended by lower than expected offers.  Recognizing this, I always prepare each of our sellers for the high possibility of receiving such offers and then help them formulate a plan of action should such offers come.  Even with all of the prep work we do in the very beginning of a listing, it is not unusual to see all the preparations go out the window when the offer actual does come in "low".

I read the same posts that you referenced but did not come away with any impression that the authors of those posts become emotionally tied up by 'low' offers or that they convey any emotional baggage along with the presentation of said offers to the sellers.

Questionable assumptions aside... great points and worthy reminders.  Thanks!

Posted by Tim Fennell, Jacksonville Real Estate (The Legends of Real Estate, REALTORS®) over 6 years ago

"divest themselves of all emotion"

good luck with that

how bout just trying to keep it to themselves and not sharing.

Posted by Jay Beckingham, "I love first time homebuyers" (Absolute Home Mortgage Corp) over 6 years ago

It is so difficult working with agents that get too involved and have a knee reaction smack daddy attitude!  I remember "a meeting of the minds" as an agents goal.  

Posted by Laura Sargent (Carolina One Real Estate) over 6 years ago

The mandate to get in and out successfully in a Real Estate transaction cannot be expressed enough. The distractions abound and only focused licensed professionals can move things forward in a timely, rewarding manner. I met up with two agents recently who derailed a potential deal and when I tried to give them another bite at the apple, they blew that too.....Stay focused and frosty...good post and host Mike

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 6 years ago

I have said it forever, the low offer is not the problem it is your reaction to it. 

Sometimes you just need to go to bed, wake up and be real about it. Spiteful counter offers are useless, being pissed off is useless. 

The only thing productive is to make an effort to get the offer within your range, if it doesn't work then it doesnt work.

Posted by Mike Russell, Overland Park Kansas Real Estate (Mike Russell & Associates) over 6 years ago

WOW - I wasn't prepared for this post to go 'viral' or to be featured. I'm appreciative of the thoughts, comments and opinions shared.

To respond to several comments regarding the blog by Liz & Bill and Lenn, please note that their posts were merely an inspiration for my topic; the only correlation involves the subject matter of less-than-full-price offers. They've been included ONLY to encourage the community to visit and read these terrific blogs.

Praful - I agree 100%. Despite the best of information sharing and guidance, I still have Buyers in this market lose a home to a more competitive offer ( that's an assumption since I never get to learn the details). And when this happens, my Buyers often tell me, "You told me so" and will usually make a strong offer on their 2nd choice.

Mary - We think alike. One of the first conversations I have with my Sellers pertains to being prepared for a less-than-full-price offer and to avoid taking it personally. I explain the analogy used in this blog with much success. It avoids all the emotional turmoil and drama and permits continued negotiating.

Jane - You hit the nail on the head. Present the information and simply await the client's instructions on how to proceed.

Liz & Bill -I enjoyed your blog and agree that a Buyer making price cuts over features not included in a home is absurd. Your post was merely an inspiration for my topic, and therein lies the only "correlation." You should have noticed the one line summary I added that helps reference (and differentiates) the topic. The link embedded for your blog (and Lenn's) was merely to "plug" your post and encourage the community to read it. I do like the disclaimer you've added helping to clarify that your blog was a creative work and not an actual letter submitted to the Buyers involved in the particular transaction. 

Scott - That's always the best way to proceed!

Cinnamon -It's perfectly acceptable to disagree and I sincerely appreciate you taking a moment to share your thoughts. By claiming offers are "low" or "low-ball" you take on the role of decision maker which is dangerous and inappropriate, in my opinion. In reality, you're not the driver, your client is. While you may attempt to take on the role of a back-seat driver, professionals assume the role of navigator, helping the driver reach their destination. Emotions are never a part of negotiations. The offer is what it is, and the client can either accept or dismiss it based on the merits of what is being proposed. As for Liz & Bill's post, there was no misinterpretation and no one accused them of losing control.

Fernando - Same here my friend. Watching agents get so enraged over an offer astounds me. They lose all perspective and fail to realize the property is not theirs but is owned by their client.

Posted by Mike Mayer (Mike Mayer, Broker/Owner - i List For Less Realty, LLC) over 6 years ago

Ann - Thanks for commenting. We're human and emotions are a part of our make-up and it does require effort at times to overcome them.

Tish -Calm down...  I not only read ALL of Liz & Bill's post, but found it a source of inspiration. And shame on you for assuming! I've edited my post to include the disclaimer that the link to their post (and Lenn's) was with the sole intention to plug their blog. The only correlation, hence the link, is the subject matter: less-than-full-price-offers. Very few took my post as an attack on either of these fine ActiveRainers, which was never the case. I hope it makes you feel better to know I didn't get all choked up responding to your comments. Thanks for sharing your thoughts.

Richard -I love the attitude! I possess a similar outlook and philosophy as well.

Posted by Mike Mayer (Mike Mayer, Broker/Owner - i List For Less Realty, LLC) over 6 years ago

As far as I'm concerned as a listing agent I will present any and all offers. Can't tell you how many times that first ridiculous offer lead to a fair offer.

My first case was in the mid 1960's and the buyers were from another culture. The house was priced at fmv because the sellers wanted to sell but have it show first in the mls book. The price was $30k and the buyers offered $15k, my seller asked what we should do and I said counter, the sub-agent said he was going to the buyers place and I told him the sellers and I would write up the counter and would drop it off to him shortly at the buyers.

Well the seller countered at $45k but stated in the counter if it was accepted by X time he would discount the price to $30k. Seller was a salesperson and understood the mid-price negotiating practiced by many. I dropped it off and stated I would be at my office until 10pm. About a hour later I got a call from this sub-agent and we arranged to meet again at the sellers. The buyers had raised their offer to $20k.

Now the trap was set, sub-agency at work, I put out a tape recorder and directly asked what the buyers had indicated to him as to their top price. He smoothly said they had indicated their top price on the counter. I had him acknowledge on tape he was a sub-agent and what his legal duties were and asked again. He got very nervous and finally stated they would pay the $30k but wanted to try and get it as low as possible. So the seller countered at the $30k and included a few things they were intending to leave anyway. I joined the agent at the counter with the buyers and they accepted. Point being is most listing agents and sellers would have told the other side to get lost and no deal would have resulted from that low ball shot.

Posted by Brian Park over 6 years ago

Mike, I feel better with the Note added.  Thanks for the adjustment.  The misinterpretations of our post over the last two days have been a WEE bit exasperating!

Posted by Liz and Bill Spear, RE/MAX Elite Warren County OH (Cincinnati/Dayton) (RE/MAX Elite 513.520.5305 www.LizTour.com) over 6 years ago

Wow, you hit it right on the head "When Agents become emotionally involved, or take the offer personally, the results often include Sellers who become defensive and unwilling to proceed with the transaction."  It's a business deal, we are agents, nobody should be getting personally insulted.

Posted by Adam Mallory, Broker, ABR, e-Pro (eBroker Real Estate 619-566-ADAM) over 6 years ago

Mike:

Bill and Liz have a valid point and so do you.  It is deflating to receive the first offer which is much lower than the asking price.  We must present all offers to the sellers.  The way we present the offer, even those that are less than asking price offers, can affect the way the sellers feel about the offer.   If their goal is to sell the property, they will be willing make a counter offer.  Which may or may not lead to a sale.  We should help our clients take the emotion out of the sales process.

Posted by Evelyn Kennedy, Alameda, Real Estate, Alameda, CA (Alain Pinel Realtors) over 6 years ago

Yes present all offers, period. I am working with one seller's agent right now and I swear he is making decisions without presenting them to his seller first. 

Posted by Erica Ramus, MRE, Schuylkill County PA Real Estate (Erica Ramus - Ramus Realty Group - Pottsville, PA ) over 6 years ago

Great post..... you are right we as agents have a tendency to get emotional and this passes onto seller or buyer.

I am going to Bookmark this post, to use a  reminder . Thanks

Posted by Susan Jackson (America's Network Realty Group, Inc) over 6 years ago

Mike ~ Well said.  It is our job to help our client, buyer or seller, to understand the process and that includes negotiation to keep the offer alive.  There are valid reasons not to continue, but we control the process and the client makes the decisions.

Posted by Ken Speer (Alpha Global Associates) over 6 years ago

Just dealt with another today AND I was representing BOTH sides. While I wanted to send the "buyer" packing and refuse to write the rediculously low offer, I remembered to remain a professional. I had prepared my seller a head of time, She still wanted to just reject the offer but I was able to help her understand that this wasn't personal, but just business...and she still had all the control. Tough go keeping the respect of both side, but so far its been okay. We are still negotiating and I honestly don't see it coming together, but stranger things have happened.

Posted by Natalie Tarrant (RE/MAX Little Oak Realty) over 6 years ago

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