If you’re an avid Facebook Market Praser like us, you may have already come across a lowball offer when you’re about to sell an old sofa or while trying to find the perfect Credenza for your new home. But before you start decorating, you need to talk about buying a house first.
We can be overwhelmed by buying a home, submitting offers and navigating the entire home buying process, whether you are a newbie or a seasoned home buyer, but don’t worry. This Redfin article covers everything you need to know about lowball offers, so there’s one less confusing terminology.
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What is a lowball offer?
The lowball offer is when the buyer makes an offer at a home that is well below the asking price. Normally, this offer is 10-30% below the asking price, but this depends on several factors such as market conditions, market value, the condition of the home, and the amount of time the home is in the market. For example, in a market with high demand and low inventory, a small discount offer may seem like a lowball offer.
The advantages of lowball offers
For home buyers, the biggest professional is that they can buy a home well below market price, saving a significant amount of money.
For sellers, lowball offers can show interest. This can create a sense of topic that can be encouraged in slow markets or attract other buyers. For sellers who are under pressure to sell, this kind of offer may be beneficial to quickly and close, as it is better than selling or waiting long.
For both parties, both parties can agree to the price, as the negotiation process can be started by simply offering it, even if the buyer does not accept the lowball offer.
Cons of lowball offers
Unfortunately, HomeBuyer has some disadvantages to making a lowball offer. You may anger the seller and hurt your credibility with this kind of offer. Also, a low offer can lead sellers to the counter in less favorable conditions, such as few repairs or less flexible closings.
For the seller, when receiving a lowball offer that can create emotional stress, it can definitely feel a sense of humiliation or personal. Low offers can lead to closures, but engaged in negotiations can waste time by missing stronger offers from other interested buyers. Whether you are under pressure to sell quickly, there is always a risk of feeling it because they are forced to accept an offer you are undervalued.
If the seller decides to negotiate, starting low will elicit the negotiation process and can lengthen the closure.
When should I make a lowball offer?
List price is too high
You may find the price to be too high as the seller may price a home that exceeds the market value. However, it is important to work with real estate agents to further assess the listing price and ensure that the housing market supports you before creating an offer. You need to update your home
If you have any visible or reported issues in your home, a lowball offer may make sense to offset these costly repairs. Sellers may not adjust the list price to reflect the condition of the home. The house is sitting at the market
Putting your home on the market for a while may indicate that the listed price is too high or there is no room for interest. In any case, if the house has not been sold for more than three months, the seller may be more open to lowball offers. The home is a real estate sale or foreclosure
In these cases, a lowball offer may make sense, as sellers may want to sell quickly. Motivated sellers are willing to accept significantly lower offers or negotiations as they prioritize quick closings. Whether it’s a real estate sale or foreclosure, be sure to do research before making an offer.
What do you do when making a lowball offer?
If you want to make a lowball offer, it is important to be careful not to insult the seller. Even if the seller rejects your offer, these tips will help increase the likelihood of negotiation if the initial offer is not accepted.
Don’t lower your offer too low
It depends on the market and other factors, but please make sure you can’t go below the asking price by more than 30%. A very low offer could anger the seller and shut down further negotiations. Do not skip the investigation
Before making a lowball offer, do due diligence to understand comp (equivalent sales), market conditions, and more. Don’t ignore the seller’s situation
It is important to be aware of the seller’s situation and be aware of it. For example, if you make a lowball offer as soon as your home is listed, or if you have multiple offers from the home, make sure you have the timing right before submitting the offer, as yours may backfire. Don’t skip writing thoughtful offer letters
A thoughtful offer letter will help you improve your chances, especially if your offer is significantly below the asking price. Having an explanation of your reasoning can help sellers understand your perspective, ease the impact of seeing low offers, and increase the chances of negotiations and closing. Do not pay the request for the offer
Once again, beware of the seller. Asking multiple requests like extra repairs along with low offers can anger the seller and kill the deal (without negotiation), so choose the fight wisely. Don’t get mad or deny
It’s easy to get upset when an offer closes, but don’t forget to be professional. For sellers, lowball offers can be offensive simply because selling a home is an emotional and sensitive process (even if you follow all the other steps). Be sure to act with grace and kindness, whether the seller is open to negotiations or not.
FAQ
How do lowball offers get approved?
Like any other closure, when the seller accepts the offer, the lowball offer is approved. It is rare for this type of offer to be approved, so consider working with a real estate agent to help with this process. As a seller, how do you respond to lowball offers?
Getting a lowball offer can be disappointing or offensive, but be calm, professional and try to truly appreciate the offer. You can then reject the offer or counter it. All circumstances are different, so it is best to talk to a real estate agent to make sure you know the best next step. Do I need to make a lowball offer?
Unfortunately, we cannot make that decision for you, but we highly recommend working with real estate agents to assess your situation, the market and better understand the dynamics before making a low-ball offer.
