If you’re buying a home, you want to save money. However, going in with a lowball offer isn’t always the right move and can start you off on the wrong foot with a seller. Learn more about lowball offers and when they make sense or don’t by talking to a top agent.
Imagine getting your dream property at a killer price: you find the perfect house with just the right amount of space and a spectacular view. The seller’s asking price is too high, but they are motivated to sell and you find the right price at or below market value.
It’s an ideal scenario but you’re sure you can save some money by starting off with a lower offer.
The problem is you’re probably not the first to conceive of a lowball offer for this property and you won’t be the last. There are plenty of ways to mess up a lowball offer where you wind up frustrated — and without the home you want.
A top agent can you help you make the right offer and get your dream home for the right price.
What is a lowball offer?
Negotiating for your home is not the issue. In fact, home sellers expect any potential buyer to send over a price below their list price, especially in a buyer’s market. It really is just the name of the game.
How do you know when your offer is a lowball offer, then?
Unfortunately, there is no set guideline for what is considered a lowball offer. The seller could really consider any price below their asking price a lowball offer if the listed price is already at the bottom of what they want.
It’s generally accepted that asking over 15% off the sale price is lowballing.
But that doesn’t mean you shouldn’t do it. Sometimes, making a lowball offer is acceptable — and it satisfies both the buyer and seller.
When should you make a lowball offer?
Here are a few scenarios where making a lowball offer might be suitable:
The Seller Wants Out
It’s always a good idea to talk to the listing agent before making an initial offer, possibly during an open house.
The listing agent can tell you the circumstances of the sale. Maybe the seller is in a tight spot financially and really needs to sell their property fast. Or maybe the seller inherited the property and wants to avoid the hassle of maintenance.
If the seller is motivated to sell, a lowball offer between 10% to 30% off the asking price may be acceptable.
High Listing Price
Selling a home can be an emotional affair. Many sellers place more value on their property than other similar homes in the area because they remember the hours they’ve sweated in the yard and how many times they’ve replaced the plumbing.
When you encounter an overpriced home, tread lightly. Your lowball offer could insult the seller or they might be relieved to get their first offer, if the home has been on the market for a while. Your real estate agent can test the waters to see why the house is at that price.
Point to specific things in the house that make the house overpriced. Maybe houses in the seller’s price range have updated kitchens and wood flooring, but theirs could use work. Determine a reasonable dollar figure for the value that feature is lacking and reduce your price by that amount.
The House Needs Updates
If the house you’re looking at needs some TLC — you may have a case for a lowball offer. Replacing the roof, updating flooring, gutting the bathroom, and other major structural changes all come at a price. The seller may accept a lower offer rather than make concessions like repairs before someone will buy the property.
As with the overpriced house, it’s a good idea to come in with a dollar figure of the repair and updating costs. Before you do, speak to the listing agent to understand the circumstances. The listing agent may give you a few clues about how low the seller will go.
The Housing Market
The housing market will give you a good idea of what to offer when buying a home. If it’s a seller’s market, lowballing is probably off the table. If you lowball in a seller’s market, the seller will likely throw out your offer while another buyer gets the house.
A buyer’s market might lend some room for negotiation. In a seller’s market, an appropriate lowball (only 30% below asking price) might get a counteroffer as a starting point to negotiations.
Length of the Listing
If the listing has been sitting on the market for over a hundred days or has popped on and off the market, there may be some room for a lowball offer. The seller may be ready to consider any serious offer.
Before you make an offer on a house that has been on the market for a while, ask your real estate agent to speak to the listing agent. You may find the reason the house is still on the market is because the seller isn’t willing to budge on price.
How do you make a lowball offer that works?
You’ve probably stumbled across this article to pick up a few tips before making a lowball offer of your own. But the best thing you can do to give your offer a chance is to have your buyer’s agent talk to the listing agent before you submit.
Gather as much about the sale as you can and use that information to craft your initial offer.
What are some common lowball offer mistakes?
Being Too Aggressive
One of the most common mistakes people make when they are pitching a low offer is being too aggressive. Aggression can be a valuable trait in negotiating, but in buying a house, remember that the sale is more emotional. If you come across as someone only in it to get the best deal, the seller might feel you are discounting the years they lived there.
Another common mistake buyers make when lowballing is offending the seller. They’ll offer a price that is way too low, insist that it is fair, and then pout when the seller turns it down. Sellers are under no obligation to take your offer and would likely rather work with someone who values the home enough to pay a fair price for it.
Handling Rejection Poorly
When a seller rejects an offer, most buyers pack up and look for another house. This is yet another mistake that happens frequently. If the seller says “no” to your offer or counters it, that doesn’t mean you won’t be able to make the sale, it just means you may need to work harder for it.
If it’s a counter offer, continue to negotiate the price down until they either say yes or take a stand for their lowest offer price. This is an open door—so walk through it!
If your offer gets flat out rejected, table it for a few months. If at the end of that period, the house is still on the market, resubmit your offer. The buyer may accept or at least negotiate at that point.
How do you counter a lowball offer?
If you get a lowball offer, don’t stress. There always seems to be one person who is out to get the best deal possible. If you get several, however, it may be time to consider your strategy. Have your agent look at the real estate market if they haven’t already performed a comparative market analysis (CMA). Are other houses in a similar condition to yours priced in the same range? What factors would make potential buyers want to offer less?
If the offer is near what you would consider accepting, counter with a satisfactory alternative, including negotiating closing costs. When the offer is way too low to even consider, reject the offer and back up your reasoning.
Need help negotiating when buying or selling a home? Concerned about bidding wars or accepting a lower price than you want?
You need a top-notch negotiator like a Clever Partner Agent. Partner Agents work for a reduced listing commission of $3,000 for homes under $350,000 and just 1% for homes over that. They’ll ensure you get a good deal whether you’re buying a new home or selling an existing one.
FAQs about Lowball Offers
Can you offer lower than the asking price?
Depending on the state of the market, you can offer less than the asking price. In a seller’s market, home buying can be competitive and you may lose a potential home by offering less than the asking price. However, in a buyer’s market, offering less than asking price carries less risk, but the seller may come back with a counter offer.
How do I deal with a lowball offer on my house?
Even if you get a lowball offer, it’s important not to get insulted or take it emotionally. If the offer is somewhere within reason, respond with a counter offer more in line with your own expectations. For a buyer willing to offer something so low, expect another counter offer, so prepare to negotiate back and forth, using your real estate agent as a go-between. If you have other offers on the table or the home has only been on the table for a short time, you may not need to respond to the lowball offer yet.
Should you accept a lowball offer?
There’s no automatic yes or no when accepting or rejecting a lowball offer. Take the specifics of the offer and the situation into account. How quickly do you need your home sold? If there are other offers on the table, are they viable? If you need a quick sale and this is the only offer on the table, it might be worth negotiating with the buyer. However, if you can wait for a higher offer, you can let the buyer go without considering their offer.