Real estate agents often suggest that sellers either accept the first offer or at least give it serious consideration. Real estate agents around the world generally go by the same mantra when discussing the first offer that a seller receives on their home: The first offer is always your best offer.
Typically, a lowball offer is considered to be at least 20% below the asking price. If you're offering 10% below, the property should be in a good condition but may just need some cosmetic work done.
Just know that an offended seller might not want to negotiate with you any further if they can go with someone not trying to undercut them. 'And fyi 10% is not a lowball offer. 30% would be.
The rule of thumb is usually between 5 and 10 percent of the home price. Bear in mind that you could lose the money if the deal falls through, so it's important not to put up so much that you'd be ruined if you lost the cash.
“In a buyer's market, I would not hesitate to submit an offer that's around 10% below asking,” advises Chris Cloud of Exit Heritage Realty in Haymarket, VA. “Most sellers will at least see that as worthy of a counteroffer.”
Step 3: Decide On How Much Earnest Money To Offer
Cash is king, and even if you're not buying a home with cash, you'll have to submit a good faith deposit, which is often referred to as earnest money. The earnest money requirement varies from market to market but is typically 1% – 3% of the total home price.
A low offer may be upsetting to the sellers, but if you and your real estate agent present the offer along with an expression of your appreciation for the property, it's more likely to be accepted than a low offer accompanied by a half-complete contract or an insult about the property's condition.
The definition of a lowball offer can vary dramatically. Some agents might say it's 25% or more below the list price. However, in areas with a shortage of available homes, this threshold could shrink to 20%.
Presenting the Offer
Once you have finalized your offer terms, your agent will present the offer to the seller.
Is Earnest Money Refundable? Earnest money isn't always refundable. The good news for buyers is in most situations, as long as a buyer acts in good faith, earnest money is refundable. As long as any contract agreements are not broken or decision deadlines are met, buyers usually get their earnest money back.
“Once you've been on the market for five weeks or so, you're chasing the market,” says Mike King, an agent with the Partners Trust Realty in Brentwood, CA. If you haven't seen any action in a while, it might be time to take your house off the market, do some touch-ups, and relist.
“What's the best price you can give me?” This question puts the onus on the other person to offer a lower price, which can help you get a better deal.
It's best to offer between 5% and 10% lower than the market price, but always go lower than your maximum to allow room for negotiation. You can research house prices in the area with similar square footage and the number of rooms to make sure you are buying at a fair price.
A contractual right that requires an asset holder in a company to offer to sell its asset to the right holder before offering to sell it to third parties.
If you value only the economic outcome of your deal, make the first offer in order to anchor the negotiation in your favor. But if you value satisfaction with the negotiation process more than the outcome itself, you may want to avoid the stress and anxiety of making the first offer.
The seller may think any price below the asking price a lowball offer if the listed price is already at the bottom of what they want. It's generally accepted that asking over 15% off the sale price is lowballing.
It's also acceptable to offer 20% or more below asking when the house has been priced significantly higher than what other homes in the neighborhood have sold for. If comparable homes have sold for much lower than the list price of the house you're interested in, that could work in your favor.
“Thank you so much for the offer. I'm really excited about the company and the role. I want to be upfront with you that the salary is lower than I was expecting based on my skills and experience. I'd like to be at a number more like $X.
While some REALTORS® may be reluctant to disclose terms of offers, even at the direction of their seller-clients, the Code of Ethics does not prohibit such disclosure. In some cases state law or real estate regulations may limit the ability of brokers to disclose the existence or terms of offers to third parties.
Acknowledge it's a low ball offer
It's important to be direct in the process, and acknowledge that you see the offer as too far under the market value. Don't respond immediately; instead, let them know you'll get back to them. Then consider what tactic could work best.
Anywhere from 10 days to four months is common, depending on the local housing market and how long it takes for other houses in the area to sell, although many agents don't like to wait much longer than 30 days if there's no action.
Here are the elements that make up a very strong offer: Highest offer of all buyers. Offers short contingency periods. All-cash buyer. Down payment of at least 20% of the purchase price.
Saving for a house deposit
Ten per cent is a good benchmark and the higher your deposit gets, the more mortgages you'll be accepted for. The more you're able to put down upfront, the less you'll need to repay with interest.
California law, on the other hand, limits the amount of earnest money that can go to a seller should the deal fall through to 3% of the purchase price. There are some exceptions, Stuart says, but this law makes it so few earnest money deposits exceed 3% in the Golden State.