Walk Away a Winner – Never Respond to an Offer That Can’t Be Closed
This is a real estate classic. You’re a seller and are asking $200,000 for your property. A buyer comes through your house, looks at it, leaves, and then the next day comes back again. You’re sure this per son is interested and, after talking awhile, she says, “Would you take $160,000 for your property?”
You’re anxious to sell and you reply, “No, no I wouldn’t, but I’d look favorably at $185,000!”
You’ve just committed a “no-no!” You’ve started negotiations on a deal that can’t be concluded. Why can’t it be concluded? Because there’s no formal offer on the table. The would-be buyer hasn’t offered anything. She has simply asked a question.
In effect, you’ve just given away $15,000 before the negotiations have even begun. If this would-be buyer eventually makes an offer, you can be darn sure it’s going to be predicated on an asking price of $185,000, not the $200,000 you purportedly want.
What should you have said? That’s easy. When the would-be buyers ask, “Would you take $160,000 for your property?” The correct reply is, “Are you offering $160,000?”
The would-be buyer might now fall back and regroup. “Well, let’s say that I do? Would you consider it?”
This is merely a restatement of the first question. You now need to restate your response.
“Put your offer in writing, enclose an earnest money deposit, pre sent it to me, and I’ll let you know.”
The point is that that you should only respond to a legitimate offer that can be closed. If it can’t be closed, then true negotiations haven’t really started.
Your goal is to get the other party to the negotiating table. Until an offer is made, you’ve got nothing to negotiate.
According to the Statute of Frauds, real estate sales agreements must be in writing to be valid.
This problem can crop up at any time. For example, you’ve made an offer to a seller and are hot in negotiations. Along the way the seller suddenly says, “What if we just table this for a while? I think you need to go back and rethink your offer, and I need to sleep on it.”
You don’t “table” real estate negotiations. Either you’ve got a deal . . . or you haven’t.
What the seller is actually proposing here is to stop negotiations. In effect, he’s making an offer that can’t be closed. If you accept, you allow your offer to continue in force indefinitely while he neither accepts nor rejects it. In other words, he’s asking for an open-ended offer on your part. If a better offer comes in over the course of the next few days or weeks, he’s free to take it. (By the way, in real estate, all offers are presented as they arrive. Even if you have an offer pending, if another is made, it is, or should be, presented immediately.) The seller here has nothing to lose if you agree. He is, in effect, offering you nothing.
The point, of course, is that the seller is making an open-ended offer that can’t be closed. Your response should be immediate and clear. You might say something like, “I understand what you’re saying. But I’m looking to buy property today, and I have several pieces I’m considering. I believe we should continue negotiations until they are concluded. If you break them off, I’ll assume that’s a rejection and look elsewhere.” Be friendly, indicate you have alternatives, and lead the negotiations back toward a conclusion.