News Article - Low-balling--Should You Write a Low Priced Offer?

By:  Jamie Thompson

More than one time in your life you low-balled or offered an obscene low amount for an appliance, car, or other item.   How did it go?  Sometimes the transaction occurred, but in many cases nothing happened.

In real estate the term "low-ball" is often associated with writing an offer that is significantly below the seller’s list price.  In Arizona an offer is consider a low-ball offer when the offer price is 10% under the list price.   So, is low-balling a good idea?  Situations vary. 

Consider a situation where the seller’s list price is significantly high for the overall market.  When a listing is significantly overpriced, the seller is either unrealistic about what the market will bear or the seller is unable to sell for less due to the debt owed on the property.  In either case, the low-ball offer is unlikely to result in an accepted contract.  In rare situations the low-ball offer finds a desperate seller ready to sell.   Instead of reducing the list price incrementally and increasing showing traffic with a lower list price, the seller maintained the original list price and is worried the home will never sell.  The result is a seller ready to take the first offer received and a buyer who gets a great deal.

What if the seller’s list price is at market value?  Well, be careful with this situation because the seller and the listing agent are well aware of the local real estate prices.  While low-balling the seller and getting a good sell’s price on the home sounds appealing, the low-ball offer may upset the seller.  An angry seller could react by outright rejecting the low-ball offer.  If the seller accepts the offer, the angry seller may be difficult to deal with during the escrow period, because they feel taken advantage of during the original negotiation.

Now consider a situation where the seller’s list price is at market value or below market value.  If you like the house, low-balling is rarely a good idea.  Many times the low-ball offer results in the seller being offended.  Additionally, if the home is at market price or below market price the seller is getting significant showing traffic.  Since the seller and listing agent are aware of this, both will be willing to wait for the second realistic buyer if the first buyer does not make a realistic offer. 

Do you want to learn more about buying a home in Arizona?  Whether you are interested in foreclosures, short sales, or luxury homes, Jamie Thompson and The Thompson Group can help you find and negotiate on your next dream home.  Call 480-776-5214 and set up a buyer consultation.