After renting for years, we’ve saved enough for a down payment and are ready to buy. We’ve been watching the market for six months and have toured several homes. We found a great one in our price range with an attached garage and a perfect backyard. It’s been on the market for a few weeks. Should we make a low-ball offer and see if the sellers are desperate? – HIGH HOPES
DEAR HOPES: Congratulations on getting your down payment together and making the leap into home ownership. You’ve done a lot of legwork to zone in on the perfect property. Now you need to find a way to make it yours.
I’ve spent decades helping buyers and sellers to navigate deal-making strategy. Successful is almost always more nuanced than simply “buying low” or “selling high”.
The lowball offer and subsequent dramatic win makes a great story arc for reality TV, but you can’t believe everything you see on television. Played out in real life, this approach has the potential to offend the seller and possibly even derail the negotiation. When a seller feels that a buyer has severely undervalued their property, they may respond with an equally unrealistic counter-offer, dig in their heels and refuse to budge on their price, or even worse, not respond at all.
Submitting an offer does not ensure you’ll get a response from the seller, as they are free to respond (or not) at their sole discretion. If they feel your offer is predatory, they may refuse to come to the table. If both sides begrudgingly go their separate ways, a lowball offer could turn out to be costly. If you were in the “ZOPA”, or Zone of Possible Agreement (a.k.a. willing to pay what the seller would have accepted) you’ve lost out on a valuable opportunity.
Buying this home may be a business transaction for you, but it’s likely an emotional roller coaster for the seller. They’ve spent years living in the house, and weeks preparing it for sale. The home is part of their story. Sellers are often giddy to hear they have an offer. If it comes in markedly low, it’s like a kid being handed a big, wrapped birthday gift – and finding a pair of socks inside.
If you see this house as your ideal home and not just a run-of-the-mill property, your approach should reflect how strong you want your chance of buying it to be. I suggest submitting a reasonable offer. With the guidance of your agent and the knowledge you’ve gained by watching the market, you can decide what this “perfect house” is worth — and more importantly, what it’s worth to you.
Price is part of the deal-making strategy, but winning is not a zero-sum game.
PRO TIP: The summer of 2022 has been a uniquely challenging time in real estate. Sellers are coming to grips with diminishing prices, and buyers are contending with interest rate hikes. Lowball offers tend to be ineffective at the best of times, and these days, everyone is especially nervous. If your heart is set on this house, I’d be mindful of offending the sellers. #Advice #AskDavid #TheNegotiator
David is a top-selling K-W real estate Broker who works with you personally when selling or buying. Call for a free home evaluation, and scan here to vote for David in the 2022 Reader’s Choice Awards!