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4 reasons to make a low-ball offer

It is a Buyer's Market. Period.

Most homes are sitting months on the market waiting for any offer; no less a low ball offer.

There are good reasons to make a low-ball offer.

That is what the buyer thinks the house is worth.
That is the amount the buyer is qualified for a loan.
May need to have that price so that the mortgage payment is equal to the rental income.
May want to flip the house. Buy Low Sell High.

Keep in mind, low ball offers are not likely to get accepted. You are looking for that one seller in a hundred (and they are out there) who for whatever reason , just wants out.

Posted by Daniel Wexler on 12/20/2008 11:18 AM

Comments (3)

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3 Comments on 4 reasons to make a low-ball offer

DEC

How low is low...lets say a $300,000 listing for example? Percentage? Thanks and Happy Holidays!

DEC

I did a quick check of markets I work and pricing. I see best possibility for a low ball offer to work is with a new custom, spec built home. While the regular markets I report on have ratio of list price to sales price anywhere for 94% on up, these custom built spec homes are sometimes going for as low as 85% of list price to sales price. How can you beat that? The builders want to be cashed out so they can move on to their next venture. Example $809,000 home sold for $540,000. A Morgan Creek 5,800 sq foot new home listed at $995,000 sells for $775,000 in an upscale golf course community.

Of the markets in the Sacramento area - if price is under $300k and priced at current market, you get a very high percentage of list to sale price - and in the case of REO's that are playing auction mentality games, many times over list price. I saw one at 160% of list price - but it's usually around 102-105%. BUT, of the 87 sold listings I looked at casually - 2 were sold at what I consider a lowball offer price - so that's more like 1 in 50 instead of 1 in 100. You can't win if you don't try.

MAR

IT IS A BUYER'S MARKET. Although we may have some aggressive low ball offers, we must remain rational and not get involved with an emotional purchase. It's strictly a numbers game at this point. Whether it's return on investment, rental income based or bailing out the seller who might be in a financial crisis. The Foreclosure market is a hot trend Nationwide and in Gallatin County Montana, we had only 127 foreclosures for the 2008 calendar year. Most of which came down to multiple offers as Anna mentioned above getting well above the list price.

There is more room for negotiating with a higher priced home. The homes under $300k are taking a 5-10% hit here and the upper end homes can be as much as 30% under list price. That brings us back to 2004 pricing.

My point is this, throw an offer out there. A professional buyer's agent will present the offer in such a way that should keep the angered listing agent and seller from escalating into a frenzy of emotional distress. Always support your offer with recent comps and active listings that justify your offer amount. You may be doing them a favor.

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