‘Lowball offer’ is a word that is subject to considerable debate. It can refer to an offer that is significantly less than the asking price or it can refer to an offer that is substantially less than market value. The term “lowball offer” will be used in this blog to refer to offers that are substantially less than the asking price OR below market value.
Although they can be discouraging and upsetting, lowball offers can be dealt with. We recommend the following:
Recognizing the Motives of the Buyer
Understanding the buyer’s intentions is crucial before responding to a lowball offer. Lowball bids are typically made by buyers in one of the following circumstances:
- They are trying to find a deal. Investors or opportunistic purchasers are seeking a bargain and wish to purchase a home below market value. They use lowball offers to identify sellers who are in a desperate situation.
- Their ability to pay is constrained by their limited budget. Buyers can sometimes fall in love with a home that is out of their price range. For instance, they might think your home is worth $1,000,000 but only have a $800,000 budget.
- They deduct their renovation budget from the asking price since they want to renovate. It occurs more frequently than you might think. Suppose a buyer falls in love with a $1,200,000 home and makes an offer of $900,000 to replace the (completely acceptable-for-the-average-buyer) kitchen and bathrooms. Some buyers are unaware that their personal plans for a house do not affect its market worth.
- They consider it a successful bargaining strategy. Some buyers (and their agents) like haggling and employ lowball offers to change the balance of power during a negotiation. They may have every intention of paying market value, but not before engaging in a protracted negotiation.
- They lack awareness. The majority of purchasers rely on their real estate agent to explain the worth of a property to them; regrettably, not all agents are knowledgeable about property valuation.
- They genuinely worry about the market worth of your house. They may sincerely believe that your home is worth much less than your asking price, whether or not you agree with them.
Knowing what drives the buyer might help you effectively bargain and perhaps even improve the chances of a successful sale.
Are You Priced right?
Are your asking prices supported by solid comparable sales, or recently sold houses in the area that are similar to yours? Have you taken into account the state of the market?
Homebuyers in Ontario are smart; they can recognize an overpriced house just as quickly as they can an underpriced one. You might be overpriced if you’re selling your house and have gotten several lowball bids.
Avoid taking it personally
It’s normal to get offended by a lowball offer, but it’s crucial to keep in mind that the buyer is merely attempting to get the best possible bargain for themselves. Your chances of success will rise if you can resist being defensive
Counter Propose a Reasonable Price
It’s crucial to make a reasonable counter offer if you get a lowball offer. Take into account the neighborhood’s recent sales, the state of the market, and any improvements or modifications you’ve made to the property. A counteroffer should not be motivated by feelings of resentment or revenge against the buyer, but rather by rational considerations.
Be Prepared to walk away
You might have to walk away if the buyer won’t negotiate and doesn’t provide a fair price. Some buyers have no intention of ever paying market value; they are simply seeking a deal.
