Who makes lowball offers? Sometimes, it’s a graduate of one of those get-rich-quick real estate seminars. Another lowball offer may come from somebody who is bottom-fishing for sellers in dire financial distress. But when a seller is in dire financial distress, they are usually already over-encumbered on their home with other mortgages or equity lines of credit and CAN’T accept a lowball offer.

More often, however, lowballing is a negotiating tactic used by people who state categorically, “No one ever pays full asking price. You always have to start low to end up with a fair price.”

Those statements are not true, of course. When you do your homework, you know the difference between well-priced properties and overpriced turkeys.

Why lowballing is usually a bad idea –

Lowballing a well-priced house breaks the first rule of a good offer – make a realistic offering price based upon the sale price of comparable houses. Because skillful negotiators understand both sides of the issue, imagine that you’re the seller of a house that is priced as close as humanly possible to its fair market value. . .

Several days after your house goes on the market, you receive an offer with an absurdly low purchase price. After the vein in your neck stops pounding, what conclusions can you form about the lowballing buyers?

1)      The buyers obviously haven’t done their homework regarding comparable home sales. Because they’re grossly ignorant about fair market value, why should you try to educate them?

2)      Maybe the buyers think that YOU don’t know what your house is really worth. (That vein starts throbbing again.)

3)      Perhaps the buyers are trying to steal your house based upon a mistaken impression that you’re desperate to sell. There’s a name for critters who prey on misfortune – VULTURES.

None of these conclusions is at all favorable. As a seller, you’d probably make one of the following responses to buyers who lowballed your well-priced house:

a)      Let the buyers know that their offer is totally unacceptable by having your agent return it with a message that you wouldn’t sell your house to them if they were the last buyers on earth.

b)      Make a full-price counter offer. To show your contempt for the buyers, you’ll hardball them on each and every term and condition in their offer. (Two can play this game.) If you accept their counter offer, the 30-day escrow can become a very hateful and unpleasant experience -- and YOU set it up that way!

Buyers who lowball a well-priced property destroy any chance of developing the mutual trust and sense of fair play upon which cooperative negotiation is based. Bargaining is fine, but you must find a motivated seller and not aim too low. Starting at 25% below what the home is worth simply won’t work.

There’s a huge difference between submitting an offer that’s at the low end of the home’s fair market value and lowballing. Lowballing is a quick way to lose the house you want.

When are low offers justified?

Some sellers provoke low offers by their unwise pricing. If you find a home that’s priced high, simply make your initial offer at the low end of the house’s fair market value and see how the sellers respond to it. If they refuse to negotiate, then they aren’t really sellers. They’re masquerading as sellers. Don’t waste your time trying to educate them. If you want the house, bide your time – at some point, their agent will put the word out that they are now motivated sellers who won’t turn down any reasonable offer.

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