By: Michele Lerner
Most house hunters hope to find that hidden gem: a house they love with a bargain price. While that occasionally happens, it is more common for buyers to try to create their own discount by making a lowball offer.
A lowball offer, one that’s significantly lower than the listing price, is often rejected by sellers who feel insulted by the buyers’ disregard for their property. Most listing agents try to get their sellers to at least enter negotiations with buyers who make a low offer, but some sellers choose to reject the offer completely. As buyers, you can take steps to increase the likelihood that your lowball offer will be accepted, or at least that negotiations can take place.
Before you make an offer at all you should be thoughtful about your goals. If you love the house and truly want to buy it, then you may want to up your offer a little bit rather than suggest a purchase price 25% below the asking price. If, instead, you are interested in grabbing a bargain and becoming a homeowner for financial reasons and are less invested in which house you own, a lowball offer could be the right option for you.
Lowball Tips for Buyers
1. Stay aware of current market conditions: You and your REALTOR® should be discussing the local real estate market throughout your house search so that you can recognize the value of individual homes. If your local market is a seller’s market with competition for homes, you are much less likely to have a lowball offer accepted than if buyers have the upper hand. However, in any kind of market, a house that has been listed for sale for several months is more likely to have owners willing to negotiate a lower price.
2. Be respectful of sellers: Even if you think the sellers have overpriced their property or have let it fall into disrepair, it is important to treat them with respect and follow the protocol of your local real estate market. After all, this is the sellers’ home, perhaps the place where they have raised their family. They may be selling because circumstances are forcing them to sell, rather than by choice. A lowball offer may be upsetting to the sellers, but if you and your REALTOR® present the offer along with an expression of your appreciation for the property, it’s more likely to be accepted than an offer accompanied by a half-complete contract or an insult about the property’s condition.
3. Have your agent contact the listing agent: To depersonalize the negotiations it is best to have your agent and the listing agent discuss your offer, but your REALTOR® can do more by talking to the listing agent even before you make an offer. Your REALTOR® should also find out as much as possible about the sellers: Why they are selling and whether they have turned down other offers. This can be helpful regardless of whether you are intending to make a low offer or are contemplating a higher offer.
4. Have your financing in order: Sellers are rightfully concerned about getting to settlement any offer they accept, so your lowball offer should be accompanied by a pre-approval letter from a lender along with an earnest money deposit. The higher your deposit and your promised down payment, the more likely the sellers are to take your offer seriously. In fact, if you can make an all-cash offer, you are even more likely to succeed.
5. Eliminate as many contingencies as possible: If you are offering a low price for the home, you should not expect to have the sellers make repairs or to convey additional items to you such as their window treatments. You should still have a home inspection, but you may want an information-only inspection if you anticipate making any repairs yourself.
A lowball offer is not always the right offer to make. In fact, you need to be prepared to lose the house if your offer is too low. However, making the offer respectfully in the context of your local market could result in a successful purchase.
J C REALTORS GROUP
Direct Line: 954 240-5521