It’s only natural for home buyers to want the very best deal possible… and in some cases, that might mean making an offer well below the home’s appraised value or its listing price.
If you’re in a buyer’s market, and you know the seller’s a little desperate to get the place sold, making a lowball offer can make sense. If you’re in a seller’s market or face a lot of competition, it’s almost never advisable.
Regardless, before making a lowball offer, it’s important to review some basics: Negotiating a lowball offer can be treacherous, and there are right and wrong ways to handle it. Even in a buyer’s market, an extreme lowball offer can insult your seller, and may result in the deal being taken off the table altogether.
So what should buyers know about making a good lowball offer? Here are some tips from the SOLD.com team.
Making a Lowball Offer: Our Advice
Here are some general approaches we’d recommend.
- Study the market. Again, the advantageousness of a lowball offer will hinge on market factors. You should definitely pause to consider the state of the market before you make your offer. If it’s hard out there for sellers, you can proceed with your low offer. Otherwise, you may want to make an offer a little closer to list price.
- Find out the seller’s motivations. This isn’t always possible, but if you’re working with an agent, you can request that they try to find out why the seller is looking to move. If the seller is facing a lot of time pressure and needs to get the place sold ASAP, that puts you in a much better position to push for a lower price.
- Make a good, strong offer. Even when you’re lowballing, you want your offer letter to be as clean, as professional, and as appealing as can be. That might mean looking for little ways to sweeten the deal… for example, you might waive certain repairs, or shorten the contingency period. Also, submit your mortgage pre-approval letter, showing the seller that you’re ready to go!
- Remember, you can counter the counteroffer. Your first offer is highly unlikely to be accepted by the seller. You’ll probably receive a counteroffer, but remember, you can then make a counteroffer of your own. You may go through this back-and-forth multiple times… but so long as the seller is still at the bargaining table, there’s no reason for you to throw in the towel.
- Do your homework. Something else we’d recommend is offering the seller with a reason for your lowball offer. Provide them with annotated comps; for example, maybe the house next door sold for a lot of money, but it had a brand-new kitchen, a new roof, etc. Show why you think the seller overpriced the place. Help them understand your low offer.
These are just a few steps to consider as you make an offer that’s below asking price.
Making a Lowball Offer: Mistakes to Avoid
In addition, make sure you’re steering clear of these common lowball mistakes.
- Don’t make a lowball offer just because you can’t afford to buy the house. If your lender hasn’t approved you for a large enough loan, that’s not the seller’s problem… and it’s not a smart reason to try a lowball offer.
- Don’t assume that making a cash offer will make your lowball offer more appealing. Sure, cash offers are nice… but most of the time, the seller mostly just wants to get as much money as they can. A such, a cash offer won’t be enough to entice them into accepting a lower price.
- Don’t walk away when your lowball offer is turned down. Again, your first offer is almost sure to be countered… but if the seller is willing to bargain with you, that’s good news!
Find Out More About the Best Way to Sell a House
If you’re on the other side of the equation, wondering about the best way to sell a house, we invite you to claim your free SOLD.com seller’s report today. In it, you’ll learn everything you need to know about achieving your real estate goals. Request your report now!