Let’s Make a Deal

When it makes sense to make a lowball offer

By Daniel McGinn | Newsweek Web Exclusive
Jun 17, 2008 | Updated: 4:05  p.m. ET Jun 17, 2008

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  • Posted By: donkhard @ 09/27/2008 12:49:54 PM

    <a href="http://donkhard.com">donkhard.com</a>

  • Posted By: luxdj @ 06/18/2008 1:49:30 PM

    Low ball Everyone!! I've seen some homes prices here in Santa Fe NM drop a million dollars. Every day there are 20-30 new listings and only 7 solds. what does that tell ya? 40% of homes here in Santa Fe are 2nd/vacation homes. People are dumping them and trying at least to break even. There are great deals if you want to live here or if you are in a good position to have a 2nd home. I can help....Shawn 505.795.1214

  • Posted By: wildonion773 @ 06/18/2008 1:36:41 PM

    If you buy a house without an agent, you can also save thousands in commissions. You will need to meet with the owner and the agent to see if the agent will eliminate the buyer's agent commission since you are not using a buyer's agent. Seller's agents will typically want to collect both the seller's agent's commission and the buyer's agent's commission even if there is no buyer's agent. Having the seller present ensures the lower commission is understood by all parties. Get it in writing before starting negotiations. On a $200,000 house a buyer can easily save $5,000 to $6,000.

  • Posted By: Zantor @ 06/18/2008 12:28:42 PM

    NEWS FLASH! It is now a buyer's market. For years the real estate market has been wildly over inflated by greedy Realtors and house -flippers looking to make a fast buck. People have become wise to this and the market is reflecting this. No matter how much you paid for it, a property is only worth what a buyer is willing to pay for it. Too bad you bought in at the peak of a bloated market. You made a bad investment. Suck it up, take your loss and get what the market will pay, or hold on to it while it continues to drop in value. This is a correction and i'ts here for a good long while. That's the sound of chickens coming home to roost.

    • Posted By: JThom @ 06/18/2008 1:18:52 PM

      Heck yeah!!

  • Posted By: mjacks @ 06/18/2008 1:17:28 PM

    What is wrong with low balling? Just as the seller is looking out for their best interest, so is the buyer. Why would I for example pay 200k for a house when others in the same neighborhood is selling for 125k. This is not about feeling sorry for the buyer, it is about what the market rate is today, not what it was two years ago.

  • Posted By: cinproc1@netzero.com @ 06/18/2008 10:46:00 AM

    The problem that everyone has failed to observe in these times, is that by lowballing, it will take them that much longer to reach the heights that some of us had to pay. Also, they keep the market down. And more important, wait until it's their turn to SELL!!! I would love to be a fly on the wall!!!

    • Posted By: JThom @ 06/18/2008 1:17:10 PM

      Ok. I present a lowball offer for a home and it sells at the price I prefered and was ready & able to pay. How would that hurt me? I'm purchasing a home for a price close to its "actual" value, not at some inflated price trumped up by some (seller's) agent trying to earn extra cash for the transaction. The market was ready to go down in the average price of new homes, but that meant existing home prices needed to fall too.

      When the next upturn for home prices come (in 15 years or so), I'll be in a great position b/c I aquired my home on a "lowball" offer.

  • Posted By: JThom @ 06/18/2008 10:18:09 AM

    As a potential home buyer, why would I consider a seller's asking price, knowing that they paid too much for the home/real estate initially? For example: If they paid $300k for a know that's worth $225k, why should I "consider" them at all. That's one of the big reason for the housing bust also. People finally realized that the market prices for these homes were getting out of control (regardless of the market locations).

    Ask yourself this...In Columbus, OH, I pay $1 for a double-cheeseburger. When in Maryland or DC, I pay the same amount. It's crazy to see the very same homes sold in these two different areas for vastly different transaction prices. Materials & labor in both areas are just as available in both areas where the difference b/t Ohio & DC is that in DC somebody was stupid enough to pay too much for their cheap home. Now they're stuck.

    • Posted By: summer4077 @ 06/18/2008 11:23:42 AM

      That's oversimplifying the real estate market. You can't live in a cheeseburger. Homes prices are defined more by the area than anything. I wouldn't pay 300k to live in a house at James and Livingston (I'm from Cbus too), but I'd certainly pay that and consider it a bargain in Dublin. Plus, in certain cities land is scarce. In San Francisco and NYC, there's nowhere to build. People pay out the nose for the convenience of living in the city. Also, jobs are usually higher paying in major cities, so people can afford to pay more on housing, and housing is more expensive because of the laws of supply and demand.

      I will agree with you that sometimes it makes no sense, though. The real estate market was getting out of control and overinflated by idiots who fell for the sales pitch, and greedy people who bought more house than they could afford. I'm glad it's finally falling back down to a level where normal people can once again afford to buy homes. I think it needs to fall even further, in fact.
      I always wondered how a house that looked to be about 200k would sell for 300k...now I know! Glad I didn't get suckered into buying into the greed.

      • Posted By: JThom @ 06/18/2008 1:12:00 PM

        I agree. The laws of supply & demand doesn't make sense sometimes. I saw, almost 1st hand, how people would build homes for $150k in July and sell it in August for $250k to some impatient buyer that just had to have a new home. If you found a good home in Dublin for $300k, it would've sold for $400-450k in Maryland-DC easy (3-5 years ago).

        The US real estate market is going to be unbalanced for a while b/c there are some many people that want to just sell their home to get rid of their mortgage debt. But having paid too much already has put them in a "negative equity" type of situation where they're going to have to take a lose no matter what options they use.

  • Posted By: Micky Marsh @ 06/18/2008 12:33:33 PM

    IT MAKE SENCE TO MAKE A LOWBALL OFFER WHEN AND IF YOU'RE HIT WITH A LOW BLOW TO THE STOMACH, THAT CAN REALLY HURT.

  • Posted By: cinproc1@netzero.com @ 06/18/2008 10:48:40 AM

    Hey Kbor -- How about desperation in the realtor who needs a sale and will undercut you just to make a dime? More than that, a realtor tried to sell my house form $113,000. I did a FSBO and sold for $142,00 shortly thereafter. Stop trying to influence unsavvy buyers with falsehoods.!!!

  • Posted By: kbor @ 06/18/2008 10:44:53 AM

    When a seller lists with a discount brokerage or free real estate web site, it sends out a message that they are desparate and trying to salvage every dollar. Statistics show that Realtors get the highest sales price in the shortest time that For Sale by Owners. Like it or not, you get what you pay for, pay nothing and you get nothing. Realtors charge what they do because they are trained professionals providing a service that saves you money, or minimizes your loss in the long run!

  • Posted By: kbor @ 06/18/2008 10:42:18 AM

    When sellers list with a discount brokerage or free home listing web site, they are sending out the message that money is tight and they are desparate for an offer. Statisitic show that Realtors get the highest prices in the shortest time period. You get what you pay for, you pay nothing, you get nothing. Hire a professional Realtor and you will get professional advice and service and ulitimately, your home will sell.

  • Posted By: jath123 @ 06/18/2008 9:44:16 AM

    "spend a little less time thinking about the home, and a little more time thinking about the sellers and their situation" Ha! Now that prices (and realtor commissions) are dropping, we are supposed to consider fairness over market value? Where was this new-found concept of fairness when skyrocketing house prices were breaking buyers' backs? Oh wait, that led to record realtor profits, so it wasn't a problem.

  • Posted By: RFitzmor @ 06/18/2008 8:52:44 AM

    If you can smell desperate on people go for the kill. What the buyer paid is not your problem, if they need to sell the price is what someone is willing to pay. The asking price is what they would like, the contract price is what they will get. In most cases paying asking price in today's market is foolish.

  • Posted By: 15R8 @ 06/18/2008 8:50:57 AM

    We had someone try and low ball us they verbally offered $110,000 then after months of waiting made a firm offer of $92500. We sold the house for $100000 but only months later .
    Now the buildingt dept. wants to rewrite the building codes and apply codes that were not in existance when our house got its C of O. Thanks FHA

  • Posted By: benmora1956 @ 06/18/2008 8:33:40 AM

    It appears as though low balling works.

  • Posted By: fedorovingtonboop @ 06/17/2008 10:52:18 PM

    thanks! i'm gonna low ball somebody soon

  • Posted By: CESchmitz @ 06/17/2008 9:44:39 PM

    The first two comments express exactly what I was thinking the further I got into this article - Pure pablum!

  • Posted By: gillarson @ 06/17/2008 7:23:26 PM

    Where were you when the housing prices were going through the roof? I did not here anything about buyers sensitivity and having to pay ridiculous prices with no equity buy in. This article's advice is self serving and appears to be trying to preserve high prices using the 'feelings' of the buyer as an excuse.

  • Posted By: morfius007 @ 06/17/2008 6:34:20 PM

    Probably most if not all of these lowballers have heard or read this same advice. This isn't top secret or an inside scoop. If they're thinking enough to lowball, then they've probably read something or asked advice from someone about real estate. Please don't give us milk instead of steak.

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