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A lowball offer is better than no offer. You don't know the seller's situation. Three percent is not a lowball. Make the offer that you feel comfortable with. I know when I've sold homes, I always try to push the comps and I'm always open to serious offers.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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You offer what you think you can afford and value.
Our residence in Redmond WA, we offered 22% above Ask, in a contingent bidding. We beat out 3 who went 20%, and 1 who went 21% and cash.
On our acreage, we ignored-rejected bids what we thought were too low but we did come down ~20% when the offers clustered around a certain value.
Goodluck.
Whether an offer is viewed as "lowball" is purely in the eye of the beholder. A Seller may consider anything below asking price to be a lowball offer if they feel that their property is worth the asking price, or more. A Buyer may tend to pay less attention to the asking price and submit an offer based upon comparable sales, even if that renders an offer price significantly below asking. In their eyes, that offer is not "lowball"--it's simply what they're willing to pay.
Of course, everything depends upon the local market conditions as to the relationship between offer prices and asking prices. It also has much to do with the particular type of real estate being sold. Most discussions here relate to sales of single family residential. With SFR there is generally a tendency for offers to more closely align with asking prices.
With sales of commercial, industrial or land parcels, however, asking prices are often considerably more than what a Buyer would reasonably expect to offer. Since it usually takes longer to market these types of properties, as opposed to single family houses, there seems to be a tendency for Sellers and Listing Brokers to place a higher asking price on the property, leaving more room for negotiations. A higher list price may, in part, be wishful thinking, but there is often less urgency in selling non-residential properties since the sale usually isn't tied to someone's need to move. Of course, listing prices for non-SFR properties are also based upon on local market conditions and practices, but that seems to be the case in my area.
As an extreme example, several years ago, not too long after the real estate crash, there was a very large parcel of land that a client wanted to purchase. It had a multi-million dollar price tag and sat on the market for several years. Although the list price may have been worth it to the right purchaser, no one came along to buy it. After five years on the market, the owners finally dropped their asking price considerably. We put in an offer for about half of the reduced asking price--which was not a lowball offer, it was just a realistic one.
Fortunately, the owners didn't feel that it was a lowball offer, either. After some brief negotiations on a counter-offer, a deal was struck. The final sales price turned out to be just over 20% of the original list price. Again, that's an extreme example, but I don't tend to pay too much attention to the list price when formulating an offer. I pay much more attention to comparable sales and basing an offer on trying to get the best deal possible--even if it means that we walk away from a purchase. A "lowball" offer really isn't in my vocabulary.
Last edited by jackmichigan; 10-23-2020 at 04:53 AM..
Reason: tiny typo
Whether an offer is viewed as "lowball" is purely in the eye of the beholder. A Seller may consider anything below asking price to be a lowball offer if they feel that their property is worth the asking price, or more. A Buyer may tend to pay less attention to the asking price and submit an offer based upon comparable sales, even if that renders an offer price significantly below asking. In their eyes, that offer is not "lowball"--it's simply what they're willing to pay.
Of course, everything depends upon the local market conditions as to the relationship between offer prices and asking prices. It also has much to do with the particular type of real estate being sold. Most discussions here relate to sales of single family residential. With SFR there is generally a tendency for offers to more closely align with asking prices.
With sales of commercial, industrial or land parcels, however, asking prices are often considerably more than what a Buyer would reasonably expect to offer. Since it usually takes longer to market these types of properties, as opposed to single family houses, there seems to be a tendency for Sellers and Listing Brokers to place a higher asking price on the property, leaving more room for negotiations. A higher list price may, in part, be wishful thinking, but there is often less urgency in selling non-residential properties since the sale usually isn't tied to someone's need to move. Of course, listing prices for non-SFR properties are also based upon on local market conditions and practices, but that seems to be the case in my area.
As an extreme example, several years ago, not too long after the real estate crash, there was a very large parcel of land that a client wanted to purchase. It had a multi-million dollar price tag and sat on the market for several years. Although the list price may have been worth it to the right purchaser, no one came along to buy it. After five years on the market, the owners finally dropped their asking price considerably. We put in an offer for about half of the reduced asking price--which was not a lowball offer, it was just a realistic one.
Fortunately, the owners didn't feel that it was a lowball offer, either. After some brief negotiations on a counter-offer, a deal was struck. The final sales prices turned out to be just over 20% of the original list price. Again, that's an extreme example, but I don't tend to pay too much attention to the list price when formulating an offer. I pay much more attention to comparable sales and basing an offer on trying to get the best deal possible--even if it means that we walk away from a purchase. A "lowball" offer really isn't in my vocabulary.
Excellent post, Jack.
I work mostly residential home transactions.
I say "There is no such thing as a lowball offer," because all I see are failed negotiations.
Agents who say "Lowball" willfully stoke emotions in a situation where emotion should be minimized. We are supposed to help manage emotions for our clients, not stoke them.
So, emotional sellers, you don't like the "lowball offer?" Take one of the other offers.
No other offers, you say? Then NEGOTIATE THE OFFER YOU HAVE, fer cryin out loud.
I work mostly residential home transactions.
I say "There is no such thing as a lowball offer," because all I see are failed negotiations.
Agents who say "Lowball" willfully stoke emotions in a situation where emotion should be minimized. We are supposed to help manage emotions for our clients, not stoke them.
So, emotional sellers, you don't like the "lowball offer?" Take one of the other offers.
No other offers, you say? Then NEGOTIATE THE OFFER YOU HAVE, fer cryin out loud.
And I suppose there are a few who do "cry out loud".
There is one land broker in my area, in particular, who is notorious for putting high asking prices on the properties that he lists for sale. He gets people to list through him by suggesting pie-in-the-sky prices. He gets a lot of publicity off of his signs because his properties usually sit on the market forever. When the owners finally wake up to reality, he pockets a commission on a much lower sales price--but he still gets paid, unless they were smart enough to change brokers.
In one of my more recent transactions, I was able to work a deal on a property that he had previously listed for sale, but the owner chose not to extend his 1-year listing. I dealt directly with the owner and we were able to strike a deal for under 70% of the original list price. I'm sure that I could have gotten the price even lower, had the purchaser been able to complete the deal more quickly. They had some complicated financial arrangements which needed several months to resolve, so they weren't in a position to make a quick cash purchase.
Do NOT Trust your agent, or theirs ! They should have only one thing in mind, for which they are paid handsomely. But somehow or another, they seem to lose track in many instances of who they work for.
In a "normal" situation, anything inside 10% below asking is very polite. Tell you agent to present the offer, or you will find another agent. The last thing you need is a dumb a$$ agent screwing up a negotiation.
Maybe your offer is what the property is worth to you, or maybe you think it is worth more, but you want to start the "negotiation" low so that the final price doesn't get too far away from the "right" price. Maybe you have other issues in mind which the realtor doesn't need to know about.
I don't know real estate "rules" but i would assume that the agent has a responsibility to present an offer, as long as it is reasonable...like not down 50% from listing for a "normal" property, or have contingencies in it which are just ridiculous (yes, we love the house but want the seller to throw in the '66 Corvette which is in the garage).
Buying and selling is business. Keep it that way. OP, i would fire your agent on the spot, and would sue them for damages if the house sold close to your price when all was said and done.
They have an obligation to present all offers, even if it's a dollar, unless instructed otherwise by the seller.
And I suppose there are a few who do "cry out loud".
There is one land broker in my area, in particular, who is notorious for putting high asking prices on the properties that he lists for sale. He gets people to list through him by suggesting pie-in-the-sky prices. He gets a lot of publicity off of his signs because his properties usually sit on the market forever. When the owners finally wake up to reality, he pockets a commission on a much lower sales price--but he still gets paid, unless they were smart enough to change brokers.
In one of my more recent transactions, I was able to work a deal on a property that he had previously listed for sale, but the owner chose not to extend his 1-year listing. I dealt directly with the owner and we were able to strike a deal for under 70% of the original list price. I'm sure that I could have gotten the price even lower, had the purchaser been able to complete the deal more quickly. They had some complicated financial arrangements which needed several months to resolve, so they weren't in a position to make a quick cash purchase.
The strategy of taking a listing at any price, buying the listing, is taught at some brokerages.
"Someone is going to take it, and it may as well be you."
So, you take the $550,000 house listing, buy the listing at $650,000, and wait for the second time the seller moans about no showings or offers.
And, then you go to work on the price. "Yeah, we overpriced it. Let's do something about that, OK?"
Some agents are smooth about that.
Others go to work immediately to get a price reduction.
I will overprice to an extent, but will also tell my sellers, "We will know in a week or ten days if we are priced wrong. And, we will revisit pricing if needed."
The agent hopes to get contacts/leads from marketing. Get a few buyers and another listing, and trying to sell that overpriced listing is less painful.
A truly crazy thing right now: agents who suggest underpricing a listing to "get multiple offers." We are still in a strong sellers market, and offers are not an issue.
But, the agent gets to advertise "Sold in 0 Days!" "Sold at 105% of List Price." Both of which sell nicely to folks who don't realize how meaningless those numbers are.
As others have said, it varies from transaction to transaction. Earlier this year, we submitted offers on two properties in this "hot" SoCal market. Both initial offers were about 9% below asking. One didn't bother countering, but one did and we ended up making a deal.
As others have said, it varies from transaction to transaction. Earlier this year, we submitted offers on two properties in this "hot" SoCal market. Both initial offers were about 9% below asking. One didn't bother countering, but one did and we ended up making a deal.
SoCal is still hot. Saw ASP in OC went up 9% in September. Crazy.
Responding to an earlier post, I do know of buyer agents who really hesitate to present an offer. I was looking at a listing that dropped in price because of Covid. My realtor still told me to go above ask.
I work mostly residential home transactions.
I say "There is no such thing as a lowball offer," because all I see are failed negotiations.
Agents who say "Lowball" willfully stoke emotions in a situation where emotion should be minimized. We are supposed to help manage emotions for our clients, not stoke them.
So, emotional sellers, you don't like the "lowball offer?" Take one of the other offers.
No other offers, you say? Then NEGOTIATE THE OFFER YOU HAVE, fer cryin out loud.
Yep. In this case it was 3%. If I'm too low, counter. If you're not going to negotiate, then say so. I think maybe she wasn't really ready to sell the home?
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