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b-LOG: Is the ‘low ball offer’ really the best approach?

b-LOG: Is the ‘low ball offer’ really the best approach?
Date Posted: 06/09/2012

We constantly go on about the need to put yourself in the shoes of the person(s) that you are negotiating with. As a buyer, having a one dimensional, ‘low ball’ approach can often be a low percentage tactic that does nothing but waste time and opportunities. Considering the situation of the sellers, the condition or status of the property and the general market conditions are all a good start in determining what next steps to take.

The buyer who throws low ball offers until they find something has to ask an important question:

Am I more focussed on getting a steal rather than finding a home?

Separating that thought process will be critical on attaining success in a home search.

One big consideration is this. If a seller is willing and prepared to negotiate from asking price ‘x’ to acceptable sale price ‘y’, their ability to mentally and realistically get to ‘y’ will be largely influenced by the initial offer the buyer makes. If the seller is asking $250,000 and the offer comes in at $210,000, the buyer may not have a chance to see what number the seller would be willing to negotiate to. The seller in this situation gets so upset that they are unable to calmly and rationally respond.

Not to get dry and mathematical, but let’s suppose fair market value for the home is in the $236 to 240,000 range. The buyer whose first priority is getting a deal while finding a comfortable home is second, may eliminate any chance of a successful negotiation because they have upset the seller so much. Yes, buying and selling real estate should not be emotional but again, this is where you have to consider the perspective of the seller. If this has been the family home for the last 60 years, it is a reasonable certainty to speculate that the seller’s ability to negotiate will be greatly influenced by the initial offer that the buyer makes.

So, provided fair market value is there within reach, figure out where that number is and negotiate towards that end. Yes, there is always the ability to carve out some wiggle room in the price, but again, your ability as a buyer to see that wiggle room will be helped a lot by a reasonable and rational initial offer.

We have seen countless times where the seller gets so upset that they request that a particular buyer or buyer’s representative is not welcome in their home. These same sellers may have been willing and able to negotiate to a comfortable number for the buyers but the effect of the low ball has really put a damper on the chance of a deal coming together.

Now, is a low-ball offer still a low ball offer if it is on a properly that is grossly overpriced? Well, that’s a different story. This is another spot where the ability to put on the shoes of the other party is crucial. If I’m the seller, how would I feel if I was the buyer inheriting all of the deferred maintenance that may be present. As the seller, can I see through their lenses enough to react properly to an offer? If my asking price is $250,000 and my home is worth $208,000, the idea that an offer may be a low ball is really dependent on whom you ask. Having a skilled and experienced REALTOR® on your side can be a huge asset in wading through the challenge infested waters of negotiation. What is the effect of my low ball offer? What is the effect of my next to non-existent signback?

Remember, on a signback, essentially, the seller is making an offer to the buyer. So, this whole perspective concept really isn’t a one-way operation. Managing the negotiation process is an art to be learned. For a buyer or seller of a home, it is arguably one of the most important negotiations of your life. Going in with more than a ‘low ball’ approach will be a great help.

To discuss this or any other real estate concepts, please feel free to contact THEbTEAM at your convenience.

Thank-you for visiting.


Thank-you to Andre Hunter for the photo.