The Ins and Outs of Making a Lowball Offer
Saving money on buying a house is every home buyer’s goal. One tactic that a home buyer may use is making a lowball offer. What exactly is a lowball offer? One that is way lower than the asking price, typically more than ten percent below.
The major concern with a lowball offer is that the homeowner will not even consider working with the buyer and reject their offer outright instead of offering a counter. A home buyer who will not be devastated to lose out on the property has no reason not to try making a lowball offer.
The Real Estate Market
The real estate market will dictate whether a seller is going to entertain a low offer or if they will blow it off for the next buyer. A market that is favoring buyers will have homeowner’s stressed out. They may be seeing few offers and many of them may be low.
This is the time for a home buyer to make lowball offers. A homeowner who needs to sell their home is likely to accept even if they do not want to.
That being said, there are other times where the market favors the homeowner. If there is a huge amount of buyers, few homes for sale and offers flying in from every direction, it is not the time to consider using the lowball offer strategy. Buyers who compete against each other will need to sweeten the deal with higher offers.
Offensive Offers
Homeowners are attached to their homes. They have lived there for years, seen their children grow up there and have had a lot of great memories in this home. Some homeowners are selling their house not by choice but by necessity. Seeing lowball offers can offend them when they think their home is worth a lot more. And offending a homeowner is a good way to get an offer rejected.
When the real estate market is right for a lowball offer it is important to still be considerate of their feelings. When presenting the lowball offer be sure the real estate agent is emphasizing the love for the house and appreciation of selling the property at such a low value.
Learning More Through the Listing Agent
Have all negotiations go through the two real estate agents. When making an offer, have the real estate agent contact the listing agent. However, wait until more information is learned about the property. Try to figure out why the house has not sold and if other offers have been declined. If many people have tried lowball offers and been declined it may be time to make a bit better offer if the house is something the buyer truly wants.
Be Ready to Pay
Nothing makes a homeowner more nervous than taking the chance the home buyer cannot make due on their offer. This is why sending an offer with a pre-approval letter will let the homeowner know the offer is secure. Getting pre-approved takes more time for the home buyer, but it gives them the knowledge of what their home buying power is and lets them confidently make offers.
If avoiding using a mortgage, paying in cash is a great way to get offers accepted. Being able to prove the house can be paid in full immediately at closing is appealing to homeowners. But the bottom line is that the buyer needs to know what they can afford and if they will have enough money for emergencies once the home is purchased.
Few Contingencies
Pairing a lowball offer with a long list of contingencies is not going to impress any homeowner. With a lowball offer try to eliminate as many contingencies as possible. When getting a home for significantly less than the homeowner wanted be realistic about what the homeowner is willing to do in the way of repairs. Always get an inspection, but expect to pay for the repairs after purchasing the home.
Making a lowball offer is not necessarily a good strategy for all home buyers. Buyers who have little interest in what home they buy may not feel stressed when lowball offers are rejected. And most homeowners will reject a lowball offer if they feel offended. Carefully plan how to make the offer in the best possible way to have a homeowner even consider accepting such a low amount for their home.