How to Get Your Low-Ball Offer Accepted (Photo by Oli Scarff/Getty Images)
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When it comes to negotiating a real estate deal, sellers want to get the highest market value while the buyer wants to pay the least amount possible. When you’re dealing with tens or hundreds of thousands of dollars, the differences can be drastic. And real estate also includes a level of emotion not seen in other transactions. Home sweet home can include sentiment that feels personal. How can both sides win?
When making a low-ball offer on a property you know is probably worth the asking price, or close to it, there are several things to consider that can help move the deal forward, says Josh Latham, real estate agent and director of sales at RE/MAX Advanced Realty.
Choose the Right Agent
One of the main objectives in initial discussions is leveraging your agent’s abilities to get the other agent on board with your offer price, says Latham.
“Don’t neglect the fact that you aren’t making an offer to just the seller but also the seller’s agent,” he says. “An agent that can utilize their skills in convincing the listing agent as to why a low ball offer is good for their seller is paramount. If this can’t be achieved then it may be too much of a hill to climb successfully.”
The listing agent is not only the gatekeeper to the seller but also their friend, confidant, therapist, sounding board, says Latham. “That agent needs to be the focal point of consideration when making the offer as he or she will be the fulcrum of things to come,” he says.
Tap Into a Seller’s Motivation
First and foremost, a buyer should understand the motivation of the seller, and that is not always money, says Susan Chong, residential real estate broker and founder of Denver-based Iconique Real Estate.
“At this time of year with the holidays approaching, most people who have a home on the market are motivated,” she says. “Their motivation may be money, but it also may be time or flexibility. A seller is much more likely to be flexible on price if you are meeting their other needs by, perhaps, meeting a certain closing date or providing the opportunity to rent back after closing until they find their next home.”
Knowing the history of the listing is important in developing your offer, says Chong.
“If the home has a history of dropping price several times over the course of the listing, possibly time is more of a motivation for the seller than money,” she says. “Establishing a relationship with the listing agent will help you gain insight into the seller’s motivation so you can develop your offer accordingly.”
Show Compassion
In addition to a quick closing, consider offering more time for the seller to move out. Low ball offers might create funding issues for moves, says Latham, such as the ability to pay movers, afford temporary housing or adjust their own search parameters for their next house.
“Showing compassion outside of the actual pricing can show you aren’t a total asshole and want what’s good for them,” says Latham. “Even if they can’t agree right away on the price of the house, this can be a way of saying ‘I care about you and your well being. Can’t you see now how nice and generous I am?’”
Back Up Your Number
Have your agent offer justification for your offer by bringing a specific list of comps from the area that led you to believe and understand that the low ball price you are offering is practical—even if it isn’t, says Latham.
“Again, we’re trying to convince the listing agent of your cause,” he says. “This is another tool to make your case strong.”
Have Solid Funding In Place
If you’re going to make a low ball offer, don’t do it with a shady loan that’s been haphazardly built to fail, says Latham.
“Nothing makes a buyer’s agent look more like a loser in their profession than when they bring a buyer who barks and has no bite,” he says. “An agent absolutely hates to go to the listing agent after they spent hours, if not days, to take his client’s offer only to tell them they can’t even pay for it in the end. Shore up your financing or don’t show up.”
Know What’s Low
Not everyone has the same perspective on what a low price is, so if you’re moving to a new area, be sure you understand the values.
“In a market like Denver, where people are migrating from the West Coast as well as markets such as New York and Washington, D.C., homes that are considered market price or possibly even a little on the high side to a Denver native or someone relocating from the Midwest, may seem like a bargain to those from more expensive markets,” says Chong. “Likewise, with rentals at only a 5% vacancy and record-high rents, those entering the home-buying market are already accustomed to spending more on housing than what they may have in the past. If you want a certain property, you need to make sure you do your research on what the market is bearing in terms of pricing and do not get too ambitious in cutting the price. Working with a real estate broker who is an expert in the market in which you are buying will save you time and energy.”
If you make a low ball offer, you risk losing the seller’s ear, so do so only when you’re willing to walk away. “While it’s generally not recommended to provide a low-ball offer to a seller, these strategies can help you negotiate a lower price when purchasing a home,” says Chong.