Top 5 Lowball Offer Mistakes
Why Some Offers Get Rejected and Others Accepted
Buyers who contemplate making lowball offers on houses need to consider the consequences of their choices. New buyers might not realize that not only do real estate agents receive lowball offers on their listings, but they also work with other buyers who make lowball offers on other agent's listings. It is not uncommon for agents to find themselves serving either buyers or sellers in lowball deals. Generally, the lowball offers that agents receive for sellers do not get accepted. Agents will advise their clients not to bother considering such offers, especially when made by an unrepresented buyer.
Conversely, the lowball offers written by agents on behalf of buyers might see a greater rate of acceptance. The experience and understanding agents have of the market can be invaluable for buyers who want to make offers below the asking price.
Here are five common lowball offer mistakes routinely made by buyers and sometimes by agents.
Submitting a Lowball Offer Without Calling the Listing Agent
The listing agent can provide invaluable information that will help to write the offer in such a way that the seller is likely to accept it. If a buyer or an agent representing a buyer does not call the listing agent first, then the home might already be sold. It is crucial to find out how many offers the agent has received.
An agent might receive new offers on a listing that already has several offers well above the list price pending short sale approval. A buyer's agent could possibly submit a lowball offer without calling to see the current progress on selling a property. Such blind submissions are not effective uses of anyone's time because the offer might be immediately rejected.
Submitting a Lowball Offer With a Low Deposit
Earnest money deposits typically vary anywhere from $1,000 to 3 percent of the sales price. If a buyer submits an offer far below list price and sends along an earnest money deposit of $100, it can make the buyer appear as though she may not have the resources to fulfill the offer.
Submitting a Lowball Offer With a Plea for Acceptance
A buyer should not send a hardship letter to a seller, hoping to get the sale price reduced. The seller's list price will not be swayed by personal sentiments or a desire to own a home the buyer cannot afford. Banks are even less forgiving, especially if the home is listed as a short sale or a foreclosure.
Telling a seller that a buyer does not qualify to pay the list price sends a signal that the buyer should focus on other homes that fit his price range. Such actions make the buyer appear unqualified and uninformed.
Submitting a Lowball Offer With Fake Comparable Sales
Unless the home is greatly overpriced, the listing agent has already pulled comparable sales to support the sales price before putting the home on the market. Sending the listing agent a list of sales from another area that is not comparable to the property insults that agent's intelligence and professionalism.
It also shows that the buyer's agent does not know the neighborhood or its surrounding properties. Ideally, a buyer's agent wants to win the listing agent's cooperation, not alienate the listing agent.
Submitting a Lowball Offer With Concession Requests
Some buyers' agents might add in concessions on top of an already low offer. This can include asking for a closing cost credit, totaling 3 to 6 percent of the sales price. They might ask the seller to carry the financing on a land contract.
Some sellers are willing to give a cash credit to buyers, but will generally refuse to do so on a lowball offer. Such concessions essentially ask the seller to take on exorbitant financial burdens for the sake of assisting the buyer.
There are better ways to win lowball offers than making these five mistakes. The key step is to conduct some research to find a qualified agent to guide you.