I asked you to share your successes and failures with low ball offers. And like always, you came through with incredible stories, tips, and strategies that are very helpful for anyone considering lowball offers on homes, now or in the future.
Here’s what readers shared when I asked Have You Made A Low Ball Offer?
Strategies for Making LowBall Offers
JanniPi is closing on a new house this month. While buying a new house wasn’t originally in the plans until the current home one sold, JanniPi stumbled on an opportunity to live on the Delaware Bay with no yard work. JanniPi’s lowball offer technique:
I generally offer 10% less then asking, assuming the comps are solid and current. In this case, it was accepted by the seller, but they declined to make repairs or lower the price based on the home inspection… The house needs updating and a better heating source for year round use, which will be a big expense, but it’s so worth it!
Fowler starts his lowball offers at 10% below comps to test the sellers response and and see how much they will counter. The next step in Fowler’s lowball strategy:
I will add in immediate costs/issues which may bring that up to 40% below asking. As long as your numbers are backed by reasonable data you will not appear delusional or insulting.
Stanley has had success with offering as much as 40% below comps. Stanley’s strategies for lowball offers on homes:
One thing that works is add on contingencies you don’t care about but allow the seller to negotiate them out giving the feeling of accomplishment. Seller financing is a good one as well as seller paying closing cost/mortgage points, repairs etc.
Big-D shared a successful low ball bid. After telling the owner the list and research (and skipping a real estate agent which saved the owner 3%), the owner agreed. The result? A purchase price for 35% below the asking price. Here’s how Big-D puts together a lowball offers on homes:
I second Stanley. I get the land value from the local property tax authority, and start with that as a base. I take detailed notes in the walk through – looking at age of stuff, windows, floors, any mechanicals, any thing that might need to be replaced. I put that into a pot and start at 10% below comps if everything is perfect. If the house is 30 years old and the kitchen cabinets are 30 years old with drawer paper on them, take money off. If there are windows that have busted seals, and you have single/double pane glass windows, etc. If your furnace/hot water heater are 15 years old, etc. These are all things I take value off of and then I make my offer.
The offer should not be offensive, and the way I measure that is simple. How much would it cost for me to replace this house from scratch. If this house were burned to the ground, how much would it cost for me to have this house build exactly the same, new, at builders cost (plus cost of land). That should be the lowest you go (regardless of neighborhood, because you made an insulting offer).
What is the worst they can say, “No”? When they come back with a higher offer, come back with one that is okay. I will come up a few grand, but then I will get this capitulation in the closing (2 grand for a new furnace).
John has made a few low ball offers, usually when he’s purchasing a car. John’s lowball strategy:
I am only willing to pay what I think the product is worth or a bit less what I think it is worth. I’ve upset a few people, but who cares, I think they were trying to rip me off. In my opinion it is better to give them the opportunity to accept an offer rather than never receive one. With that said, I’d be pissed off if I continuously got low balled. But such is life.
Shahid bought a new house in a NW Chicago suburb in 2008. One of the strategies in negotiation is to walk away… but have you ever walked? Shahid did and it turned the lowball offer into a purchase success story. Shahid’s lowball strategy:
My house was listed at $215,000. I started out at $165,000 with a max price limit of $180,000 in my mind. We negotiated and I went up to $178,000 and they were stalemating at $190,000. I decided to walk. About a week later they called up and said that they would accept the $178,000 if I was still interested.
In hindsight, I think if I had walked at $175,000 I probably would have gotten it. In the end, I closed at 83% of listed price.
I had the realtor do some research and see what the current owners had paid for it. ($165k 7 years earlier) I knew that I had to offer enough for them to repay their mortgage, pay realtor fees, etc. and break even.
Thank you for sharing your stories! They are very insightful for me and all of the readers at My Dollar Plan.
If we decide to make an offer, I feel much more confident about making a lowball offer!
If you have a lowball offer strategy or success story (or failure) to add, please tell us about it!