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The Art of Making Low Ball Offers That Won’t Put Sellers on the Offensive

At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.

As a first-time homebuyer, you might toy with the idea of making a few low ball offers on homes that interest you. After all, who doesn’t like to save money? But there’s a trick to making a low ball offer: you can’t make the offer so low that it offends the seller.

Today, we want to provide you with a better understanding of this homebuying technique and whether low-balling your offer is right for your situation.

What are low ball offers?

If you’ve done some research on this technique and Googled “low-ball technique,” you’re likely to find a description that’s not at all what you’d expect. According to Psychologist World, “sellers offer a product at a lower price, which their customer agrees to, then they increase the price before they complete the sale. Having already agreed to the sale, customers reluctantly accept this higher price.”

That sounds pretty shady, right? That’s because it is — even if it doesn’t break any laws.

When it comes to real estate, making low ball offers is just a negotiation tactic used by the homebuyer to buy a house for much less than the seller’s asking price. If someone wants to purchase a home in a buyer’s market, they just might find a seller who’ll agree to a low ball offer. Even if you’re house-hunting in a seller’s market, you can find motivated sellers — it’ll just take more research.

Regardless of the current real estate market, there’s a right way and a wrong way to make a low ball offer.

A house you can make low ball offers on.
Source: (Christian Koch / Unsplash)

Low ball offer no-nos

After weeks or months of searching for your dream home, you’re ready to submit an offer — a low offer, at that. However, before submitting your offer, make sure you haven’t committed these common mistakes.

Don’t make your offer too low

When you’re submitting a low ball offer, you need to make sure it isn’t too low because it could offend the seller, who may not even want to entertain any other offers you want to make. As Beth Pretty, a top real estate agent in Midlothian, Virginia, with a dozen years of experience in the business, warns that “It depends on the price point.”

According to Pretty, if a home sales price is already low, you need to be more careful about a low ball offer than if the home is priced higher. “For example, if you have a property listed at $200,000, you’re probably not going to want to go in at $50,000 to $75,000 under that price —  versus a $500,000 house, you might get away with that.”

Don’t believe paying in cash deserves a discount

You might think that paying in cash is a good reason to have a low offer accepted, but that’s not how the seller sees it. When the contract has been signed and the house is sold, it’s money in their bank account either way.

Don’t be aggressive

One would think that if you want negotiations to go in your favor, you have to be aggressive… but that’s not the case with real estate. When you’re making an offer on someone’s home, you aren’t just purchasing a piece of land with a house on it. You’re purchasing a house that someone turned into a home filled with memories.

Yes, the seller’s ready to move on, but the sentimental value can make letting go a little harder. Respect that.

Don’t get angry if your offer is rejected

It’s not uncommon for people to get upset when an offer is shot down, but you can’t throw a hissy fit and walk away. If the seller rejects and gives you a counteroffer, consider this a perfect opportunity to negotiate. If the seller rejects your offer outright, you can put that house on the back burner and see if it’s still on the market in a couple of months. If it is still available, the seller may be willing to accept the offer — or at least be open to negotiating.

Don’t use old comparables as a negotiation tool

Typically when you’re trying to make an offer on a home, your agent isn’t the only one who will look at comparable sales in the area to see if the asking price is in the same ballpark.

“Appraisers are typically tasked with finding comps that are only three months old,” explains Pretty. “If there’s not enough, then they have the discretion to go back six to twelve months. If it’s a very unique property — for example, a farm, equestrian property, something on the water or a golf course — they can go back as far as two years to pull that information.”

Outside of a home a low ball offer was made on.
Source: ( / Unsplash)

When should you make a low ball offer?

Making an offer that’s significantly lower than the asking price can be tricky, but that doesn’t mean you shouldn’t consider it. There are a few scenarios in which your offer may get approved, including:

The listing price is too high

Sometimes sellers will list their home for a lot more than it’s worth. You can’t blame them because they put in a lot of blood, sweat, and tears into maintaining their home and making it… well, a home. So, of course, they are going to want as much as they can get.

However, if you do come across an overpriced house, be respectful when discussing why the home is overpriced. An example of how to approach this could be through the comps — for example, if the comps used to price the home all have updated appliances and flooring, whereas the listed home could use an update, you can and should mention that when you make an under-asking-price offer.

The home needs to be updated

One of the biggest things to consider when coming up with an offer is what kind of repairs or upgrades the home needs. However, Pretty advises against this: “Typically, what’s better is to ask for credit towards closing costs.

If a price is lowered by even $5,000, that’s only about $25 less per month in mortgage payments. Instead of lowering the price, a buyer can request to have those issues repaired, or they could request what’s called ‘credit in lieu of repairs.’ It’s in the buyer’s best interest to take credits towards closing costs.”

The housing market supports your number

The local housing market can be used to determine the best time to make an offer on a home. Ideally, you’ll want to make an offer when it’s a buyer’s market because the seller will be more willing to negotiate. Also, the time of year is a contributing factor when deciding to make an offer.

If you’re able, in most markets, waiting until the winter or holiday season to make offers can be a good time for low ball offers because the seller probably won’t have as many offers coming in as they would during spring or summer.

The listing is lingering on the market

If the home has been on the market for more than three months, the seller may be more likely to entertain any serious offers, even low ones.

“If it’s been on the market three months or more, they might be a little more desperate and open to a lower offer. If the houses just sits, sits, and sits, you could get away with 10% to 15% under list price,” Pretty explains.

A neighborhood where low ball offers can be made.
Source: (Chuttersnap / Unsplash)

Getting your offer approved

If you’re still considering putting in a low ball offer, it’s a good idea to choose an agent who knows the area and the profession well. A savvy agent will contact the listing agent and ask them questions to find out why, exactly, the house hasn’t sold. When you understand the seller’s motivation, you can tailor your offer so your offer — at least — is considered.

Pretty explains that your agent doesn’t have to say much at all. “If you’d be quiet and let them talk, they will just unload with lots of great information that you can then share with the buyer.”

And you might learn that a low ball offer is entirely off the table: “Sometimes the listing agent says ‘We’ve already gotten some lowball offers and my client was infuriated and won’t even consider them. So don’t come in low.’”

Perhaps the most successful tactic for getting a low ball offer accepted is to have compassion for the seller. Selling a home isn’t easy, especially if they’ve lived in the home for a long time. Many memories have been made within those walls, and it’s important to honor that. Don’t present the seller with an offer that is ridiculously low — because it gives them the impression that you’re a heartless jerk who is only concerned about saving money, without considering the seller’s situation at all.

So should I make a low ball offer?

Deciding to submit low ball offers aren’t something you should take lightly because it could be the difference between getting the home of your dreams — or not. If you’re grappling with the decision, Pretty recommends pondering a situation where “…you wake up tomorrow and somebody else got that property. How are you going to feel about it?”

If you can live with that outcome, she suggests that you go ahead and submit a low ball offer. But if you already know that you won’t be able to live with it, and you really want that house, “then be a little more reasonable and go in there with something stronger.”

Header Image Source: (Milan Seitler / Unsplash)