is it foolish to make a lowball offer on an overvalued house in a hot neighborhood?

Asked by Esmerelda, Los Angeles, CA Fri May 23, 2008

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Don Tepper, Agent, Burke, VA
Fri May 23, 2008
BEST ANSWER
No, it's not foolish, though it depends on your definition of "lowball" and "overvalued." If you are confident you know its value (either via a Realtor's CMA, or diligent research on your own--NOT Zillow), then your offer should be no higher than, and often lower than, its value. That in itself might be defined as lowball. For example, a house has a true market value of $500,000. It's priced at $600,000. You offer $475,000. Is that a lowball offer? Not really, from the perspective of true value. Maybe yes, from the standpoint of the seller.

There's no definition, of course, what "lowball" means. Like a lot of things, it's in the eye of the beholder. But, to take the example above--house value is $500,000 and it's priced at $600,000--then an offer of $400,000 (20% under value, 33% under listed price) probably would qualify as "lowball." But: So what?

If it's in a hot neighborhood, perhaps the chance of your low offer not being accepted is higher. So then you have to ask yourself how much you really want the house: What's its value to you. Offer more if you really love the house. Offer less if you're just trying to get a bargain.

A lot of questioners on Trulia worry about "offending" the seller with a low offer. Don't worry about it. That's the seller's problem, not yours. Make an offer that works for you. Just understand that, the lower the offer, the lower the likelihood that the owner will say "yes."

Hope that helps.
6 votes
Myke, Home Buyer, 89449
Fri May 23, 2008
Well - what's lowball?
Lowball in relation to the actual market value? Yea - that might be foolish.
Lowball in relation to the asking price, but competitive with market value? Not foolish at all.

If a house is over priced, it's over priced. Paying more then you should for it, simply because someone else owes the bank a lot of money, or wants to pay off a student loan - or whatever else - is foolish.

If you know what the homes value is, and you're prepared to work with that - there's nothing foolish about it.
No guarentee the seller will take it - cause there are still some suckers out there that will pay more then they should.
5 votes
Bay Jackson, , Shreveport, LA
Fri May 23, 2008
Unfortunately many sellers are in a situation of having to sell. I am dealing with sellers right now that purchased new construction two years ago with an interest only loan and are trying to sell in order to downsize. They simply wanted to take what they owe, add the commission, and there is your list price. That doesn't work in today's market. Get with your realtor, find some good comps, and offer accordingly. Good luck!
1 vote
Michael Barr…, Agent, Irvine, CA
Fri May 23, 2008
Hi there Esmerelda, It depends on many factors. The best thing is to0 coinsult with a professional realtor to review the Market in that area.

If you need help getting all the relevant Information please drop me a line

Kijnd Regards
Michael Barron
First Team Real Estate
(714) 552-6817
1 vote
Larry Story, Agent, Greensboro, NC
Fri May 23, 2008
Good answers so far depends on how low. But, let's face it all they can do is say no. Of course if you insult them they will not counter either. So roll the dice.
1 vote
Debt Free Da…, , 85260
Sun May 25, 2008
You never know what will happen but you don't want to insult the seller either.
Web Reference:  http://getprequalified.com
0 votes
Lezlie Brazil, Agent, Culver City, CA
Sun May 25, 2008
Hi Esmeralda,

Your question is a good one. In today's market, all buyers want a good deal.

Making a lowball offer on an overvalued house requires professional research. Most real estate agents can easily determine the value of the property. However, you also want to know the motivation of the seller and how much equity they have in the property. These figures can best help you "guesstimate" the bottom line for the seller.

There is some risk associated with a lowball offer. The sellers may reject or ignore your offer. However, if you submit a respectful offer, it can work out in your favor. Recently, I submiited an offer for well under asking price and the sellers said no deal. Three weeks later, the listing agent called back and said they were willing to negotiate. We close escrow this week and my clients are purchasing at close to $30K under asking.

With negotiations, many times it's all about knowing what to say and how to say it. If you need any help negotiating your deal please contact me.

Lezlie Brazil
Keller Williams Realty
4644 Admiralty Way, Marina Del Rey, CA 90292
T 310-991-4263
F 310-861-0207
E lezliebrazil@kw.com
Web Reference:  http://www.lezliebrazil.com
0 votes
Charita King…, , Downey, CA
Sat May 24, 2008
It takes a willing seller and a willing buyer to complete a real estate transaction. Lowballing is making an offer below the market value (25%) below asking price or market value. To determine if you are making a lowball offer, have your realtor ran a comparative market analysis to see if the property is priced according to the market value. You have to be aware of what is going on as far as sales in your area, what's in escrow, and what are sold within 3 months. Properties that are in pre-foreclosures and REO are usually listed below market value to attract bidders, and these properties could get sold for higher and to the highest bidder and most qualified. Check with your agent. Good luck!
0 votes
Byron Guille…, Agent, Granada Hills, CA
Sat May 24, 2008
Buyers or the so-called investors are lowballing at all times, their fishing in the current market. Someone, may grab the bait and obtain a good deal.

Sellers, may have to be smarter these days, if there is some profit from their sale, they should take it and walk away. I've seeing greedy sellers that bought their property 25 years ago, paid 35K for it and now they want 500K.

The bubble is not there anymore!
0 votes
Dorene Slavi…, Agent, Torrance, CA
Fri May 23, 2008
It might be foolish..it might not..It all depends upon the situation the seller is in.
The best strategy for you would be to get an excellent Realtor who will work with you and give you a CMA of the area. This way you will know what the homes in the area have sold for, and what the home you are interested in might be worth.
One thing I have found to be true in Real Estate...All Sellers want to make a profit...and All Buyers want a bargain!!
Web Reference:  http://www.doreneslavitz.com
0 votes
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