In real estate negotiations, the seller normally makes the opening offer to the buyer via the “list price” in order to get negotiations started. Occasionally the seller will also make an unsolicited offer to the buyer below the formal list price to see if the buyer is really interested in the property. This negotiation tactic is known as a reverse offer. By using the reverse offer negotiation tactic, the seller is hoping to tempt a buyer that has visited the property more than once but still seems reluctant to make an initial offer. A reverse offer can be an effective way to establish the terms and tone of the real estate negotiation to follow.
After a potential buyer views the property, the seller’s agent makes a reverse offer by contacting the buyer’s agent and offering to sell the house at a price lower than listed or with concessions that were not part of the listing. This reverse offer, by its very nature, concedes some points that might otherwise not have been part of the negotiations if the seller had waited for a traditional buyer first offer. Some real estate professionals see this as a signal that the seller is desperate or that the property was over-priced or trouble-ridden to begin with, but it could also simply be a sign of a sluggish market or many available similar listings.
Having a solid foundation in real estate negotiation skills can help balance out the effects of the reverse offer if it is being used with your buyer. The first step is to make clear to the offering agent that any concessions will depend on the total value as perceived by the buyer. The seller should try to link the points of the reverse offer to the needs of the buyer. Focusing on the interests and needs of each party is the key to a successful negotiation outcome.