The Lowball Offer
HOW LOW OF AN OFFER CAN I MAKE?
This is the #1 question that I receive every time a buyer client of mine makes an offer. This question has proved to be more difficult to answer than one would think for a market where buyers are supposed to have most of the leverage. Honestly of all of the CMA’s that I have prepared recently, prior to writing offers, a majority of the properties are priced to sell. Believe it or not the last four offers that I have written for my clients have wound up being multiple contract situations. The first thing as a buyer you must decide is how badly you want the property and if you will lose sleep over not getting it. Even though buyers generally have more leverage in this market then sellers do buyers still need to realize that most sellers are emotionally attached to their homes and alienating them with a lowball offer can work to your disadvantage. Not all sellers are desperate to sell in this market and the seller may just decide that they don't want to sell their house to you. If you are not emotionally attached to the property and can find a distressed seller that has equity in the property then the lowball offer may work for you. If the house has been on the market for a longtime and hasn't received any offers you will have a better opportunity to get the home at a better price. Lately it seems that everyone wants to buy the same house in particular neighborhoods. Basically buyers are cherry picking the best properties and multiple contracts are occurring. I am also seeing banks list properties so low to encourage multiple contract situations. I recently had a client put an offer on a property that just had a $35k price reduction to bring it down to $400k after the price reduction. I believe there is a price that every house will sell for and getting the house down to $400k was that point. When we submitted our offer below list price there were no other offers but sure enough within 24 hours another one came in and we were forced to re-submit our "Highest and Best" offer which in addition to price also includes the limitation of contingencies. Another thing to keep in mind is that the real estate community becomes a small circle among the full time top producing agents. If you go around making lowball offers on a continuous basis the word will get out and you won’t be taken seriously. My advice to my buyer’s is that if you have found your dream home don’t let it slip away. Remember that a house is more than just an investment. Your house is your home, a place for your family to live, build memories, and live your life.