Do Lowball Offers Work?
When planning your offer strategy it’s often suggested to at least discuss the merits of sending in a Lowball offer. Most of the time it’s an unpopular idea, but do lowball offers work?
What is a Lowball Offer? A Lowball Offer is an offer on a property (or anything else for sale) that is significantly lower than the asking price. They can sometimes borderline as laughable, or insulting depending on your vantage point.
There’s no shortage of instances where a Home Buyer feels like the asking price of a home couldn’t use some pruning. We will cover when a lowball offer is a bad thing and when it may actually yield a bountiful harvest.
In hot markets such as Austin, homes tend to move relatively quickly. If the Average Days on Market (ADOM) in the area are within 1-14 days, a lowball offer will most likely not work.
At this point in the timeline Sellers will not want to negotiate with a lowball offer, and will likely reject the offer without a counter. If that happens it puts the Buyers in a bad negotiating position as they will be ‘chasing’ the Seller with any subsequent offer. All the while the Seller will not take the Buyer seriously until they get closer to the list price.
However, if the home has been on the market for 21+ days, they’ll be considering a price reduction in the near future. Remember, any home will sell for the right price. So if the home is still on the market, it’s likely due to the price.
At this point you may consider submitting a lowball offer. If the Seller has yet to receive an offer they will be grateful to get anything. This is when a lowball offer can really work wonders on the negotiation process.
What lowball offers can do, is get the Seller towards their bottom line much faster than the traditional route. If they've been waiting 3+ weeks for an offer and they finally get one, they are more willing to get the deal over with, than vye for every dollar possible. Their thinking is that if it continues to sit, their listing will become toxic and they may have little to no chance of selling it.
In my experience Sellers will take big chunks out of their asking price just to get the deal done. They are tired of waiting, and doubt has crept in long ago about the viability of their original plan about the listings strategy.
In summation, if the listing is in an area where homes sell quickly, a lowball offer won’t work until about the third week or so. After that the Sellers will be more willing to move towards their bottom line. You won’t get everything you ask for, but you’ll get much more than if you don’t negotiate with intent and strategy.