What Is A "Low-Ball" Offer???

By
Real Estate Agent with WEICHERT, REALTORS® - Briotti Group CT RES.0785956

What Is A “Low-Ball” Offer???

 

 

Lenn Harley wrote HOW MUCH WILL THE SELLER TAKE? DEPENDS.... HOW STRONG IS YOUR OFFER?, in which she points out that the true determinant of what a house will sell for is…the seller.

Several comments on that post mentioned the term “low-ball offers”…

What actually constitutes a “low ball" offer?

For sellers who are in no hurry to sell, or do not need to sell, that answer may very well be anything under list price, as I had the recent opportunity to experience firsthand. However, for motivated sellers, the answer to that question is rather ambiguous, and resides in the heads of the seller alone.

I like how Lenn referenced the days on market and other factors in one area that she serves to demonstrate the variability in what sellers will accept. Another factor to be considered is the List Price/Sales Price ratio for any given area. So if the average LP/SP ratio for an area is 93% for example, does that mean an offer at 89% is a low ball?

What factors would encourage a buyer to “low-ball” an offer?

Things like:

·        Location

·        Condition of home

·        Sale prices of comparables

·        Personal budget considerations i.e. monthly PITI payment

All of these factors are in play when a buyer makes an offer, regardless of the amount…but what is considered a “low-ball” offer? Who makes that determination – the seller, the agent, or the market?

 

Posted by

Greater Waterbury CT Real Estate FaceBook William James Walton, Sr. on LinkedIn William James Walton, Sr. on Twitter William  James Walton's videos on YouTube 

 

 

 

Courtesy of William James Walton, Sr. , Realtor, WEICHERT, REALTORS® - Briotti Group

Serving northern New Haven and southeastern Litchfield Counties (Waterbury, Wolcott, Prospect, Naugatuck, Middlebury, Southbury, Watertown, Thomaston and Plymouth)

 

Call William James Walton, Sr. Real Estate Agent with WEICHERT, REALTORS® - Briotti Group (203) 558-7463 for help with your real estate needs -buying or selling -  in Waterbury, Watertown, Wolcott, Middlebury, Southbury, Prospect, Naugatuck, Plymouth and Thomaston

Buyers - Search for Greater Waterbury, CT Area Homes For Sale

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Ambassador
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Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

I got an offer this week on a property where they included the comps they used.  They have 4 comps in the neighborhood with an average sales price of over $320K.  Then a property in another neighborhood that is smaller that sold for $299K ignoring the house across the street that just sold for $316K (which an appraiser won't).  So what do they offer?  The $299K price and open ended closing cost assitance.  Not even something in between. You just have to throw up your hands and say do you want us to take you seriously?

Jun 22, 2010 05:58 AM #1
Rainmaker
313,528
Glenn Roberts
Retired - Seattle, WA

The selling agent has the first opportunity to call it a low ball offer and maybe that's what the buyer intended to write. Then the listing agent gets a look and may react like Cindy above. I would however take any offer seriously, mainly because I've been wrong in the past. The listing agent is probably reacting from pride, as in "I determined this price for the seller and your calling my skills deficient," but the real decision maker is the seller, and sometimes sellers. The listing agent should openly discuss options with the seller. Sometimes sellers have undisclosed needs.

Eventually if there is a loan involved the appraiser will have some say.

Good questions, William.  

Jun 22, 2010 06:38 AM #2
Rainer
84,958
Andrew J. Lenza
Coldwell Banker Residential Brokerage - Holmdel, NJ

An old computing maxim is garbage in, garbage out.

Unless your local MLS (or blogger) tracks the sales price discount from each list price, the "average" will always lose relevancy.

The best definition of list price I've coined is that it's the seller's expectation that may result in market value by virtue of the buyer's performance.

That said I would have to consider the Original List Price and all subesequent price reductions to effectively arrive at this nebulous discount.

Jun 22, 2010 09:49 AM #3
Rainer
478,183
Not a real person
San Diego, CA

I like the people who price their home too high and then they add to it. For example, if the comps for a neighborhood show a home should be priced at $300,000, then they will value-range price it at $310,000-$378,867. Then they get really upset with the low-ball offer that comes in at $295,000.

I know one couple who did that for three years and six real estate agents. Ultimately they sold but at $150,000 less than if they had just taken the first offer which was just $5,000 less. Stupid people.

Jun 22, 2010 12:28 PM #4
Rainmaker
1,142,035
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

William. I avoid the term "low ball offer". It's just an offer. It may be low but it's still an offer. Counter it and see if there is an agreement in there somewhere.

Jun 22, 2010 12:28 PM #5
Rainmaker
678,889
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

Bryant - Point well taken, but who determines if an offer is considered "low" - us, the seller, or the market? And, how low is low? 

Jun 22, 2010 12:37 PM #6
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

William, any offer is worth submitting and let the Seller make the decision.  But when I am Pre-Approving someone for a loan, and they already have a house in mind, and tell me that they are going to go in 50 - 100 thousand under asking price, I just say GOOD LUCK and leave it at that.

That type of Borrower I will usually end up doing several Pre-Approval Letters for before they come to reality and make a realistic offer.

Jun 22, 2010 12:39 PM #7
Rainmaker
678,889
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

George - what you alluded to is what I would consider a "low ball" offer...depending on the price.

A house that is listed at over a million, 100K is about 10% less...that shouldn't make or break a deal like that.

For a house that is average 200-300k or so, then yes, that's ridiculous...

Jun 22, 2010 12:53 PM #8
Rainmaker
678,889
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

Russel - in which case that 295K wasn't really a low-ball at all, all things considered.

Jun 22, 2010 12:56 PM #9
Rainmaker
269,974
Kristen Wheatley
Better Homes & Gardens | The Masiello Group - Brunswick, ME
Supporting Success - Best Job in the World!

I would say "all of the above."  "low-ball" is in the eye of the beholder.  Some buyers know and purposely make a low offer just to see if it flies.  It is really a matter of perception.  I have seen listings $150,000 over their real market value.  Any offer on them would be considered a low ball offer by the seller.

I like Bryant's comment.  It is still an offer.  We have a quote from someone taped on our wall (I don't know who.) "Don't be offended by any offer, be offended by the buyers who looked at your home and did NOT make an offer."  Every offer, no matter how "low ball" some may think it is, can be a starting point to a sale.

Jun 22, 2010 03:55 PM #10
Rainmaker
1,142,035
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

William. To me low is any offer the seller won't accept based on price.

Jun 23, 2010 01:56 AM #11
Ambassador
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Ellie McIntire
Ellicott City Clarksville Howard County Maryland Real Estate - Ellicott City, MD
Luxury service in Howard County & Catonsville

William- Great topic. Our MLS provides statistics on list price to sold price. Many list their home with those stats in mind.

Jun 23, 2010 08:36 AM #12
Rainmaker
643,754
Susan Mangigian
RE/MAX Preferred, West Chester, PA, RS152252A - West Chester, PA
Chester & Delaware County Homes, Delaware and Ches

A low ball offer, in my opinion, is an offer that completely disregards recent sales in that neighborhood.  How many times have we had a buyer ask us to run comps and then disregard them to go on and offer a ridiculous and much lower amount than would be expected if they were indeed making an educated decision.  I've always wanted to say "why did you ask me to run comps if you already knew you were going to try to steal the house?  Why not just buy a mask and do it that way? " lol!

Jun 24, 2010 02:58 AM #13
Rainmaker
678,889
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

Susan - So a low ball offer would not be one that used range pricing in the evaluation of recent sold comps...i.e. house is on market for say 125K, and the most recent sold comps say between 112K-121K...

Ellie - It would be nice if all sellers used that information in that way. Sadly, many do not...

Jun 24, 2010 03:26 AM #14
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William James Walton Sr.

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