Written by Lowball Offers and Home Buyers.
Given the current buyer’s market in Yakima, a hot topic right now is “Making Lowball Offers”. Most stories you hear from friends these days that pertain to buying a house are preceded with one of two introductions, “Everything was going great…until” or “We got an amazing deal!” Don’t get me wrong, not all real estate stories are told to induce sorrow or jealousy from the listener… just the juicy ones. If the story is about their amazing deal, it almost always starts with why they decided to make an offer significantly lower than the asking price. Realtors commonly refer to this type of an offer as a “lowball” offer. In our current market, lowball offers are becoming more and more common. Does this mean all buyers should be making lowball offers right now? Not necessarily.
If you’re thinking about making an offer on a home, you don’t want to offer so little that the seller is insulted. On the other hand, you don’t want to pay more than what the seller is willing to accept. This is a classic conundrum every buyer faces when making an offer. So how do we know when to lowball and when to offer high? First of all, be confident that you know the true market value of the home. This isn’t the asking price, the county assessor’s price, or the zestimate on Zillow. This is simply the highest amount any buyer is willing to pay on the open market. Secondly, don’t let your emotions interfere with the transaction. Always be able to walk away from the transaction if the seller wants to sell for more than the amount the home is worth. The third piece of preparation is to determine the reason the seller is selling and how strong their motivation is. Is the seller still living in the home and hasn’t completely committed to moving yet because they’re waiting to see if they find a buyer? Maybe the home is owned as an estate with no mortgage and a beneficiary is trying to get it sold as soon as possible for whatever they can get. Always take the seller’s situation into consideration.
Making an offer on a bank foreclosure home is the most common scenario where a buyer feels there’s nothing to lose if they make a lowball offer. In this situation, the fact that the seller won’t be insulted by a low offer is mostly true. However, most of these homes are already priced below value. If you start with a low offer, it may be countered at full asking price, or simply rejected and ignored. In the meantime another buyer may step in and make an offer. Now demand exists and your chances of getting an amazing deal are slim to none. Some of these homes sell for more than the asking price, even in our local market.
In conclusion, there is no set formula or percentage that is considered to be a lowball offer. Sometimes a seller is ecstatic to get an offer 20% or more below their asking price, where in other circumstances a seller is insulted by an offer 5% below their asking price. As long as you’re prepared with the right tools and the proper knowledge, you’ll be able to find a great deal on a home that meets your needs.
In the month of November, the Yakima area real estate market recorded 108 total homes sold with an average sales price of $160,504. How does this stack up against previous months? Click below to view the monthly statistics chart.
Click here to view monthly statistics chart.
Your Local Real Estate Professional,
Cory Bemis
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