First time buyers and sellers who have sold and now need to buy their next home often ask us what we think about submitting lowballs. Offers much lower than the asking price.
Here are some things for the buyer to consider:
Think like a seller first. Understanding market conditions at the time of offer is essential. In rising conditions sellers are aware of the demand in Surrey and the Fraser Valley and the lowball buyer runs the risk of offending the seller so badly the seller may choose to negotiate less or refuse a counter altogether. Ensuring you have taken the time to carefully consider sales data for the last 1-2 years in the immediate area will help you get in the mind of the seller to better understand what they are expecting. Maybe they have already priced it low to encourage multiple offers? Maybe they have priced it below the last sales to illicit a quicker sale and less days on market?
Leave room to negotiate. Lowball buyers should ensure they write their offer below what they actually want to pay so they can modify if the sellers doesn’t respond or counters high. Make sure you offer the sellers something in return. Find out what closing dates the seller is looking for and do your best to accommodate them. Offer the seller a quick subject removal period with fewer conditions to satisfy. Offer the seller a cash offer (no subject to financing) and a large deposit … cash is always king.
Back up your offer with data: Use sales data to create a case for your offer. Don’t pull a number out of the sky. Ensure you have some argument for your offer that can show the seller you are willing to debate value rather than bully or disrespect them. Is there a recent transaction that has shifted the market? Is there a economic trend predicted to shift the market in the near future?
Some things for the seller to consider:
Keep your emotions out of it. Lowball offers can have a variety of motivations and do not always come from a person’s desire to be insulting. Sometimes the lowball may be all the buyer can afford. Some buyers may be so attracted to your property they are driven to act even if it’s beyond their reach. Some cultures conduct negotiations from a different perspective. Business is business. Try to think with your head and not your heart.
Always counter. A great deal of effort from the buyer and their realtor has gone into submitting an offer and motivations are always revealed during negotiations. Don’t turn away a potential sale before understanding the buyers motivations or rationale.
Don’t overprice your listing. Overpricing your listing is asking the market to not take your listing seriously. Ensure you have used sales data and not your neighbours asking price to support your case in both your listing price and all your future negotiation.
Colin and I generally advise against the lowball approach - preferring to do business using hard objective data to support position – but our clients make all final decisions based on their own motivations and regardless of conditions … an offer is an offer is an offer!
When the time comes for you to think about offers, think of the Jenn & Colin Real Estate Team.
From our family to yours.
Jenn & Colin