How do you as an estate agent handle lowball offers from buyers

Lake Properties                       Lake Properties

Lake Properties                  Lake Properties

1) Mindset (the foundation)

• It’s business, not personal. Buyers probe; many low offers are tests or negotiation anchors. Don’t react emotionally.
• Every offer is information. Even a low offer tells you the buyer is interested, or that your listing copy/price/condition has a perception gap you can fix.
• You control the process. You can counter, request proof, ask for terms changes, or walk away. Don’t feel forced to accept or reply defensively.

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2) Step-by-step protocol (how to respond, every time)

1. Pause and evaluate
   • Confirm buyer’s proof of funds or mortgage pre-approval.
   • Check earnest money / deposit amount and any unusual contingencies.
2. Analyze the offer as a whole (price, deposit, financing, closing date, contingencies, inclusions, inspection, appraisal clauses).
3. Compare to your bottom line (the lowest you will accept) and to market comps.
4. Decide a strategy — one of: (A) Counter with price + explain comps, (B) Counter with non-price concessions (shorter close, higher deposit), (C) Ask for buyer justification / proof, (D) Issue “best and final,” (E) Reject politely and keep marketing.
5. Respond professionally (agent should send the reply; sellers should avoid emotional language).
6. If negotiation continues, keep records and set firm deadlines for responses.
7. If you accept, document protective terms: deposit, timeline, appraisal gap coverage (if any), inspection escrow, etc.

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3) Negotiation levers (things you can trade instead of cutting price)

• Earnest deposit size (increase to show buyer commitment).
• Closing date flexibility (shorter or seller rent-back).
• Which inspections/contingencies remain (e.g., buyer accepts AS-IS or waives certain contingencies).
• Repair credits vs price reduction (give credit after inspection instead of lowering list price).
• Inclusions/exclusions (appliances, furniture).
• Appraisal gap coverage (buyer covers X if appraisal low).
• Financing terms (e.g., allow seller carryback for a short time — only if you know what you’re doing).

Use combinations: e.g., accept a price slightly lower if buyer increases deposit and shortens closing.

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4) Scripts you can use (copy / adapt)

A — Quick polite rejection (if you won’t engage):

Thank you for the offer. At this time we are not able to accept that price. If you’re able to revise, please send an updated offer with proof of funds or pre-approval.

B — Counter with price + comps (professional):

Thank you. We appreciate your interest. The sellers have reviewed the offer and are prepared to counter at R1,425,000 based on recent comparable sales (attached). The sellers request proof of funds or a lender pre-approval within 24 hours and a R100,000 earnest deposit. Closing flexible to suit your timeline. Please advise.

C — Ask for buyer to justify a low offer:

Thanks for submitting. We’re curious what led to the offer amount — is it based on an inspection, appraisal expectation, or repairs you’re budgeting? Please provide justification and proof of funds so we can continue discussions.

D — Best & Final request (use during multiple offers):

We have multiple offers and invite you to submit your best and final by 4:00 PM on [date]. Please include updated financing proof and earnest deposit amount.

E — Walk-away / final “no” (firm):

We appreciate the offer but it’s below our acceptable range. If you’d like to continue, please submit a realistic revised offer.

F — Post-inspection lowball reply (offer to negotiate repairs instead):

We reviewed the inspection concerns and are willing to offer a R25,000 repair credit (or make the agreed repairs) in lieu of a price reduction. Please confirm whether you accept that remedy.

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5) Worked numeric example (step-by-step arithmetic — how I’d recommend countering)

Scenario: Listing price = R1,500,000. Buyer offers R1,200,000 (a lowball). You want to calculate the gap and decide a counter.

1. Calculate the difference (asking − offer):

   • 1,500,000 − 1,200,000 = 300,000.
     So the difference is R300,000.

2. Calculate the percentage difference:

   • Divide difference by asking: 300,000 ÷ 1,500,000 = 0.2.
   • Convert to percent: 0.2 × 100 = 20%.
     So the offer is 20% below list.

3. Decide a countering anchor (typical strategy: anchor near 95% of list rather than meet the low offer halfway). Compute 95% of asking:

   • 0.95 × 1,500,000 = 1,425,000.
     So a 95% counter is R1,425,000.

4. Reasoning: 95% preserves negotiating room, signals seriousness, and narrows the gap from R300,000 to:

   • 1,425,000 − 1,200,000 = 225,000.
     So the new gap is R225,000 (still large, but leaves room to get to your bottom line).

5. Alternate smaller concession: if you prefer to be firmer, counter at 97%:

   • 0.97 × 1,500,000 = 1,455,000 → R1,455,000.

Rule of thumb from this example: For a very low offer (≥15–20% below) you generally don’t accept the midpoint; instead counter high (90–97% of ask) and force buyer to climb or justify.

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6) Special cases & how to handle them

Cash investor / flipper who lowballs

• They often factor repair costs and resale margin. Ask for their scope of work and timeline. If their number is below the cost threshold, walk. If you want a quick sale, consider a middle option but insist on a strong deposit and fast closing.

Buyer with weak financing (low offer + mortgage)

• Ask for an increased deposit and proof of lender pre-approval with a name and LOE (letter of endorsement). If financing is shaky, seller protection clauses or higher deposit protect you.

Post-inspection renegotiation (buyer lowballs after seeing inspection)

• Offer a specific repair credit or perform the repairs. Avoid ad hoc large price cuts — quantify repairs with contractor quotes before conceding.

Multiple offers

• Use “best and final” deadline to extract the most value. Don’t counter each buyer with a separate incremental increase—either set a highest-and-best deadline or choose the strongest offer and counter only that party.

If buyer is insulting or unreasonable

• Keep reply brief and professional or have your agent respond. Do not argue. Protect your bargaining position and reputation.

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7) When to accept a low offer

Consider accepting if one or more of the following is true:

• It meets or exceeds your bottom line (the walk-away price you set).
• Buyer offers superior terms (cash, quick closing, large deposit, waived contingencies).
• Market conditions indicate inventory is high and relisting will take months.
• The carrying cost of continued marketing (mortgage, levies, agent fees, staging) outweighs the difference.
  If you accept, document protections: deposit size, no-contingency clauses if applicable, and explicit appraisal/inspection handling.

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8) Communication & timing best practices

• Respond promptly and professionally. Even a short rejection/counter within 24 hours keeps momentum. (You can instruct your agent to respond fast.)
• Always ask for proof of funds or lender LOI before deep negotiation.
• Keep negotiation in writing (email/contract) to avoid misunderstandings.
• Set deadlines for responses to avoid endless lowball back-and-forth.

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9) Presentation — how to justify your counter

When you counter, attach a short, professional packet:

• 3 recent comparable sales (within 1 km / 3 months) with photos and adjustments.
• A list of upgrades/improvements you completed (dates + receipts if possible).
• A clear summary of why your price is fair (location, school zone, condition).
  This converts emotion into evidence.

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10) Quick checklist before replying to a lowball

• [ ] Confirm buyer’s proof of funds / pre-approval.
• [ ] Verify earnest deposit amount and whether it escalates.
• [ ] Pull 3–5 recent comps and sales data.
• [ ] Reconfirm seller’s bottom line (lowest acceptable price + non-price terms).
• [ ] Decide negotiation strategy (price vs terms vs reject).
• [ ] Prepare a professional written reply using one of the scripts above.
• [ ] Set a firm response deadline (e.g., 24–48 hours).

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Lake Properties Pro-Tip (expanded)

• Always treat lowball offers as negotiation openings, not insults. Start with a calm, evidence-backed counter anchored near 90–97% of your price when the offer is far below list. Use non-price levers (deposit, closing date, contingencies) to extract value, and keep the buyer’s proof of funds front and center. Finally, have your agent act as the buffer — emotions waste deals; facts close them.

Lake Properties                   Lake Properties