Every home buyer wants a deal, right? The problem is, every home seller wants the most amount of money they can get. Those two parties are at odds with each other so it’s critical how you make your offer, and especially when you “lowball” the seller on their asking price.

First, let’s define what a lowball offer is. By strict definition, a lowball offer is one that is significantly below market value. In practice, an offer is considered lowball if it is significantly below a seller’s asking price. Let’s use some examples, and I’ll give you specific numbers for the Kansas City area.

Let’s begin with a home that is truly priced at market value, meaning other homes in the area have recently sold at that price of $250,000. Assuming the home just came on the market today and it’s in very good condition with moderate upgrades and no need of any repairs, the sellers are going to be very optimistic about that asking price of $250,000. As a matter of fact, in today’s strong seller’s market of 2017, they may even expect to receive multiple offers driving the sales price above $250,000. Within the first 48 hours, anything below their asking price would be considered a “low offer”, but any offers less than $5,000 would be considered a lowball offer.

Put yourself in the seller’s shoes for a minute. If your Realtor has shown you a detailed market analysis and you feel your home is priced right, then why in the world would you ever negotiate on your price in the first week, much less the first 48 hours? Buyers always picture in their mind that the seller is desperate to sell. Trust me, I’ve worked with hundreds of sellers and I have yet to find one that is truly “desperate” to sell. Almost every single home seller I’ve ever worked with has told me, “I don’t have to sell this home.” Why do they always feel the need to tell me that? It’s their way of telling me they are not going to accept any unreasonable offers. Not now, not ever! They know there are plenty of buyers out there and someone else will buy it.

Now, let’s take that same $250,000 priced home and assume that they’ve sat on the market for 30 days without receiving any offers. In our current seller’s market it’s safe to assume that home may have already had 10-15 showings during that time. If that many people have viewed the home in person and no one has written an offer, then the market is saying it’s clearly overpriced. This is the point where you can write a lower offer. Notice I said, “lower” not “low-ball”. A lower offer might be $5,000 to $10,000 lower. The theory here is that if the home is not selling, it’s clearly $5,000 to $10,000 overpriced.

Still, at this point you’re still not going to get away with lowballing a seller more than $10,000 below their asking price. Oh sure, you can make that lowball offer, but I guarantee you’re going to get a counter offer back from the sellers, and it’s probably going to be something really close to their asking price. “Why is that?” you say? Because you’ve insulted the sellers and now they don’t like you. “I don’t care if they’re insulted,” you say? Well you should, because now you’ve set up a scenario for the sellers to be very combative in their treatment towards you and your agent.

When you lowball a seller, whether it’s a home sale, car sale, or any other item of value, this behavior likely leads the seller to view you as aggressive or manipulative, thus weakening the overall trust in the negotiation. Consequently, relations between both parties deteriorate rapidly and the entire negotiation may be at risk. I’ve actually had a few sellers who got so mad they refused to sell to this buyer at any price! It happens more than you think because many homeowners take pride in their home and have emotions tied to it.

I can’t tell you how many times I’ve heard a buyer say, “Well my friend said to lowball the crap out of them because he got a deal on a home several years ago by lowballing them.” When I look up this home their friend bought (keep in mind as a Realtor I have access to that information on the MLS), I typically see why the seller accepted his “lowball offer”. The home was a piece of junk that needed a lot of work and was way overpriced. Their friend shot a lowball offer to the sellers $20,000 under the seller’s asking price, but the home was probably $20,000 overpriced to begin with. Their friend thinks he got “a deal” but what he really got was “a project” with a lot of work.

At this point you may be thinking, “So it sounds to me like Ron is not much of a negotiator. He’s afraid to write my lowball offer”. Not at all and as a matter of fact, I consider myself, and my team members, expert negotiators with over 700 home negotiations under our belt.

There are times when writing a lowball offer is acceptable, and I’ve already eluded to one of them. Specifically, when the home is blatantly overpriced. Other examples might be when the seller is less emotional about the home, as in a bank repo (REO), short sale, or a home that is in desperate need of repairs/updating. In these cases, the home is likely sitting on the market for 100, 200, or even 300+ days with no offers. At that point, the seller just needs a reality check and it’s likely the seller’s agent will beg for any offers at all, just so he can take something to the sellers.

Now, it’s still not that easy. You can’t just write a lowball offer and draw a line in the sand saying, “That’s my final offer. Take it or leave it.” You (or specifically your agent) needs to build a case for the price you’re offering. Showing comparable homes that were in good shape with upgrades that sold at “X” price and explaining to the seller’s agent, “This home needs carpet, paint, repairs, new appliances, etcetera so that’s why we’re offering this price. We are willing to fix these issues ourselves but only if we can agree to this price.”

When I meet with a seller to put their home on the market, I always explain that I have to bring them all signed offers, whether they’re ridiculous or not. Even in this super hot seller’s market, I think it’s hilarious that I still receive the occasional lowball offer. What makes it even funnier is that it’s usually on a home in pristine condition, has only been on the market for 24 hours, and we’ve already had 15 people preview the home in person. No joke, I’ll have already spoken with three agents who say their buyers will be writing an offer, then out of nowhere, here comes a written and signed offer $10,000 to $20,000 below my seller’s asking price. It’s good for a laugh, but when I call the agent and tell him we have three other agents that are writing offers, they always say, “Well, my client wanted me to write this offer. I told them it’s ridiculous and this home will easily sell at the seller’s asking price. Just give me a counter offer and I’ll take it to them.”

What that agent is really saying is, “Help me train my clients that you can’t write lowball offers on a home like this.” Unfortunately for that agent, what I typically do is text my sellers to let them know the price, they laugh and say, “No thanks. We’re not interested in making a counter offer to these idiots,” then the buyers lose out on a great opportunity and have to go looking at more homes.

On a side note, HOME SELLERS please take note of this article. This is exactly why I ask you to make all necessary repairs, replace carpet, repaint some rooms, update a few light fixtures and faucets, and clean up the landscaping. I don’t ever want to give the buyers a reason to negotiate on my seller’s asking price.