Using a Lowball Offer . . . to Get One That Isn’t
“A crisis is a terrible thing to waste.”
–Paul Romer (repeated by Rahm Emanuel and many, many others)
“A lowball offer is a terrible thing to waste.”
–Ross Kaplan
[Editor’s Note: a least in the Twin Cities, lowball offers on well-priced, well-marketed homes < $300k are a thing of the past, thanks to an ongoing Seller’s market. But, as prices climb above $500k, especially in the suburbs, the market is much more balanced. Above $1 million, it’s decidedly a Buyer’s market — though you probably won’t read that in the local paper any time soon.]
Sellers — and their Realtors — who get offended by a lowball offer are making a big mistake.
What should they do instead?
Use it to get a better offer — either from the party making the offer, or preferably, another Buyer.
Reason > Emotion
In my experience, many lowball offerors feel the need to first “try” a lowball offer.
When it’s rejected — which it invariably is — they’ll often come back with a much stronger offer. See, “The Mulligan Market.”
Even if the lowball offeror won’t come up significantly, the existence of an offer — any offer — is useful leverage over other prospective Buyers.
“Is There Any Other Interest?”
One of the first meaningful exchanges between the Buyer’s agent and the listing agent (representing the Seller) when a Buyer is contemplating an offer is whether there are any other interested parties.
When the Seller is negotiating with a would-be lowballer, the answer is “yes.”
Buyer #2 must then decide how seriously to take this possible competition.
In my experience, the more Buyer #2 likes the home, the less they’re willing to risk losing it — and the stronger their offer.
See also, “What Lowball Offers Really Accomplish.”
Of course, irrespective of the foregoing, the first and best way to regard a lowball offer is as a backhanded compliment: someone out there sees enough potential (and upside) in your home to want to buy it.
If one Buyer feels that way, it’s likely that others do, too.
