It is a common practice in the real estate market for a homebuyer to make a purchase offer to a seller. However, in a suffering market when there are more sellers and fewer buyers, a home seller sometimes takes the initiative and makes an attractive offer for one or more buyers to consider. This strategy is referred to as a reverse offer or preemptive offer. A reverse offer generally means that a seller is willing to sell the house for a discount price and even may be willing to negotiate on supplementary expenses such as buyer's closing costs and homeowner's association dues and fees. An offer generally is made in a letter of intent to sell.
Identifying Potential Buyers
Make offers only to potential buyers. Not everyone who has seen the house will want to buy it. Make offers to prospective buyers who have had two or more showings. Also make offers to those who have contacted the broker and expressed a degree of intent to purchase, albeit with some reservations.
Estimating Offer Terms
Consult with the real estate broker before deciding the terms and conditions of your offer letter. While you may be eager to sell the house, you don't want to sell it for too low a price. A price 1 or 2 percent lower than the original listing price often is sufficient to convince a prospective buyer. The broker is more likely to make an accurate estimate of a buyer's price range. You also need to find out from the broker what reasons might be making a buyer sit on the fence. In some cases, it may be something other than the original listing price.
Offer Letter Terms
Write a clear and concise offer letter, which lays out all your terms and conditions. Generally an offer includes a figure suggesting a reduction in selling price. An offer also may include other incentives. A seller can agree to cover the closing costs on the deal or to buy down the interest rate on the buyer's mortgage. A seller also may agree to prepay taxes, insurance and homeowner's association fees and dues. Some sellers make a reverse offer that includes utilities such as kitchen and laundry appliances, furniture and flat-screen TVs.
Give the buyers only a short period of time to respond to your offer. The deadline to respond must not be more than a day or two. Short deadlines are known to create a sense of urgency and initiate serious buyers to make a move. Mention the deadline date in your offer letter.
Disclose the information in writing, if you have made multiple offers. Let a prospective buyer know that you also have sent an offer to other potential buyers, and the first one to respond will be invited for further negotiations.
- The Zac Team: The Benefits (and the Art) of Sellers Writing Offers to Buyers
- Bigger Pockets: How to Use a Reverse Offer to Get Your Property Sold
- Silicon Valley Real Estate: Considering the Reverse Offer