Should buyers present their best bid first or start low and wait for a counteroffer? In the hot Atlanta real estate market, agents typically advise buyers to bid close to asking price or even higher for a better chance of instant success.
No one wants to overpay for a home, and due to the common belief that sellers price high and expect lower offers, buyers are often left guessing at the minimum amount they can bid without needing to negotiate a counteroffer on a home.
Buyer’s initial offer
Some buyers begin negotiations by offering a set amount — such as 15 percent — under asking price as an initial bid. However, arbitrary bidding often leaves the door open for a seller’s counteroffer. If buyers choose to bid below asking price, they will need to produce some type of support for their bid in the form of comps, number of days on the market or anticipated repair expense based on issues noted in the seller’s disclosure.
Sellers often have an emotional connection to their house, and the buyer’s agent must be able to skillfully present a lower bid while, at the same time, offering valid reasons as to why the lower amount is appropriate.
Sellers’ counteroffer strategy
After an initial bid is presented by the buyer, the seller has the option to accept the amount, reject it outright or make a counteroffer. If the seller chooses to come down only a small amount, this leaves the door open for a buyer to make a counteroffer as well, which extends the negotiating process.
If the two parties are not far apart in price, other concessions may be discussed, such as a change in settlement date, inclusion of appliances or window treatments or a waiver of certain inspections. If the seller is truly motivated to seal the deal, he must work with the buyer to negotiate an agreeable price as well as other terms of settlement.
Should lower bids cause sellers to rethink list price?
After turning down several low bids, sellers may wish to reconsider their home’s list price. Keep in mind that new buyers enter the bidding process unaware of previous offers. If a house has been on the market for a long time, potential buyers may assume it’s priced too high and bid lower than current asking price. In this case, dropping the asking price can work against sellers. Rather than lowering the price, talk to your real estate agent about changing your home selling strategy to generate new interest in your home.
During negotiations, both buyers and sellers must come to the table with realistic bids and counteroffers. When the pressure rises, don’t be afraid to take advantage of your real estate agent’s negotiation skills and expertise to make a counteroffer on a home. Experienced agents have been through the process many times and can advise clients when to hold firm and when it’s time to move on.
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