What Should She Counter-offer?

How long has the unit been on the market and how much other interest is there? How desperate is she to move?

I've gotten offers like this in the past. My tack was not to counter, but to politely explain that the list price was based on active and recently sold comparables with an invitation to view the comparables and bid again. I'll be honest, no one did. But the property sold soon after for full ask.

That was in a better market, though, and this is one experience.

UWS123
Depends on what her bottom line is. If she's asking $499K, and this is a market realistic price,and she will not accept less than, say, $475K, I would either counter by coming down a few thousand, or NOT countering at all. In this instance, the $410K offer is lowball.

In order to assess the offer, I would counter $498 and see what they will respond. Negotiation is an art and a game and there is nothing to lose other than a potential deal.

At this point I would say that we are so far apart that there is no counteroffer co
ing . Hang tough at this point .

Why isn't her realtor giving her no real guidance? There's no reason why she should be looking for advice on the internet. She's got a licensed professional working for her who is supposed to make around $30K for doing some work.

I'd counter 485K. Then they can say "go fish" or come back up within "reasonable" range (whatever reasonable means to your friend.)

I would counter at $485 because spring is here. I would counter lower if this was say; last December.If you lose them, you are at a better time. Hang tough with the weather on your side.

depends on the sellers personal situation, and time pressure to sell...every situation is different. If she has to sell and 450k is where she will go, counter at 480k or 475k...if she isnt pressured, and wont sell below 475k...then maybe 'no response' or down 9k to 490k...all depends on seller situation and bottom line..if she has to sell, u dont want to mess this up as some properties are still finding it hard to get good bids

I agree that it's a low offer. But how many offers has your friend received? How long has it been on the market? Maybe they are just testing the waters... I never understood why sellers don't counter an offer, even when it is a low ball like this one (unless they have a better offer on the table, which it doesn't sound like this person's friend does)? I personally wouldn't go back to a seller who just flat out rejected my offer, even if I was willing and able to pay full price. I would fully expect them to counter, even if only by coming down a tiny bit. At least that shows that the conversation is open, rather than slammed shut...

It sounds like the buyer is a realist, and the seller is probably a Republican:

http://streeteasy.com/nyc/talk/discussion/26026-the-difference-between-democrats-republicans

I told her to counter at $489K, but now I'm leaning toward the $485K that seems to be a popular figure.

She does want to sell, but this lowball threw her for a loop. I told her the buyers were just fishing, and to respond like it was an actual offer, rather than an insult.

nobody is telling her to accept the low-ball and she really needs to keep emotions out of it. A seller unhappy with a buyers bid, happens ALL the time! If she wants to sell, and more importantly, needs to sell, counter at 485k. You need to know the bottom line. Ultimately your headed there if she needs to sell.

Good advice needsadvice -she must counter. I don't feel at this point it's as much about the number as it is an indication that she's willing to play. This whole philosophy about refusing to counter is beyond me.

Comps, by and large, are bullshit.

They're fine for a rough guide as to the ballpark worth of a property, but they're hardly a hard-and-fast rule for pricing. What other (different) apartments sold for at different points in time, involving buyers and sellers with completely different sets of circumstances really has no firm bearing, ultimately, on what YOU can get for YOUR apartment.

"Comps, by and large, are bullshit."

Except that they form the basis for appraisal, and therefore financing.

always counter just as always make an offer. I would counter @498k.

great thread. Should have more of these.

Great thread and we are still on the original subject and not off into something else!

The only problem I see with countering at $485K is that it sends the message to the buyer than a deal will get done around $450K.

If the seller is okay with that then go right ahead, otherwise, no counter and ask for another bid.

AN offer is a start. The owner can refuse the offer or counter again. Depends on his situation, also.

but spin, re: not countering. Maybe the seller is not "willing to play" at this point, especially with someone putting in such a low ball offer. Would going back at $498,000 actually make that prospective buyer feel they were going to get anywhere?

We just bid relatively low (15% off ask) on the apartment we're buying. Though the seller was initially unwilling to counter, she eventually did. We wound up raising our offer to her first counter (5% off ask) because she didn't seem to be moving any further and we loved the apartment. It is what it is.

ph41 - I've had this debate so many times with friends and I still can't believe why it's so difficult to understand. As a seller you have all control -even when countering on a ridiculously low offer. In my opinion there is a big psychological difference between no counter and a message to "try again", vs. a counter close to ask. Countering even the low balls sends a signal that you appreciate the buyers interest and would like to explore a way to find some common ground. What's the harm in engaging them? Keep the low ballers talking, heighten their interest, let them feel hopeful even if it is only false hope you're offering. Make those agents do the work you're paying them for. Not every negotiation has to end in a win.

nice post spin. excellent advice. imo opinion one should ALWAYS counter. You never know what might come back. Keep the emotions in check. It's all just math.

Story: Individual sent out mass-lowballs to 300 homes/apts. Just emailed an offer to evry listing he saw. He got 3 acceptances. You just never know what's going through the noggin of the other guy.

I guess it just depends, as a seller, if you want or need to spend your time negotiating with someone who is probably not serious.

For me, if the apartment is reasonably new to the market and/or has other interest, $410k on a $499k apartment is "try again if you're serious." $450k would get a $497,500 counter showing willingness to negotiate but expecting a large increase in price.

I agree with wannabee that $485k sends the wrong message and sets up the seller as being more willing to negotiate that she may actually be.

i would counter $495. it's better then $498k.

with $495K you're telling them that you'll play ball, but don't come back with another stupid offer. with $498K you can as well say, "stick your offer up *($#*&$".

As a serious buyer I am not shy about bidding low if I disagree on valuation and/or think I know the seller is at a disadvantage beforehand. Some of those disadvantages may involve time on market, trend of market, condition of property, etc. Just as the seller is trying to maximize their price, I am trying to minimize mine. That's the way it works. So if a seller isn't interested in engaging such buyers then they are not serious about selling. A high counter from a seller will get my attention. It may cause me to re-evaluate the value, or introduce spousal persuasion into the equation.

concur with lad and maybe an attention to detail speech between seller:broker.

---------UPDATE----------

She countered at $485K.

Now we wait and see if the buyer walks or if they counter.

Probably get a 425K counter on the 485K. This has middle written all over it which is fine if the seller is OK with 450K. If not, it will take some skill to get this above 450K.

>The only problem I see with countering at $485K is that it sends the message to the buyer than a deal will get done around $450K.

That is precisely what the buyer is suggesting and a $485 counter should be the last counter if she wants more than $450K and/or $460K with some broker participation

as noted above, this is over thinking. nothing is done until its done. if you want to see where the buyer may be willing to go, you need to counter. if you go $485 and buyer ups to $425, you don't have to split the difference. you can stop there, you can counter at $482.5, etc.

the only reason to not counter is if you're not willing to sell at the counter you offer.

Of course you don't have to split the difference but in this case with this buyer, my guess is that it will never get past the mid point.

I think in most cases countering is always the best way to go, you never know where a negotiation will end up once it begins. Certainly if this is priced correctly an 18% below ask offer is low. But you have all types of buyers and sellers; some want to test the waters. I have had sellers that insisted on listing high, I knew they would take significantly less but would not reduce the ask, "Get me an offer." There are all types...

Quite a few buyers want to test the sellers, especially if a property has been on the market a few months or there is one rogue trade that took place at an unusually low price point. But when you don't counter I can tell you it sends a signal (or at least the buyer interprets) this as hostile, true or not, that is the impression the buyer is left with and stops them dead in their tracks.
I always point out to them to not take it personally, let's just stick to our game plan. I also point out that they need to be prepared for a no counter if they are bidding significantly lower than the ask, especially on a newly listed home.

The seller should also stick to there game plan, counter what you would counter any opening bid, you're in control.

In a more bullish environment I think the seller can be more aggressive with their strategy, but today I think it's best to engage and get the conversation started.

"You have to be on the dance floor to dance" As we say in golf.

Keith Burkhardt (broker)
The Burkhardt Group

-------------------------------------------UPDATE--------------------------------------------

No response from buyers to her $485K counteroffer.

I think they were looking to lowball and moved on.

needsadvice - the only problem is that now her STARTING point for future negotiations with other buyers may have been lowered to $485K, unless she tells her realtor that she will stay with the $499 lisiting price. However, her realtor now knows the "real" asking price and will probably "hint" that to any future prospective purchasers.

needsadvice..thx for the followup....good thread.

There are a lot of fishers out there - trying to buy at trough levels although prices do not seem to reflect that. Bottom line - if the seller is in no rush, hang tight at $485 - I am sure there will be a lot of activity at a lower price point.

Your friend is gambling. When interest rates will rise, she may not even find an offer that will match her current $410K offer. In this market buyers are making an offer appropriate to the anticipation of future price drop. We're double dipping already, this combined with tough banks requirements for mortgage + a soon to happen rise in interest rates, your friend may end up beating herself up for not being more reasonable.

@Keith

And as we say in dance, 'you have to be on the golf course to play golf' ;-)

@bramstar, yeah you hear a lot of silly saying on the course, most from old men in funny pants.lol. Are you a dancer, my wife is, she teaches now.

you have got to be in it to win it

-----------------------UPDATE-----------------------

Buyers back with counter at $420K.

Realtors on both sides getting ticked at buyer's lowballing.

What do I tell her the counter should be?

I'm leaning toward $475K, final offer.

I would tell her to hang tough at $485 and see what they come back with. The "buyers" are just playing your friend now., with a $420K counter, are not really serious buyers.

I'd wait a couple of weeks before replying at all.

No counter offer - simply state we need a realistic counter or the charade is over. And how would anyone know if a realtor is really "ticked"?

play the game.... $482,5000

It's gut check time. Her next counter should demonstrate how confident she is on valuation. At this point it's really important for us to know how long it's been on the market.

What's a serious buyer ph41? Full price offer?

I would hope the offer would also include some verbal explanation of why they are coming in so low. Sometimes it can be a simple matter of opening their eye's to comps, or vise versa...

At least she has a fish on the line, although it's a little too early to tell how big it is. Don't cut the line if you want to find out the answer.

Are Sellers fully realizing the era of free money is over?

No way. Counter-offer again at $485; offering less at this point would be the equivalent of bidding against yourself. I would share the comps and ask them to justify their low offer with their comps. Even if there is no deal, it would be education for the buyer.

this discussion is unfair to your friend/ seller. We do not know anything about location and comps. We do not know about purchase price, length of ownership and length of time on the market. We also do not know anything about your friend financial situation and needs. Everyone is giving advises based on their own perceptions and assumptions which can be a great disservice. For example, I can assume that if an apartment was 499 and for a low-ball your friend responded at 485, she might be desperate or in crisis or she bought the place for 157K and for all of the reasons mentioned the bidder should continue to low-ball..Finally, of course I assume that you and your friend are the same person.....

>play the game.... $482,5000

fat fingers?

>Are Sellers fully realizing the era of free money is over?

We had four zero interest credit card solicitations this week. 2 from Citi.

Of course they are one and the same. Original purchase price has no bearing on what the market will bring as everyone knows. The only remaining question, is, how many years is someone willing to wait to get what they think is "fair value" which might be, in their mind, "past maximum value".
Let me throw in another issue. It seems, that there are buyer's brokers who are uncomfortable forwarding their customer's "lowball" offers. If a buyer's broker tells a client that they don't want to get a reputation as someone who brings clients with lowball offers, what's a client to do? Would it make sense to continue to use this broker for apartments where a "low ball" offer wasn't called for, but continue seeing and bidding alone on higher priced apartments, if one was inclined to try the all cash lowball approach?
Or should one just drop the buyer's broker who is worried about her reputation. Is 17% below ask so insulting that a buyer's broker should be uncomfortable with making the offer on behalf of a client?

there is no sense messing around if 475k is in fact the final offer. The buyer simply seems too far away to me and may not come close to producing an offer that the seller will seriously consider.

My advice IF the bottom line really is 475K for seller, "no response, stand pat at 485K"

My advice IF the bottom line really is a bit lower, say 465K or 470K, "respond 475K and then pull the no response. Either way you will need to give up 5-10K minimum at some point to tease this buyer to get to a level that seems pretty far away now

just my two cents

Spin - urbandigs explained my thought process in greater detail.

multiple people have asked needsadvice how long the apartment has been on the market. He/she is not answering. That suggests it's been on the market a long time. That, in turn, suggests that "I thought that was pretty odd, comps are at $480-$515K" is BS.

Of course, I am totally guessing, since no one on this thread has any information, as others have pointed out.

ph41 - I happen to disagree strongly that the definition of a serious buyer is one who mostly agrees with the seller on valuation. I know because I have been that buyer.

If this place has been on the market longer than 4-6 weeks, the seller would be well advised to try and meet this potetial buyer half way and recover the difference on her next purchase.

if I was a half saavy buyer of a 400-500k apt I would be reading this thread with a great deal of interest....

I thought I replied to this yesterday, but I guess it didn't take (BAD wifi!) so...

Let me posit that an apartment has a "true" value, which is a range swinging around a midpoint, determined by sold comps, interest rates, taxes, maintenance, condition, quality of condition, view, quality of light, quality of building, availability of competitive apartments that can be purchased, price of competitive rents, etc.

Now the job of the buyer is to hit the low end of the range, and the job of the seller is to hit the high end. In order to do this, it is important to understand the range and the midpoint.

Now, for an apartment that's listed at $499K, the range just isn't that great ... (at that price point there are a lot of similar goods and the market is pretty efficient)...so we have a range of, what, maybe $25K? But we in the peanut gallery don't have enough data from the OP to figure out the midpoint and range of true value.

Therefore, most of the backseat driving of this negotiation isn't anchored, and may or may not be of use.

I will say, however, that nothing coming over from seller's side has been particularly encouraging to buyer, and that if seller wants to sell this unit to this buyer, the broker should be sending out warm and fuzzies on other fronts: making financial data available, talking about timing of close, etc.

ali r.
DG Neary Realty

>and recover the difference on her next purchase.

Seriously?

>But we in the peanut gallery

Speak for yourself.

>for an apartment that's listed at $499K, the range just isn't that great ... (at that price point there are a lot of similar goods and the market is pretty efficient)...so we have a range of, what, maybe $25K?

Speaking seriously, I think your 5% range is a bit low, it's probably +/- 5%, or $475 to $525, if you agree with this range thesis, and of course if you agree that the apartment to start with should be anchored around $500k.

Fair point, h'burg, range could well be double what I stated.

ali r.
DG Neary Realty

seriously 'burg. When you sell, you usually have to buy again. Anyone who doesn't look at selling as being the first part of a two part deal, where in the end you have an expectation about where you will end up financially, isn't a serious seller -to coin a phrase from ph41.

Maybe the seller, as a lousy negotiator, is an equally bad negotiator as a buyer.

Not sure I'd meet this buyer halfway just yet. The place is listed at $499k. Depending on the sellers' situation and what's on the market, they may want to try reducing to $485k or $475k in the hopes of generating offers in the $470s, rather than trying to get these buyers to $450k. At the low end of the market, 10% can be a pretty big reduction from asking, though again a broker (or a search on this site) should be able to give an idea of how close to list price comps are trading.

lad - You are assuming initial valuation is correct. We haven't heard how long on market, which is the big missing piece here.

'burg - What exactly points to the seller being a lousy negotiator, other than the fact she has a friend advertising her position on NYC's primary RE forum?

>What exactly points to the seller being a lousy negotiator, other than the fact she has a friend advertising her position on NYC's primary RE forum?

Double or nothing.

I'd be cautious about giving too much info here; we're reading this, do we know the other side of this negotiation isn't? I wonder if this isn't the time to break out the comps on both sides 'cause the other side is certainly looking to pay considerably less than ask & the way the bids have come in, OP will be very lucky to get to 450.

i think the offer should be "try again" (eg go fish).

she holds the cards etc.

If I were needsadvice's imaginery friend, I would not counter the $420K. If the buyer is really interested, she would come back with a higher number. If she comes back with at least $430K, then it's worth continuing the negotiation IMO.

Fair point about not wanting to post too much information on this forum. I wouldn't either. But then I would also realize I am not going to get useful advice.

---------------UPDATE-----------------

She countered at $480K. I said $479K was better, a more open sounding number, but she decided $480 might make them think they need to come up some.

I'm starting to get bored with it, myself . . .

I won't be posting any particulars, for obvious reasons, but everyone's input has been helpful.

needsadvice: Good point all around. Please keep us posted once the dust settles and is in contract.

Last night, one guy posted this article from urbandigs on another thread. Your friend should read it 10 times and sleep on it:
http://www.villageconfidential.com/guest-post-dont-mess-up-in-here-by-noah-rosenblatt-of-urbandigs-com/

@sledge; Glad I didn't show her that article, she would have taken $410.

I think, if they counter, she'll counter with her "lowest and final" and see what they say.

urbandigs, show me the numbers! I don't mean your specific experience of selling your place. I mean statistics that show the best bid came in the first couple of weeks. Statistics from interview with *sellers*, not *brokers*. Also divide up the data into two groups, (1) when the market is going up and (2) when the market is going down.

Without that data, it just sounds like another broker whining about how long the sales process takes and eventually even losing the listing.

urbandigs, I respect your site and the charts you provide, that is why if anyone can actually provide the statistics supporting your article, it would be you. Thanks.

As this is still a buyer's market, instead of ignoring it completely, your friends counter should be a second $485.
And now where your friend's broker should be earning their keep,and should ask buyer's broker, "what guidance is buyer going by to make this offer? Do you have comps? My comps say $485 to $515. We are looking for serious offers."

And agree with Spinny, time on market is a crucial missing piece.

Sunday: so your suggesting all the activity comes AFTER the 4th week on the market? That article is a tip for sellers, if you dont agree with it, thats fine.

engineering a chart to take into account days on market and price reductions, etc, is not as easy as it sounds. There are integrity issues to calculating days on market. In a perfect world, listing status updates will be free of data breaches, not exposed to flaws in sharing system, and easily measured/tracked. That is NOT the case, not by a long shot. Thats why it took us 14 months of data mining to engineer a system that adapts and cleans the data from these integrity issues. When it comes to DOM, when do you reset the counter? JM counts DOM as the # of days a listing is on the market from the last price cut to contract signing.

So, you could have a listing priced at 2M for 120 days. It gets cut to 1.75M and after 3 weeks it goes to contract. DOM would be 21 days for this listing given that methodology. My argument would be to cut the 2M price to 1.75M after the 4th-6th week. What if a listing goes off market for 1 month, 2 mos, 4 mos, 6 mos...a year. When do you reset counter to zero again?

There are tons of little things that you realize is reality out there with the data, when you look at 35,000,000 broker status updates going back 6 years. Its easy for people to ask for more charts when they dont see the issues behind the curtain, and then make an argument why the chart is not produced.

urbandigs: "so your suggesting all the activity comes AFTER the 4th week on the market"

I made no such claim. You on the other hand made a specific claim, and I am only asking that you support it with data. Isn't that what you are all about? The data that is.

Without any supporting data, I can definitely see the possibility that the best bid (not necessarily the most number of bids) can come at any time during the sales process. I can be convinced with quality data of course.

I am also by no means suggesting that getting such data would be easy or even possible.

Im just thinking of how a chart can be created to answer this question, and at same time, be high enough in quality given data integrity issues. I guess what we are talkin about here is two charts:

1. a % breakdown of current pending sales trends by days on market PLUS
2. Listing to Sale Spread degredation from original ask chart - would have to be delayed 2 months due to ACRIS sales filing lags

#2 is way more interesting to me. Ill put it on our to do list to investigate further, but it will be months before we get to it

the claim I made is from 6yrs in sales and seeing it happen...I never said I have a chart to quantify it, and rather was talking from personal and in the field experience. It also logically makes sense. When you first list a property, a POOL of potential buyers will, with time, become 'aware' of the listing. After that, its a matter of new buyers/brokers becoming 'aware'. If you agree that maximum exposure = maximum profit potential, my claim is logical and my advice is sound.

Also, with time, the chance of a price reduction rises. So if we are talking about the best chance of a new listing securing a bid close to ask, it would be in the initial 'discovery' period for the broadest amount of buyers. That seems to be in the first 3-4 weeks to me

My dad's often intelligent sayings throughout my life, and one of my favorites, "The first losses are the smallest."
makes me think of the more popular saying that seems to fit most of this market for the last 3 years, "the first offer is the best offer"

"Many times this very early bid is the nightmare for sellers 5 months later. So, I refer to it from the seller’s point of view as the, “I should have accepted that bid and saved 5 months of agony”"

Is "many times" = 100%, 90%, 80%, 70%, 60%, or 30% of the time? For those cases where the first couple of weeks did not bring in the highest bids, were they always close to the final sale prices? I would imagine that it would also make a difference if the market was moving up vs. down.

If I were the seller and know that 80% of the time the best bids came in the first couple of weeks and the other 20% of the time it was close to final sale price, I would take the advice and accept the early bids. However, if the best bids came in early 65% of the time and the other 35% of the time, the bids were mostly not very close to final sale price, then I might not want to accept the early bids.

As for that "pool of potential buyers", it really depends on how many of them are named julia, because a new buyer might just step up to the plate first.

I know people who would not even bid on a place unless it has been listed for more than a month.

How do you approach a seller that has had his listing up for sale for more than a year?

@sh, With a pocket full of posies?

> I know people who would not even bid on a place unless it has been listed for more than a month

Sunday, that was someone like me and most who are that way is because the offer is substancially lower than the ask, supporting the notion of first offer is likely the best offer.

If a qualified bidder was willing to pay within 5% of first ask, a contract will probably be signed fairly quickly. How many cases does the first couple of weeks bring in such a bidder. So sure, I would agree that if such a bidder appears in the first couple of weeks, it would likely be the best bid. The question is how often does that happens as oppose to all bids coming in below 10% of first ask during the first couple of weeks? The pool of buyers urbandigs was referring to probably include a good number of serial low ballers who might never buy. The chance of a new buyer (who accepts the current market price) coming along with a better bid is just as likely imo.

The ones I know who didn't bid unless the place has been listed for at least a month did end up buying recently. Both were involved in "bidding wars", though it started from a lowered ask. The final price for one was about 8% below first ask and the other was 12% below first ask.

Again, I'm personally not convinced one way or the other without some real quality data.

urbandigs, in your 6yrs of experience where *you are the listing agent*, what are the percentages of the first couple of weeks resulting in the best bid AND end up closing at a bid that was lower?

Well that's the number one reason not to bid the first month of a listing, to not get caught up in a bidding war,whether real or BS.

"urbandigs, in your 6yrs of experience where *you are the listing agent*, what are the percentages of the first couple of weeks resulting in the best bid AND end up closing at a bid that was lower? "

I really dont remember. Majority of my deals were buy side. 250 E 87th definitely was one. 18 W 48 was one, and I recall us selling for slightly lower later on. The E Harlem townhouse was another..got a 1M bid in Week 3, we didnt sell until like 8-9 months later and significantly lower. Bad example because market deteriorated ahead of us, seller would not budge and wanted to test market and felt they can get 1.5m min, as they had the townhouse their whole life.

I talked to my engineer, I think we can build that #2 chart I mentioned before. I think that would be uber interesting!

"How do you approach a seller that has had his listing up for sale for more than a year?"

I wouldnt.

Simple, you say, "I noticed that your unit has been for sale for more than a year, can you tell me a little about that?"

ali r.
DG Neary Realty

Why wouldnt you Noah? After a year, i think a seller is ripe for some serious nego...

okay, if they agreed to listen then thats fine. But if not, no way. Sellers listen to what brokers tell them they can get for their property. Its broker 101. Estimate high, get agreement signed.

Yeah digs but you know how the rest of that story plays out; After a month, maybe two, broker leans on seller to lower price after just blowing up their bubble about how much they can get. Seller either listens or stays the course (meaning no sale, light traffic). By 4th month the seller is pissed and getting tired of being told to lower his price!

Listing expires, seller calls in new broker who prices it correctly and whamo it sells! New broker is a genius, big air kisses and champs all around! lol.

I go on listings appointments not really wanting the listing and give the seller my gut, honest opinion about what it will sell at, backed up with comps and an analysis of their home etc.... Shortly thereafter I am being thrown out of sellers apartment, picking up all my papers off the stoop....

But I would say that 80% of the time I am correct.