A lowball offer is one that’s significantly below a seller’s asking price, and entering into residential real estate negotiations with a lowball offer is not a good idea. This is especially true today where the market is designed for sellers, homes are selling quickly and receiving multiple offers.
In todays seller’s market, lowball offers are almost always rejected; the seller doesn’t want to spend time making a counter offer when chances are good that other, higher offers will come. Buyers who ask for seller concessions, such as closing costs, in addition to a lowball offer, reduce the likelihood of their offer being accepted. Its important to remember that sellers have one pool of money from which to pull, the net sale of the property, and asking them to significantly reduce the amount they receive, plus spending some of that money on closing costs creates a bad combination. If a buyer is truly interested in a property, their negotiating power will increase, along with the price of the offer.
The interior condition, location, updates and maintenance are primary reasons a potential buyer may make a lowball offer. Additionally, if homes in the area are priced lower than a seller’s asking price, or prices are falling, these could also be reasons for a low offer. An experienced real estate agent will provide the seller with comparable properties in the area in order to make an educated decision on the listing price, and will offer data if prices in the area fluctuate. A buyer’s real estate agent can also provide comps to show the true market value of a property in an effort for the buyer to make a quality offer.
The current real estate market has limited inventory of move-in ready properties, but lots of potential buyers. However, with the inventory available, buyers need to make a strong offer in regards to price, closing costs and terms of possession. These elements will only increase in importance as inventory picks up as the weather gets warmer and more families look to move.
Every buyer wants to get the best deal they can, but every seller also wants to get the most from their investment. There is no right answer for every home buying situation, and ultimately the seller will determine the value of their home, but through the help of an agent, the price will attract quality offers that meet the seller’s goals.