What is a Lowball Offer in a Hot Real Estate Market?

Real Estate Agent with Boardman Realty Minnesota License#90858


It is a very hot real estate market with extremely low inventory. So a savvy buyer wants to impress, not insult the seller of their dream home. So what initial offer can insulting to a home seller? 10% less than asking? 5% less? A full priced offer with 3% of buyer's closing costs paid by the seller?

When housing inventory is as tight as it right now across the Minneapolis/St. Paul area, what is considered a "lowball offer" might be less than you think.

® in the north and east Twin Cities metro, I have seen my share of sellers who were insulted by a buyer’s offer over the years. There are times when anything less than a full priced offer is insulting. But should a buyer be afraid to request a few thousand toward closing costs with a fear that the seller will balk and accept the next offer in line?

The answer to that question really depends on the price and specific location. In some neighborhoods, it could be insulting to offer less than full price especially if it is a home priced under $250,000. There are an abundance of first time buyers out there looking for affordable, move-in ready homes. In fact, there are so many buyers that a well prepared and priced property can get an offer (or 2, 3 or more) in a matter of hours and be in pending in a matter of days. There are many neighborhoods and communities throughout Anoka, Washington, Ramsey and Chisago Counties where I work daily with a very small number of homes for sale. Well priced homes do not stay on the market long.  It is very stressful being a home buyer with a limited budget in this seller's market.

In many situations, buyers will feel frustrated and that they might never get a home. They get well-meaning advice from friends and relatives to not pay full price. "Sellers always negotiate", they say. But in reality, many sellers will not negotiate significantly, if at all. And a perceived offensive or  "lowball" offer could put the buyers’ dream home purchase in jeopardy.

How to Coming up with an Acceptable Starting Point:

    • Request that your REALTOR® to do a market analysis. When representing a buyer, I will look up the recent comparable homes sold in the neighborhood before the "what to offer" discussion begins. In this low inventory market, a seller that lists at market value but could still be in a multiple offer situation due to demand. If the home is properly priced and in high-demand area, anything that is not close to full price could mean that the seller will wait for another offer. By looking at the neighborhood comparables, my buyers better understand what offer will be considered reasonable.


    • Consider the original list price. If a seller started off too high and adjusted the price of the home it could be priced right now. If a market analysis shows the current price of the home is fair, offering 5-10% less could be considered insulting. When a buyer has found "THE: house and fallen in love with it, it might make sense to make an offer closer to the asking price rather than haggle and risk losing it.


    • The Overpriced Home. If the market analysis shows the home to be significantly overpriced and the offer will be more than 10% less than current the current asking price, it may be helpful to provide the comparables to the seller and his/her agent. Sometimes when the offer is accompanied by documentation to back up the offer, the seller is less offended.But be careful not to overlook good comps to justify your offer. This strategy can be worse that not providing documentation at all.


    • Buyer’s Plans to Remodel and Update. Some buyers think sending a long list of planned updates complete with associated estimates is a good strategy to negotiate for a price reduction. Often these lists include changes that reflect cosmetic and personal taste. Most sellers are not impressed when a buyer’s offer indicates that they are offering tens of thousands less due to paint, carpet and other cosmetic changes. If the updates are necessary due to age or wear, make note of the fact. But slamming a well maintained and updated home to justify a low offer is insulting and make continued negotiations difficult if not impossible.


  • Avoid Considering Price Paid for Home. I have come across a few buyers who research tax records to determine the price the seller paid for the property. They assume if someone purchased a home at a very low price, they have a ton of equity. This can be true but not always. Some sellers have taken the equity out of their home for improvements or for other reasons. And well sellers do have equity, they usually don't intend to give it away either. Keep the negotiations focused on the fair market value of the home.


Right now, sellers are in excitedly anticipating a non-contingent, pre-approved home buyer to write an offer on their home. In most cases, they understand the market and have worked hard to prepare their properties to entice a written purchase agreement (or several). But buyers must think through their offers; the perfect starting point for negotiations must contemplated thoroughly. Discussions can go south very quickly between buyer and seller when the initial offer is deemed rude.

Need help coming up with that perfect starting point for your home offer?

Posted by

Teri Eckholm. REALTOR with Boardman Realty, is a native Minnesotan who has lived and worked in the Minneapolis St Paul metro all of her life. She specializes in lakeshore homes, acreage properties and first time home buyers but assists anyone making a move in the north and east Twin Cities metro.

If you are buying, selling or relocating to Minnesota and need help from a professional REALTOR®, give Teri , a call or visit her website for a FREE Home Buyer Success Guide or FREE Home Value Report She specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District! Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.

Copyright 2019 terieckholm.com



LIKE MY BLOG? Subscribe, Follow or Like...It's your choice!



Comments (4)

Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Teri, great post, and Buyers need to get your advice before writing an offer, as each and every listing will have a different answer.  

Apr 30, 2017 07:04 AM
Teri Eckholm

Hi Joan,

Exactly. Buyers need to assess each property with their agent to understand whether an offer will be a hero or zero in the seller's eyes.


Apr 30, 2017 11:54 AM
William Feela
Realtor, Whispering Pines Realty 651-674-5999 No.

Almost any offer not full price is a low ball offeer in this market. 

Apr 30, 2017 07:20 AM
Teri Eckholm

Hi William,

That is true in most of the lower price points and communities where inventory is low.

Apr 30, 2017 11:55 AM
Harry F. D'Elia III
Avant Garde Residential Management Services - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

Sellers do not have to negotiate when there is low inventory

Apr 30, 2017 07:28 AM
Teri Eckholm

Hi Harry, 

Sellers do not have to negotiate when there is low inventory. But if in the same market, there can be abundant inventory in higher price points. There are always negotiating strategies buyers need to understand.

Apr 30, 2017 11:52 AM
Dave Halpern
Dave Halpern Real Estate Agent, Inc., Louisville, KY (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Phenomenal post! Great explanations!

In a seller's market some sellers think they can name any price. If the list price is unreasonably high, then the "lowball" offer may actually be the true market value.


Nov 13, 2017 05:33 PM
Teri Eckholm

Thanks Dave!

Nov 13, 2017 08:20 PM