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Lowball offers rarely, if ever, get accepted.
There, I said it.
Almost everything you read in the news these days about the housing market points to it being a Buyer’s Market. That is true to some extent, but not 100% of the time. There are neighborhoods out there that are exceptions to the rule, and often still get multiple offers (i.e. Palo Alto, Los Altos, parts of San Carlos & Redwood City).
But back to the notion of “lowball offers.” In my opinion, the success of a lowball offer is a bit of a myth.
From a SELLERS perspective
The current buyer mentality as a whole is fueled by what buyers read in the news, and the economic malaise in general. That mentality will not, I must repeat, will not change anytime soon. So unless you’re selling a home in one of those rare “hot” neighborhoods, here’s the expectation you should have — buyers are going to come in and lowball you. Negotiating the best possible price is what I strive to do for my sellers every time (and I would think that nearly all listing agents have this fiduciary objective) — there’s no way I’d advise a seller to accept a lowball offer on the first round. When buyers come into my listings and ask, “How low will they go?” my pat answer is, “Well, put something in writing and you’re sure to find out.” Any good listing agent will not show their hand to how low their seller would go.
From a BUYER perspective
Now I’ll put my Buyer’s Agent hat on.
For a home that’s been on the market a LONG time (relatively speaking, of course), sure, the odds are that the home will sell for less than its asking price. How MUCH less really depends on the seller — since every seller’s situation is unique, I really don’t know “how low” they will go until I do a little further investigation with the sellers’ agent. Even then, the sellers’ agent will rarely tell you exactly how low the sellers will go — that breaches his fiduciary duty to the sellers. That agent’s duty is to get the home sold for the best possible price relative to all the other market conditions.
So, if you come in with a lowball offer (again, lowball being a relative term), the expectation you should ALWAYS have is that you’re going to get a counter-offer from the sellers. Yes, sellers are “motivated,” but being motivated does NOT mean “desperate.”
Step 1: Make a lowball offer. Step 2: Receive a counter offer from the seller. It’s gonna happen, like it or not.
Look, here’s the reality: yes, buyers are generally in the driver’s seat these days, but, many sellers would rather wait it out, or take their home off the market before they accept a lowball offer. Making a lowball offer, while it is a start to putting something in writing on the table, rarely meets with success. Save your time and your efforts, and instead of getting your hopes up for getting “the deal of the century,” make a reasonable offer instead — the more fair/close-to-asking your offer price is, the less likely you are to get a counter-offer from the sellers.
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For those of us in the Southland, jumbo loans are a reality of life. (Jumbo loans are loans that exceed the definition of conventional, conforming loan limits set by Fannie Mae and Freddie Mac, $417,000 in 2006 or $625,000 in Alaska and Hawaii.) Many of our buyers wouldn’t be able to afford the price tag of a home here without them. For example, in September, Dataquick says the median price of a home in the Southland was $462,00.