Many parts of the country are currently experiencing an "adjusting" market. Such an environment tends to bring out low ball offers. Considering that many -- indeed, probably most -- currently active agents have only been in the business during the past five years, i.e. during the good times, low ball offers are pretty much a new phenomenon to them. They merit some thought.

First, we need to acknowledge that isn't likely to be any widely accepted definition of what constitutes a "low ball offer." Some would define it relative to asking price, others relative to value. More like the late Potter Stewart, Supreme Court Justice, said of hard core pornography, even if you can't define it, you know it when you see it. Also, we need to remember that, like beauty, what constitutes a low ball offer is in the eye of the beholder. This difference of perception frequently exists between sellers and agents.

Consider the following scenario: Mr. and Mrs. Sellers' home was worth about $575,000 a year and a half ago. Now, both they and their agent agree, its value is about $500,000 -- maybe somewhat less -- and they have listed it for $499,000. There are recent comparables to support that price. But the market is slow -- 15 percent fewer sales than the same period a year before -- and after two months on the market they have had no offers. Now, as a matter of fact, the Sellers, who bought the property for $150,000 some years ago, would be satisfied with a sale between $400,000 - $450,000, but why settle for so much less than value?

An offer comes in for $400,000. The buyer is financially strong, and all other terms are agreeable. What to do?

A variety of counsels might be offered to the sellers, and, to be sure, before doing so, one would probably want even more information than we have given. Some would say, "Go for a price you can live with. Try to get it done. Counter at $450,000 or maybe $460,000." Others might suggest, "No, don't give so much (potentially at least) away. Counter to them in the range where you think the value is, maybe $485,000 or $490,000." But, to that, others might argue, "Don't even bother to counter. If they really want the property, and they're willing to pay somewhere near value, they can come back with a price within reason. Right now, they haven't even given you a starting point for negotiations."

Don't counter at all? How can that make any sense? As a client of mine once put it, "If I counter to a low ball offer, I'm just competing with myself?" That is, he would be setting a top limit of where future negotiations (with that buyer) might go. He didn't see why he should do that before he even knew if the buyer was in what he considered a reasonable price range.

Needless to say, none of the above alternatives are the right one. They all have plausibility in their place. It will depend on the situation. Conversely, none is definitely a wrong one.

Nor is it easy to be the buyer's agent in a low ball situation. Some buyers will just go ballistic if they don't receive a counter offer. They need to be taught that a seller is under no obligation to make one.

Because agents generally don't know how high a buyer will go or how low a seller will go (sometimes the principals themselves don't realize this), it can be fruitful for an agent to work with a buyer who makes low ball offers. For some agents, though, at some point it is simply not worth the time and occasional aggravation. We just don't know. And it is those little surprises that are one of the things that make this business fun.

Bob Hunt has been a real estate broker in Orange County for more than 25 years. He has seen plenty of low ball offers.

Published: April 2, 2007

Use of this article without permission is a violation of federal copyright laws.

Bob Hunt is a former director of the National Association of Realtors and is author of the recently published book, "Real Estate the Ethical Way." A graduate of Princeton with a master's degree from UCLA in philosophy, Hunt has served as a U.S. Marine, Realtor association president in South Orange County, and director of the California Association of Realtors, and is an award-winning Realtor. Contact Bob at .