Top 5 Lowball Offer Mistakes
Why Some Offers Get Rejected and Others Accepted
Buyers who contemplate making lowball offers on houses do not realize they eliminate themselves from consideration to make a deal. Mistakes such as offering deposits that are far too small, pleading with the seller to drop the price out of sympathy, and presenting a false narrative about the local market can immediately remove a potential buyer from the running. The seller and their agent have done their homework and any offer should respect their preparation.
New buyers might assume that listing agents are eager to see any offers come their way. These professionals have already dealt with lowball offers from other potential buyers and will not waste their time on others. They have also likely worked with buyers who tried to make lowball offers and saw how other agents reacted in turn.
Buyers need to embrace these realities when they try to push an offer that is too low to be considered. Generally, the lowball offers that agents receive do not get accepted. The potential buyer is up against an Agent who will advise their client not to bother considering such offers, especially when made by an unrepresented buyer. It may seem unfair to buyers who operate without an agent but lowball offers written by one of these professionals on behalf of buyers might see a greater rate of acceptance.
In other words, if the buyer knows they can only make a lowball offer their best bet is to do so through an agent.
Here are five common lowball offer mistakes routinely made by buyers and sometimes by agents.
Submitting an 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.
The Low Deposit Problem
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.
Making 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.
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.
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.