How to Make a Lowball Offer on a Home

Tips for Getting Your Offer Accepted

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Buyers who are lucky enough to shop for a home in a buyer's market are in the enviable position of being able to make a lowball offer. This tactic of making an offer under asking price can sometimes result in big savings for the buyer and a faster sale for the seller, but it takes some careful thought to do it right.

Whether the market is hot, cold, or neutral, lowball offers can result in big savings to a buyer if they are presented and negotiated properly.

Key Takeaways

  • A lowball offer is an offer below list price. 
  • Buyers should keep in mind that lowball cash offers may not be able to compete with higher offers, even if those offers are financed. 
  • Compensate for the lowball offer by finding other ways to make your offer appealing, like shortening inspection periods or waiving contingencies. 
  • If the seller isn't likely to budge on price, consider asking for other concessions like closing cost credits. 

Common Lowball Mistakes Buyers Make

To get started, let's look at what not to do when making a lowball offer. Don't be any of these buyers:

  • Buyers who make a lowball offer because they can't afford to pay more: Don't tell the seller your price is fair because that's how much the lender has qualified you to buy. Sellers don't care what you can or cannot afford to buy. If you can't afford to buy the house, that's not the seller's problem; it's yours.
  • Buyers who believe paying cash entitles them to a lowball: Sorry, it's all cash to the seller in the end. Many buyers don't realize how the seller views it. If a property will appraise at selling price and the buyer's credit is acceptable, a conventional loan transaction will close just the same as a cash deal.
  • Buyers who walk away after a lowball offer: Some buyers get their knickers in a twist and walk away when the seller counters the offer at more than the buyer was prepared to pay. Maybe the counteroffer was at list price. Maybe less. Either way, it doesn't matter. The point is the doors have been opened for negotiations.

While it's true that the possibility of a faster close with a cash offer might appeal to some buyers, there's no guarantee they wouldn't rather take the higher offer and wait a few more weeks.

Winning Strategies for Lowball Offers

Losing strategies aside, there are some ways to make your lowball offer stand out. Here are just a few.

Find out the Seller's Motivation

If you don't know why the seller is selling, you can't meet their needs. Maybe the pressing issue is financial. Maybe the seller needs to move quickly. If you know the reason behind the sale, you can structure your offer accordingly.

Write a Clean Offer

Review your offer carefully before you send it. Don't ask for items that oppose local custom. Shorten inspection periods, reduce or waive some contingencies, and submit a lender preapproval letter. Don't give the listing agent a reason to doubt your ability to follow through. Appear strong, qualified, and ready to close.

If you want a buyer to seriously consider your lowball offer, then you need them to feel confident that going with you will help them get the sale done more quickly and smoothly.

Always Counter the Counteroffer

The first counter is only an invitation for the buyer to offer a second counteroffer. But sometimes buyers get discouraged when the first counteroffer comes in. It's a dance to see who will win. Until they turn off the lights and close up the bar, keep dancing.

Divert Attention Away From Price

There are many other considerations besides price. It's smart to change tactics and ask for other concessions such as closing cost credits, repair credits, or longer escrow periods, or to focus on tangible goods such as furniture or appliances. You may be able to stick with a higher offer if you can get these reductions.

Give a Logical Reason Why Your Lowball Offer Is Fair

Don't insult the agent by handing over a list of comparable sales. The agent knows the comps. Show you have done your homework. Make notations on each sale that compare it to the subject property. Maybe the higher-priced homes had remodeled kitchens. If the home you want to buy is not updated, then knock off a reasonable amount from the seller's list price to reflect the remodeling work.

When Negotiations End

If your lowball offer is ultimately rejected, that doesn't necessarily mean it's time to give up. Sellers have many reasons for rejecting offers. Maybe you made an offer on a new listing when the seller thinks that a great offer is just around the corner. Maybe they weren't in a rush.

Let them sit out the market. After a month or two has gone by, try resubmitting your offer. Just cross off the date, but leave enough of it so the seller can see how long it's been since you last made a similar offer. There's no guarantee they'll be ready to accept, but you can bet they'll be a little more eager to sell by then.