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making an offer

How to Make a Lowball Offer Without Angering the Sellers

[Updated: Dec 11, 2020 ] Mar 05, 2020 by Matt Frankel, CFP
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The financial goal of buying a home or investment property is to pay as much as you have to for a home, but not a penny more. One way to do this is by making an initial offer that's far below what you'd truly be willing to pay for the home.

However, there's a problem with this approach. By making a lowball offer, you run the risk of the sellers immediately dismissing it without a counteroffer or any further communication. And if it's a property you truly want, that can be incredibly disappointing.

The offer amount isn't necessarily the problem when you lowball the sellers. Obviously, there's a lower limit -- for instance, if a seller is asking $200,000 for a home, offering $80,000 isn't likely to be taken seriously no matter what the circumstances. However, in the case where you make an offer that's a little on the low end, the trick is to show the sellers that you are indeed a serious buyer.

Show the sellers you're serious

Some sellers will reject lowball offers no matter what. It's just a fact of the real estate market.

Having said that, you can increase the chances that a low offer will at least be entertained by making it clear that you're a serious buyer. With that in mind, here are a few ways you can strengthen a lowball offer to the point where a seller might be interested enough to respond.

Show that you can afford the home

This is a good rule of thumb regardless of whether you're submitting a lowball or a full-price offer. You'd be surprised how many people submit offers with no proof that they can actually afford the home.

If you're a cash buyer, make this fact clear and submit a bank or brokerage statement showing that you have enough cash to buy the home. If you're planning on obtaining a mortgage, a full preapproval (not just a pre-qualification) shows that a lender is actually willing to finance the purchase.

Include a big earnest money check

In most real estate markets, an earnest money deposit of $500 to $1,000 is enough when submitting an offer. The purpose of an earnest deposit is to show that you're serious, and if you fail to meet your obligations under the purchase contract, it goes to the seller. And when you close on the home, the earnest deposit is applied to the purchase price.

One way to make your offer stand out is to include a check for a significantly higher earnest deposit than the seller is expecting. For example, if $1,000 is the standard in your market, try including $5,000. The seller may not accept your lowball offer as initially written, but they're more likely to consider you as a buyer worth talking to.

Make it personal

As a final suggestion, try including a personal note along with your offer. Let the seller know that the intent of your offer wasn't to insult them or waste their time. Make it clear that you truly want to buy their home, but the asking price is simply out of your budget.

Very few buyers do this, and it can make all the difference. Home sellers often have sentimental attachments to their home, and while money is still a factor, they may want to know that the home they've lived in for years will be in good hands.

The Millionacres bottom line

Obviously, getting to a signed purchase contract will still probably require some back-and-forth on the price. Unless the seller is experiencing financial hardship and needs to sell immediately, lowball offers are rarely accepted in their original form. However, by presenting yourself as a serious buyer who simply doesn't want to overpay, there's a better chance that your low offer will start the negotiation process and won't be ignored.

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