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As both a seller and a potential buyer right now, my husband and I have had lots of conversations about the "lowball" offer. We know many people who sold there homes in the spring and who are now renting, waiting to make a "lowball" offer as the holidays approach and sellers start to panic.
But how low is too low?
We just looked at homes where we are moving, they are asking around 600K, and we thought maybe we could put in an offer for 575K? That sounds reasonable to me in this market.
However, we just got an offer on our home this am for 110K less than what we are asking!!!!! After 2 price reductions, we are 20K below all comparable properties in our area. We just couldn't believe this offer was tendered over the phone with comments like, we "we really see ourselves living there", "it was in pristine condition". As a buyer, I would not have the audacity to come in THAT low. I told her my husband would call her to discuss it, but I can't even imagine coming back with a counter offer.
So what is the general consensus on the lowball offer?
575 on a 600k house is more than reasonable - 110 below asking?? wow, that is a lot and in this market imho it depends on where you are located. I am in Ny and spoke with a broker in MI yesterday, he told me homes are at half value for some of them - some even in worse shape. So, not knowing your market I could not answer the question regarding your home or where you are moving too - however have a cma done on the area you are moving to to actually see what homes are being sold for, that will give you a better idea of what is fair and what is not - also dont feel discouraged or outraged, perhaps the potential buyers loved your home, but were not approved for the total you are asking - just come back with a counter and be prepared for one final counter - you never know. Every market is different, when I bought my home I paid 113k for it, a few months back another family offered 117k and were turned down, they ended up paying over 120k for a house across the street. Each month brings different needs to the table.
First of all, it might be a lowball to you, but in reality it might be a fair offer...
What/when did you buy your house? did you buy at the peak? Are you trying to make a tidy profit? How is the inventory in your market/area? Are there alot of homes for sale? If the house is 15 years old or more, if you type in the address on zillow and draw a straight line in terms of appreciation from pre-2002 , what price level are you at today?
Maybe these are savvy buyers and want to pay pre-peak prices....we don't know. Your listing price could be way out of whack..
How much were you listed for and what are the comps in your area? More information would be helpful. If you're in the million dollar range then maybe it's not such a big deal... if you listed at $500 and they took that much off then I would say that is REALLY lowballing it. I would counter, though, because there are not a lot of buyers out there and the ones that are out now are serious so you might be able to negotiate.
A lowball offer is only a lowball offer if it's meant to really steal a house at far below it's true market value. If your house is truly worth $500k, and like many sellers on the market now, you've got it listed at $600k, an offer of $110k below asking is only a lowball offer in your eyes- not in the eyes of reality. You may be $20k below the comparable properties in your area, but if you're comping to houses that are still on the market, or to houses that sold 6 months ago, that's immaterial.
CouponJack is exactly right. Your lowball offer might have been the REAL value of the house and not the grossly inflated value after 2000 inflations. However, he did offer something, I would make a counteroffer that you can live with and depending on your situation, it might be that you will have to take a loss in order to sell (as many have already begin to notice).
Counter back on the offer what do you have to lose. The best situation is when both the buyer and Seller think they got a good deal. Low ball offers are usually a slap in the face type offer . Ive seen them 10% and below and it depends on the market and what the house is trully worth. Good luck!!!
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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if you're directly negotiating, I'm guessing you're not represented by a real estate agent. I think it's statistically accurate to say that FSBO's get lower offers because the buyers think that you're just saving the commission dollars anyway.
I don't know about other states, but in CA all offers for real estate must be in writing. A verbal "offer" over the phone is worth nothing. Have the "buyer" put it in writing with a substantial deposit and then start negotiating.
I actually put in an offer on a house at $160k below asking once! It was priced over $200/ft in an area where houses were selling at $130-$150 per sqft. I figured it never hurt to try. They rejected it. The house was on the market nearly 6 months then, and it still is. Imagine that :P
Actually, the house I'm buying we got for $39k (8%) below asking, within just a few days of it going on the market, so obviously that wasn't a lowball.
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