The normal process for selling a house goes like this: The seller puts the home on the market, the buyer makes an offer, the seller counters, the buyer counters, the seller accepts, and an agreement is reached.
But with homes taking forever to move in many markets, some aggressive sellers are taking the unusual step of presenting prospective buyers with the first offer. Jim Buchta reports that "Reverse purchase agreements -- unsolicited offers that get written by sellers for prospective buyers -- are rare in today's market, but agents say that the strategy could be the next weapon in the ongoing battle to get prospective home buyers to take notice."
Here's how it works: Someone looks at your house, seems interested, but a week passes and you still haven't received an offer. So you draw up an offer with a sharply reduced selling price and a suggested closing date and present it to the buyer in the hope that they'll bite.
The obvious downside to this is that it looks a little desperate, and doesn't exactly position you well for future negotiations. But if your house has been on the market for a year with multiple price reductions and no offers, people already know where you stand. Sending an offer can add a sense of urgency to the deal, and can work in some cases.
But one problem I have with this strategy is this: If you're willing to go ahead and offer a better deal than the one you're advertising, why not just drop the price and solicit offers from everyone?
A few months ago, I looked at a condominium that was listed at $134,900 -- a price I thought seemed about right. I went on vacation for a week after I looked, planning to make an offer but before I got around to it, I got an email telling me that I could have the unit for $125,000 if I could close quickly. Had the seller simply priced the unit at $125,000 to begin with, it probably would have received multiple offers and sold above asking.
Bottom line: Writing an offer and presenting it to a prospective buyer might be a useful gimmick for selling a home, but a better trick is to just drop the price on your home as low as you can.
Can't sell your house? Try making an offer