*Lowballing* MLS Offers

2 Replies

Ill first start by saying it isn't really lowballing if that's where your numbers take you but...

To those investors that make offers off the MLS. When you're numbers are a decent amount below asking price and you make an offer do you explain how you arrived at the offer number or do you just send an offer with no explanation. What has worked best for you when sending the offer other then it being a numbers game. Have you noticed increase success with different methods?

I got my real estate license so I can send offers whenever without having to bother anyone and save on commission when listing.

Obviously people will have a little shock when you come in a decent amount off asking but do you try to justify it to them and maybe plant a seed or just send send send til one pans out?

@Brian Varmuza if I have viewed the property then I will include a quick blurb about the amount of work or updates needed. Most agents are aware of the work needed though. So don’t spend too much time explaining your reasoning.

I will often mention that I am or that I represent an investor who likes the area, has bought in the area, or something along that line. Some listing agents get offended by the low offers, and some just move on. Expect some backlash and take it in stride. Let them know you’re just basing it off of the numbers.

It will depend on your comfort level with negotiation.  If you're just sending offers without any sort of call or speaking with the Listing Agent, I can tell you that that's where the majority of offers live.  You can drastically increase the chances of the LA presenting your offer in a great light.  I just won a duplex for a client with a conventional loan over a cash offer with no contingencies.  Then I got a new roof and an electrical panel during negotiations.  Just sending offers will put yourself at the bottom of the pile, even if it's the only offer.

My advice is to call the LA, and ask questions. Build rapport, then ask about the seller, their motivation, their time frame, all the questions you would ask the seller. In our area, some agents aren't single agents because their brokers don't allow it, and some (many) will spill all the beans regardless of representation. After a nice conversation, and after you've asked if they have any other offers (and what they look like), let them know to hold off and let them know you'll be writing one up that evening or the next morning. You will often get information that changes your offer and gives you negotiation leverage. Things like an early or late close, waiving inspections, having a higher EMD, or down payment, liking their cat, etc, can swing things for you.

I generally don't explain my offer price, yet it does increase compliance if you do give a reason -- any reason -- for the other party to comply.

And when you send the offer, summarize it in the email.  Don't make the LA have to search for sneaky things -- this isn't corporate takeover territory.  It also gives them an easy format to counter.

An example:

Breakdown is:
Conventional 20% down
$5,000 EMD
10 Day inspection
35 day close
Appraisal addendum F
Giant table in the back conveys
$308,400 offer price
$8,700 seller contribution towards buyer's closing cost