Is It Wrong To Make A Low Ball Offer?

The real estate market is down. We all know that. Since real estate agents have been dying to make a sale, they’re now pitching the slogan that it’s a “buyer’s market” right now. They’re right, you can find great deals right now on newer construction and properties in pre-foreclosure. We have been looking around for houses in the Orlando, Florida area. This area was hit very hard by the housing downturn. Every other property is either in pre-foreclosure, bank-owned, or a short-sale. We found a few properties that we love. They tastefully renovated, but it appears that speculators weren’t able to flip the property quick enough. Now, they are desperate to sell, and we’re wondering how desperate.

My wife and I were wondering if it’s wrong to offer 25% to 30% less than the asking price just to see what happens. We’re not trying to insult the seller or his/her property. We’re just curious to know if they would accept the offer. Real estate agents are always hesitant to send in low-ball offers. They don’t want it to start a trend in the neighborhood, and I think they feel embarassed sending in low offers. But, some sellers are eager to dump the property, and the low-ball offer may be the only one they’ve received in months.

What are your thoughts? Do you think this is wrong? Do you think sellers take offense to it? Should we care if they do take offense to it? Are we putting the agent in a bad position?

Edit: I was just reading Free Money Finance’s blog and he addresses this same question. I just wanted to make sure you know that I wasn’t trying to copy him. This was purely coincidence!

  • Mike

    There is nothing wrong with making a fair, reasonable offer that is well below the asking price. I wouldn’t present something that is obviously a lowball because you might offend the seller or make them think you’re trying to take advantage of their bad situation and they won’t deal with you (it’s happened); just offer close to what you feel the property is actually worth and go from there. There’s no shame in that.

  • ekrabs

    Agreed, there’s nothing wrong with it.

    They shouldn’t take it personally. It’s just business. In fact, if they know better, they would’ve listed it higher than the amount they really want, fully expecting people to counter-offer with a lower bid.

    Even for houses, haggling is very common.

  • Jacquelyn Hart-McCoy

    I think you are cheating yourself if you don’t go for it in this kind of a market, you never know what price people will accept. I am seeing this happen a lot where I live. Some people can’t afford to take a loss but some may have bought in the 80’s or 90’s and will still profit from your offer that is 30k less than asking price.

    I can say from experience that the relators will try to shame you into making a higher offer, but I never let that bother me.

  • Tim Cox

    It depends on if they’re elderly or not:

    Elderly, you need to offer something reasonable.

    Not elderly, you can offer whatever you want.

  • Victoria P

    Hey, you sound as though you are in a similar position that I was in a few months ago. In May, my fiancee and I bought a house here in Orlando. We decided we were comfortable with low-balling, but realized that it wouldn’t do much good in many situations. The biggest problem? People are unwilling or unable to sell for less than their mortgage is worth, and in many cases, owners mortgages were higher than what we perceived to be the current value of their house.

    That was our experience! We did eventually find a home that was right for us, and we love it. Good luck!

  • author

    Thanks for the advice from all three of you. I find that realtors make you feel bad about it as well. I don’t like that. I am the customer. They shouldn’t tell me how to buy something, but rather help me buy it.

    We will offer what we think it’s worth. Actually, the situation is good. The house we’re looking at is owned by a company that bought the house from a couple who was relocating because of a job. Basically, their company bought the house from them to lure them into the position. So, I won’t be offending the seller or “taking advantage of their situation”. This makes me feel a little better about putting in an offer about $50k less than the asking price.

  • Seller

    Some low-ball offers just come across as entertainingly funny and ridiculously unreasonable not only to a seller, but also to the seller’s agent, to the seller’s family, to friends, to acquaintances…in short, to everyone but the “interested” buyer-bidder.

    When a great house originally listed for $350,000 (with an est. fair market value of $345,000 per property-tax reports) is dropped to $300,000, but a potential buyer offers $225,000 when the house has only been on the market a month and has had multiple showings each week, I’d say the owner might not necessaily be insulted, but instead just be too busy laughing over the “entertaining and humorous” attempt by the buyer, especially when the buyer isn’t even pre-approved. LOL Looks like a mistaken flipper…