Learning to Love Lowball Offers

Low Ball Offers: Insult -- or Compliment?

More than many businesses, residential real estate can be emotional.

One of the best examples of that is Sellers' reaction to low ball offers.

While many take it in stride, other Sellers can feel insulted or offended, become angry, etc.

By contrast, as a Realtor I understand -- and take pains to explain -- that a low ball offer is really a compliment. Perhaps a not-so-politely conveyed compliment, but a compliment nonetheless.

It may not be the most PC example these days, but I consider a low ball offer to be the real estate equivalent of a pretty woman getting a loud whistle as she walks past the construction site.

While she'll certainly rebuff such a coarse overture . . . at least it means she's getting noticed!

Getting it Out of the Way

In fact, in today's market, attracting one or more low ball offers is many Sellers' first real indication that they're getting close to selling.

Just as many Sellers today feel the need to "pad" their asking prices in order to then make "concessions" later, many Buyers feel the need to first "try" a lowball offer just to see if it works.

When it's invariably rejected -- and they almost always are -- they return, often quickly, with a "real" offer.

Lowball Offer as Harbinger

Good Realtors also understand than an offer -- any offer -- is useful leverage on more serious Buyers.

Whenever a lowball offer materializes, it's a good bet that there are one or more serious Buyers who are considering an offer on the home, but lack a catalyst.

And guess what?

Getting a call from the Listing Agent that the Seller is negotiating with another Buyer is a pretty good catalyst!

I don't (and can't) tell other agents how strong or weak another offer is.

However, the reality is, many offers that start out weak get stronger surprisingly fast (per above). And Buyers and their agents know that -- or should.

So what's the bottom line?

A low ball offer frequently signals that the market now thinks a Seller's home represents good value.

So much so that I've almost come to regard them as a good luck charm:

I've now had three deals in the last six months, where, within weeks of receiving a low ball offer (all from the same Realtor!), the Seller received (and accepted) a significantly stronger offer from another Buyer.