Top 5 Lowball Offer Mistakes
Why Some Offers Get Rejected and Others Accepted
Thinking about making a lowball offer on a house? You might not realize that not only do I receive lowball offers on my own listings, but I also work with buyers who make lowball offers on other agent's listings. So, I have stood in both sets of shoes -- buyer's and seller's. Generally, the offers I receive for sellers don't get accepted because I often advise them not to bother, but the offers I write for buyers, do. I've learned a lot from this practice, and will share what I have discovered with you.
Here are 5 common lowball offer mistakes for a house that buyers and their agents routinely make:
Submitting a Lowball Offer Without Calling the Listing Agent
The listing agent can provide invaluable information that will help you to write the offer in such a way that the seller is likely to accept it. If your agent doesn't call the listing agent first, for all you know, that home might already be sold. Always call to find out how many offers the agent has received.
I received an offer yesterday on a listing that has 7 offers pending short sale approval, 6 of which are thousands over list price. The buyer's agent submitted a lowball offer without calling. Just faxed it over. It was a waste of my fax machine paper because it won't be accepted. Who uses fax machines anymore?
Submitting a Lowball Offer With a Low Deposit
Earnest money deposits typically vary anywhere from $1,000 to 3% of the sales price. If a buyer submits an offer way below list price and sends along an earnest money deposit of $100, it makes the buyer appear as though the buyer is living paycheck to paycheck. Very weak approach.
Submitting a Lowball Offer With A Plea For Acceptance
Sellers don't want to read a hardship letter from a buyer and don't particularly care if a buyer has fallen in love with 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 doesn't qualify to pay list price sends a signal that the buyer should be writing offers on other homes that fit that buyer's price range and not this one. It makes the buyer appear unqualified and uninformed.
Submitting a Lowball Offer With Fake Comparable Sales
Unless the home is ridiculously 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 insults the agent's intelligence and suggests that the agent is incompetent.
It also shows that the buyer's agent does not know the neighborhood nor 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
If it's not bad enough to irritate the seller with a lowball offer, some buyer's agents toss in concessions on top of an already low price. Some ask for a closing cost credit, totaling 3% to 6% of the sales price. Or they ask the seller to carry the financing on a land contract.
Some sellers are willing to give a cash credit to buyers, but generally refuse to do so on a lowball offer. It's like throwing a pie in the seller's face with your left hand, followed by another pie from your right hand. Think about it.
There are better ways to win lowball offers than making these 5 mistakes. The first step is to hire a qualified agent to guide you.