When presenting an offer below the asking price,
Discuss the overall offer before revealing the price. First, work through and find common ground on the other stipulations in the offer.
Then negotiate the price after you and the seller (or seller’s agent) have agreed to or adjusted the other items that aren’t related to price, such as time of possession, closing date etc
When discussing price, identify the difference between the asking and offered prices, and focus the discussion only on that number. Ask the seller, “If the buyer had come in here with cash and closing was in a couple of weeks, would the offer have been acceptable?” If they say that they would take 45 lacs now, use the 45 lacs number as your discussion price. Don’t deal with the big numbers, like a 50 lacs asking price and a 40 lac offer. Instead, break it down to a comparison between the 45 lac they would take now if a buyer walked in with cash and the 40 lac offer. The real difference is 5 lac. Talk and plan in terms of a 5 lac difference between the seller and buyer.
Break the cost of the difference down to a daily rate. The effect of this technique is to reduce the difference to a ridiculously small amount. For example, suppose the difference is Rs. 2 lac. Ask the seller to consider the actual impact of the difference; the majority of sellers end up as buyers, so what you’re really asking him to consider is the cost of borrowing Rs. 2 lac more for his next house. In fact, the cost of that Rs. 2 lac is minimal when you look over a period of 20 years. With this information in hand, you can ask, “Is Rs. 2 lac worth a lot than to know that your home is sold and that you have the freedom to move into your next home?” This same technique works well to raise the offer on the buyer’s side or even to reach a midpoint agreement, for example, to create a win/win outcome for the buyer and seller.
Explain how the buyer arrived at his offer price. Show current comps to validate her thinking. The property may have been listed months ago, and in the meantime, the market environment may have changed considerably.
Presenting a current market analysis can help justify and win acceptance of the offer.
If appropriate and true, explain that the buyer has another home in mind. If the offer is the highest the buyer can go, express that fact by saying that clearly. This kind of statement defuses emotions before they arise.
Above all, when presenting a low price, convey that the offer is based on a realistic assessment of the market environment or the buyer’s capability, not a personal reaction to the seller or the home.
After you extend an offer below the asking price, be prepared to present off-setting benefits in an effort to make the offer attractive and valuable to the seller. Alternate redeeming qualities you can mention include
- Solid earnest money
- Buyers with impeccable credit
- Buyers with good, solid employment history
- Buyers with ample funds and a low loan-to-value ratio
- Buyers with the flexibility to close quickly or wait as long as 90 days
