Why "Low Ball" Offers Never Work

Blog Post Image

Most home buyers want a good deal when buying a home. This is no secret! So to get a good deal, the logic for many is to start with a low offer. Why not, the seller can always counter right? It is this train of thought that can, and often does, backfire on home buyers.

First off, we need to look at the reality of the current market:

Year-to-date statistics for 2016 show that in the Twin Cities MLS - sellers are getting 97.6%* of their original asking price.

*NorthstarMLS Monthly Report October 2016

This indicates that the market is supporting sellers in getting near list price. In this environment, sellers feel confident and certainly do not expect low offers.

In fact, from our experience, most sellers are shocked when they receive a low offer in the current market. However, some home buyers simply disregard the current market and decide to go in low anyway (more than 10% below list price)

For our sellers that receive low offers, usually one of two things happens: 1. The seller is somewhat insulted and therefore feels strongly that they should counter offer at, or near their asking price. Or 2. The seller often rejects the offer, with no counter, to make a statement that they aren't going to play the buyer's back-and-forth game.

Herein lies the problem: Once a seller feels disrespected or insulted, it is extremely difficult to get them back on track for negotiating a 'reasonable price' for both parties. Even when we agents explain that an offer is just a starting point, it seems a seller has often turned off their ability to compromise.

Due to this impasse, we most often see low-ball offers never come together, even if a buyer comes back with a higher number later.

Reasonable Offers

Our recommendation is to consider more than just price when making an offer. Its not always about getting the lowest price- and even if that's the goal, you stand a better chance of getting a seller to cooperate in a negotiation if you go in with a 'reasonable' initial offer

Now of course there are some home listings that are grossly over-priced, or that have been on the market an extremely long time. These need to be handled delicately with good communication between buyer and seller agents. In these cases, a seller may be more apt to consider any offer, or may be less insulted by a lower starting point. But these are typically unusual situations and can be even more difficult to navigate.

Remember, Real Estate transactions are just as emotional for a seller as they are for a buyer. If you think its only about business and price, you may be in for a long and painful ride.

Contact usĀ if you'd like to learn more about how we work with buyers and sellers.

Written by Glenn Necklen, Broker / Owner / Realtor at Necklen & Oakland- Professional Real Estate services in Maple Grove, MN.