How to Respond to a Low Offer
I just checked the stats and in Greater Lansing since the first of the year, the average list price/sales price ratio has been 95%. (This figure does not account for seller concessions…that is money the seller pays for buyers closing costs and other things) That seems pretty good, however, we continue to hear about “low ball” offers every single day. So, as a seller how do you respond to a low offer? First step…breath and take a step back. Buyers are savvy enough to know that it is a buyers market (Katie Couric has been assuring them of this ever night for over a year) and most of them are going to “try something” to feel you out with their first offer. It is hard to remove yourself emotionally from the house and not to get offended but that is what I will ask you to do. Many sellers first inclination is to reject right away when they receive what they consider to be an offensively low offer. In a market like this NEVER reject an offer outright…even countering full price will let the buyer know “I want to work with you but we are not even in the same galaxy right now” and it leaves the door open for them to come back.
If you did not pull recent sales before you listed your house now is the time to see what other similar properties have sold for recently. Review this information with your agent and pair that with your motivation to get the deal done before you decide on your counteroffer. Each situation is different and there may be other factors in the offer that would make you consider a slightly lower offer (cash deal anyone?) Try to swallow your pride and remember that, for now, it is a buyer’s market, and low ball offers are sometimes a reality.
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Short Sales – Info for Sellers
You may have heard the term “short sale” floating around out there. So what does it mean to you as a seller? A short sale is a situation in which the amount that you can sell your property for will not be enough to pay off your mortgage and thus you negotiate with you lender to accept less than what they are owed as a full payoff on the mortgage. (By the way, if you live in Michigan you are in good company if you owe more than your house is worth – a full 40% of home owners are in the same spot)
This may seem like a pretty good idea if you are ready to move and are upsidedown on your house. But hold on a minute…not just anyone can do a short sale. Who is a good candidate for a short sale? Basically someone who has a hardship and will be unable to pay their mortgage if they do not sell the house…a job loss, transfer, divorce, things like that. If you are upsidedown on your house and have money in the bank, sorry, but this is not the deal for you. In addition to a hardship, your lender will want to look at your financial information. All of it… W-2s, paystubs, tax returns, bank accounts. They want to make sure you don’t have any money squirreled away or that you could actually have the means to come up with the deficit. And no transferring the money to mom and dad’s account right before the sale…they will check back for several years.
So what are the benefits to doing a short sale for you as the seller? A short sale will not be AS large of a hit on your credit as a full blown foreclosure. It will still make your credit score go down. This means that you may be able to buy another house in the future sooner (or lease a car, or get a credit card, or any of the other of a multitude of things your credit tends to affect these days) In the meantime (and I say this as a landlord myself) it may be easier to rent a place with a short sale on your credit versus a foreclosure.
Finally, while you will not net anything at closing, you also should not have to pay anything to do a short sale. Though are lots of companies that may try to collect a fee upfront. DON’T DO IT. Any reputable real estate company in this market will have an entire short sale department, or at least agents who have experience with short sales. Make sure to ask your agent about their experience with short sales, including their success rate and average turn time. You don’t want to be their guinea pig.
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