Real Estate Offers: How to Evaluate a Lowball Offer

When your house is on the market, it's easy to think only about getting an offer. It's easy to forget that many offers in a buyer's market will be more than ten percent below the list price of your home, a cut-off point that many people consider to be the point where lowball offers begin. Receiving such an offer can cause you to feel angry and upset, and you might be tempted to reject the offer out of hand and not even return a counter-offer. At such a time, however, it is important to step back, take a deep breath, and try to evaluate the offer without emotion. There are many reasons why a buyer might offer a low asking price, and it's important to try to determine what those reasons might be in your case, so that you can either negotiate successfully, or fix the problem for the next time an offer comes your way.

The first thing you should consider is whether or not your home is overpriced compared to others in your area. Fortunately, there are many resources to help you with this. First, you should seek out the opinion of your realtor, if you are using one to sell your home. He or she is getting a commission only when your home sells, so it is in his or her best interest to help make that happen. Unfortunately, since he or she does only get paid after you sell, you should check other sources to verify what the agent says. This is especially true if your home has been on the market for a while, because the realtor may be eager to see the house sell before the sales contract expires. Two websites you should use at this point in time are realtor.com and zillow.com. With realtor.com you can look at other properties for sale in your area, as well as their list price. With luck, you will be able to search out comparable homes, look over their pictures, and get some idea about whether or not yours is overpriced by comparison. You should keep in mind that any listing which mentions 'lender approval required' is either a short sale or a foreclosure, and that it may not be in the same condition yours is. They also may be able to sell for less money because of the circumstances of the sale. While you need to keep the price of any such properties in mind, it is not as good a gauge as homes which do not need lender approval. Your realtor should also be able to supply you with a list of homes that have sold in your area recently, as well as the final sales price for these properties. It would be a good idea to keep an eye on them, because these are the homes that you must keep foremost in your mind when you consider the offer on your house, since they are the ones that actually got buyers. Depending on your state, zillow.com can also help you figure out the real value of your home. They have a way of estimating the value on properties based on recent sales in the area. This will work even better if you help fill in the missing information about your own house. When you compare all of this information, it should help you get a feel for whether the buyer is lowballing you, or if you are simply overpriced. It might not solve the situation, especially if you aren't willing to reduce your price, but it might give you a better understanding of that offer.

If you feel that your property is not overpriced for the market, there are still other factors to consider in evaluating a lowball offer. One of the important matters to consider is the location of your house in town. Maybe other properties in your area have been selling for more than your asking price, but the ones that have sold are all in the prime part of town, and you live in a less-desirable neighborhood. In a buyer's market, it will be even more important to take this into consideration. Maybe, when you consider how close you live to the highway, or how far you are from schools and shopping, that lowball offer doesn't seem to low. Zillow.com will be able to help you here; they factor neighborhood information into their estimates. However, if other houses in your part of town haven't been selling well, the estimate may be skewed, and you will have to use your own judgment to determine if the asking price is fair or not.

So, your house is priced similarly to others that have sold, and you live in a desirable part of town, but still you have an offer that feels insultingly low? Something to ask yourself in this situation is how appealing your specific house is to buyers. Has your house been meticulously cleaned and maintained? Is your landscaping attractive and well-done? Does your house smell fresh and clean, or has it been a few days since you cleaned that litter box? Maybe it's clean, but the decor is several decades old. Maybe your kitchen is in sad need of updating, or your bathroom is begging for an overhaul. Whatever the case, if buyers feel that they will have to do a lot of work to bring your house more in line with what they want, they will offer a much lower price, keeping in mind how much they will be spending after the closing. While some sellers feel that this should not be a consideration, it is a valid one in a buyer's market. This is a good time to bring in an objective third party to look around and see if your home is in need of updating. If so, the buyer's lowball might make a lot more sense. And while you might still find someone else who likes avocado appliances and shag carpeting, it's really unlikely. One word of caution, though. If you need to update and your current offer falls through, do not do major home renovations now. It will be cheaper to lower your asking price than to make expensive changes to a house that you will not even be able to appreciate. Also, if you let the new buyers deal with renovations after they buy your house, they can pick exactly what they want and suffer through the construction issues that inevitably come up.

If none of these concerns is relevant to your home, it may be very likely that you have a true lowball offer on your hands. With the housing market in chaos, some buyers are adopting an approach of making very low offers on multiple homes and seeing who is desperate enough to accept. While it may be legal, it's still a shady tactic and can wreak havoc with homeowners. While your home is on the market, you should seriously evaluate any offer you receive, but if you have one that feels low to you, even after discounting the above criteria, you should at least be wary of these buyers. I would encourage you to respond to any offer you receive, no matter how low it may feel. However, if you think it's truly insultingly low, don't feel obligated to meet them in the middle. A counter-offer of only one to two thousand below your asking price is acceptable, and it should tell the buyers that you have no intention of accepting a lowball offer. In a buyer's market, you should never let an offer die on your side of the table, but don't be afraid to let them walk away if they chose not to make another offer. If your house is truly well-priced, there will be another offer coming along sooner or later.