Taking a Gamble with Low Ball Offers
April 13th, 2008 Categories: For Buyers, Real Estate
Here’s the situation:
You see a house you like. You see there’s value there somehow… either in the location, the space, the condition, the asking price, etc. You think that with all the bad press about the market, maybe there’s room for a “deal.” So, even though your agent has told you what the other side is looking for and what the value of the property is, you decide to offer way below their asking price, to “see what happens.” You have to at least give it a shot, right?
I want you to understand clearly what can happen when you try to get a “deal” and make an offer at far below asking price, what we call “low ball” offers in the real estate industry. There are 3 things that can happen:
1. They can miraculously take your offer.
2. They will give you a counter offer.
3. They will reject your offer outright.
Don’t be surprised if you face the last situation. You see, when you give a low ball offer, you leave the door wide open for someone else. You have not given the other side an offer to get excited about. Why would they be? You did not give them what they want or even close to that. They are more disappointed than anything with your offer (and sometimes, just plain insulted). They now may very well think that you play games, that you are “testing” them. If you were on the other end, would you want to do business with someone like that?
Again, you are NOT entitled to a counter offer. Should they counter you? Yes. I would strongly encourage any client who is selling their property to counter because you just never know. But, that being said, they have every right NOT to counter you.
Your negotiation strategy may be to start really low to allow for lots of room to go up. Their negotiation strategy may be to only work with people who show real effort to buy the property, that means those who come close to their price. Just because you negotiate a certain way, don’t assume everyone else does the same.
You risk a lot when you give a low ball offer. It’s a true gamble. Sometimes you win, sometimes you lose. Be prepared.
Your best bet is if you are serious about a home, make a serious offer.
Yes- that has happened to me. I learned my lesson when I lost the house I REALLY did want when someone else came in and made a higher offer just after I did. The seller didn’t even give me a counter offer.
Now that I think about it - the difference in price really wouldn’t have matter to me if I actually got the house. Still kickin’ myself…
I see this happening all the time. Clients will try to get a “deal” when it’s a house they really like and lose out because someone else swoops in and grabs it out from under them. It’s just not worth it. If you like a property, grab it before someone else does! Or, like you said, it’ll become a property that you’re going to kick yourself about later…
I agree - it happens all the time. Buyers lose the house they want by writing a low offer and then are not only disappointed but don’t understand why.