BiggerPockets

How To Use A Reverse Offer To Get Your Property Sold

If you have a property on the market and you can't get it sold, it may be time to consider a strategy that many sellers used in the 80's when interest rates soared and the real estate market was lagging. It's called the "reverse offer." It's a strategy in which a seller makes an offer to a buyer. It runs counter to the traditional offer process in which a buyer makes an offer to a seller. However, it can be effective in slow markets if used correctly.

First, here are some advantages of the reverse offer strategy:

-It gets a buyers attention.
-It opens a line of communication with a buyer.
-It gets a hesitant buyer off the fence.
-It makes a buyer feel like they're getting a deal nobody else is getting.
-It encourages a buyer to take action.
-It gives a buyer a sense of your bottom line without revealing this number to the entire marketplace.
-It avoids putting a buyer in the uncomfortable position of "lowballing" a seller.


If you decide to use a reverse offer strategy, here are the steps you should follow:


Step 1: You should only approach buyers who have seen your property at least twice. If buyers have had a second showing, but haven't yet made an offer, they may be on the fence for some reason. These are the buyers who are a good candidate for a reverse offer.


Step 2: When you have a list of buyers who have already had a second showing on your property, call their agent to gauge their level of interest in your property. You need to find out what is keeping them on the fence. You may discover things for which you could provide an easy solution.

For example, the buyer may be hesitating to make an offer because they need to sell their current home and they are uncertain if a seller would accept an offer with a contingency to sell their existing home first. You could solve this problem by simply giving them a 90 day contingency to sell their home. Sure, you may have to wait 90 days to close on your property, but you've also locked up a buyer and ensured adequate sleep for the next 90 days. On average, it takes a buyer between 30-60 days to close anyway. So you're really only adding another 30 days. If the long timeframe concerns you, you may ask the buyer to "firm up" the earnest money by making it non-refundable.


Step 3: You can offer a price reduction. But you don't necessarily have to offer a substantial reduction to generate interest. A 1-2% reduction may be enough to get the conversation rolling. In addition to using a price reduction to attract a buyer, consider offering other incentives to get the buyer excited. For example, you could also offer:

-Seller paid closing costs
-Kitchen or laundry appliances
-An Interest rate buydown on the buyer's mortgage
-Pre-paid taxes
-Pre-paid insurance
-Pre-paid HOA dues
-Flat screen TV
-Furniture


Step 4: When you finally make your offer to the buyer, you need to create a sense of urgency. So it's important to set a required response date. It should only be 1-2 days at the most. In a market where buyers have grown accustomed to waiting as long as they want to make a decision, this will create a sense of urgency. Furthermore, if you extend a reverse offer to multiple buyers, you should let them all know that you have sent an offer to other potential buyers and that the first buyer to respond will win.


Some misinformed people argue that a reverse offer makes a seller look desperate. But most buyers say that unrealistic sellers are their biggest concern in today's market. This strategy shows the buyer you are willing to put together a deal. And remember, you don't need to slice tens of thousands off the price of your property to get buyers interested. You can simply use a reverse offer to get the conversation rolling. If a buyer decides to make a counter offer, you can still respond to it in the same way as you could if the buyer had made the offer first.

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