House hunters often dream of finding a hidden gem at a low price, but more commonly, buyers try to create their own discount by making a lowball offer. However, this strategy can backfire. A lowball offer, one that’s significantly lower than the listing price, is often rejected by sellers who feel insulted. To increase the chances of your low offer being accepted or negotiated:
- Know Your Goals: If you genuinely want the house, avoid submitting an offer that’s too low. Be honest about your mortgage affordability and the house’s worth. Consult your real estate agent to determine if the house is fairly priced and if a lower offer is reasonable.
- Market Conditions: Stay updated on the local real estate market. In a seller’s market, low offers are less likely to be accepted. Conversely, in a buyer’s market, or if a house has been listed for a long time, sellers might be more willing to negotiate.
- Respect the Sellers: Regardless of your opinion on the house’s pricing or condition, treat the sellers with respect. Present a low offer with appreciation for the property to increase the chances of acceptance.
- Agent Communication: a good real estate agent (or team!) will know that it’s important that they contact the listing agent to discuss your offer and gather information about the sellers’ circumstances. This can help tailor your offer to be more appealing.
- Financing: Ensure you have your financing in order. Submit a pre-approval letter and proof of funds for your down payment with your offer. A higher deposit or an all-cash offer can make your low offer more attractive.
- Minimize Contingencies & Requests: When making a lowball offer, keep contingencies to a minimum where possible and look at the situation from the seller’s side. For example, you should absolutely have inspections performed if your offer is accepted so that you have a comprehensive understanding of what you’re purchasing, but keep in mind that the sellers may be disinclined to give credits toward repairs.
A low offer is not always the right move so strategize with your agent and be prepared to lose the house if your offer is too low. However, with respectful negotiation and an understanding of the market, you might secure the bargain home of your dreams.