Pros and cons of "low-balling"

Monday Sep 17th, 2018

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Some people ALWAYS low-ball, they simply feel the need to "play the game" and see how low they can go.  There are definately huge risks involved, depending on many things...  

Number one factor to consider is the Market.  Is it a buyers' market or a sellers' market?  A buyers' market is the ideal time to potentially have great success with a low-ball.  Home owners in that type of market (which is now!) feel substantial stress, because of the lack of interest in their property.  They can easily go through a week without having even one "showing" of their home.  They can very quickly feel that they possibly over-priced, or their home isn't as good as they thought it was.  Their confidence quickly - VERY quickly - deflates and they start to wonder if they can sell at all.   Often listings in this market can sit for MONTHS!  Yes, in this type of environment, a serious low ball will, at the very least, cut the asking price down noticeably, depending also on the need for the seller to sell, and how much pressure they are under.

What is a "serious" low ball?  Let's say the house is listed for $800,000;  $30,000 less than that is considered a gentle low-ball, but $100,000 less would be quite serious, but not thrown aside in a buyers' market.   

In a sellers' market all bets are off, and NO low-ball is advisable.  As a matter of fact, that is when we see over-asking sale prices, so a low-ball would likely be completely ignored and discarded; it is completely unadvisable to even attempt it.  Feelings can be injured, egos come into play.  I've seen home-owners tell me they simply don't want to work with the buyer, and refuse to consider any further offer from them.  It can be quite insulting, when blood, sweat and tears has gone into making a beautiful home in pristine condition.  

Trust your realtor's advice on this.  We are always emersed in the market,  and the current level of stress/fear...whatever you want to call it, and we know when a listing may endure the time it takes to suffer through the back-and-forth of a low-ball offer.  I once had 11 offers on a listing, and an unrepresented buyer brought a below-asking price to the table, despite complete information of the situation.  He was completely surprised that his offer was miles off.  Realtors know what they are doing!  If they are representing your interests, their experience will put you in the best negotiating position possible.

Time is a MAJOR factor!  Time.   If a home-owner looks at a low-ball offer and decides to respond to it (that's a big "if"), they will send back the offer to you wit a change and you will have TIME to respond.   When you then "sign-back" with a slightly higher offer, the home-owner is in a position to accept a competing offer, and anything better than yours is likely going to kick you right out of the game.    Check back for my next blog on "timing" and how the ticking-clock can ruin any deal for you in any market.


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