New to Real Estate · Singapore / Los Angeles · Member since 2023 · 24 posts · 9 votes
Hi REIs,
I have been trying to understand the strategies on making offers. I would like to know, based on your experiences, what is the range of lowball offers you've made that tend to get accepted when it comes to motivated sellers?
Like for instance, if a property is valued at 1 million dollars, what percentage would you consider a reasonable lowball offer? $600,000 (60%) or even lower than that?
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
2y
It's not about the asking price vs the offer, it's about the reasoning behind the valuation. Occasionally you will run into a seller whose property is worth $600k, but they're asking $1 million. You can lay out the logic of your offer, negotiate, and so on. However, if the property is actually worth $1 million and you're offering $600k, you're just wasting your time and energy, hoping to run into a sucker.
It's all about addressing sellers' pain points. By addressing their pain points, you put yourself in a position to get a better price.
Lowballing for the sake of lowballing is just going to result in frustration and a lot of lost offers.
Focus on solving their problem - maybe they're in a tight spot and need a quick sale? In that case, you may be able to get a more attractive value by offering a fast cash close.
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
2y
It's not about the asking price vs the offer, it's about the reasoning behind the valuation. Occasionally you will run into a seller whose property is worth $600k, but they're asking $1 million. You can lay out the logic of your offer, negotiate, and so on. However, if the property is actually worth $1 million and you're offering $600k, you're just wasting your time and energy, hoping to run into a sucker.
It's all about addressing sellers' pain points. By addressing their pain points, you put yourself in a position to get a better price.
Lowballing for the sake of lowballing is just going to result in frustration and a lot of lost offers.
Focus on solving their problem - maybe they're in a tight spot and need a quick sale? In that case, you may be able to get a more attractive value by offering a fast cash close.
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
2y
You need to rephrase your question. There’s a difference between a lowball, and an offer that makes sense to you given your criteria. My criteria is 70%, meaning I need to purchase the property 30% under market value all in with construction.
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
2y
It definitely ranges because every property is unique. A couple of things to think about:
A deal isn't defined by how much lower you got the property in comparison to the list price. The list price is just the starting number. Nothing more.
The days on market play a huge role. Trying to lowball a seller based when it just hit the market is likely a waste of time.
For example, to Eliott's point, if the property just hit the market, and the numbers worked paying $10K over asking, then why not take it? Everyone wins.
When I have offered less, typically it ends up between 5%-10% below list. Of course some are more and some are over. It just depends. Whatever it takes to make the numbers work.
It's not about the asking price vs the offer, it's about the reasoning behind the valuation. Occasionally you will run into a seller whose property is worth $600k, but they're asking $1 million. You can lay out the logic of your offer, negotiate, and so on. However, if the property is actually worth $1 million and you're offering $600k, you're just wasting your time and energy, hoping to run into a sucker.
It's all about addressing sellers' pain points. By addressing their pain points, you put yourself in a position to get a better price.
Lowballing for the sake of lowballing is just going to result in frustration and a lot of lost offers.
Focus on solving their problem - maybe they're in a tight spot and need a quick sale? In that case, you may be able to get a more attractive value by offering a fast cash close.
Yes, I totally agree with you. Lowballing someone who isn't in a hurry to sell is going to make you look bad as well! Which was why I mentioned "motivated seller". I heard from one of the biggerpockets podcast that they manage to buy a property for $1, which was probably a chance out of a million. However, this was probably an insulting offer, but was accepted regardless.
Anyhow, you gave a great point! I have realized that we need to know the reason why these homeowners wanted to sell their properties. In some circumstances, we might even have to pay above the home value.
You need to rephrase your question. There’s a difference between a lowball, and an offer that makes sense to you given your criteria. My criteria is 70%, meaning I need to purchase the property 30% under market value all in with construction.
Right, lowballing sounds really bad. Alright, thank you for the insights! I will keep that in mind! 70% sounds like a BRRRR strategy!
It definitely ranges because every property is unique. A couple of things to think about:
A deal isn't defined by how much lower you got the property in comparison to the list price. The list price is just the starting number. Nothing more.
The days on market play a huge role. Trying to lowball a seller based when it just hit the market is likely a waste of time.
For example, to Eliott's point, if the property just hit the market, and the numbers worked paying $10K over asking, then why not take it? Everyone wins.
When I have offered less, typically it ends up between 5%-10% below list. Of course some are more and some are over. It just depends. Whatever it takes to make the numbers work
Timing of the lower offer definitely does impact the outcome. If the property has been sitting on the MLS for 9 months, the seller might be more willing to entertain offers that are lower than their asking price. After all, I read somewhere that most sellers would actually be relieved when their properties sell.
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
@Hendra Wijaya, if its a listing with no obvious distressing situation going on and where the seller and their agent likely feel its appropriately priced then I use this rule of thumb when discussing offers with buyers.
- Withing 90% of ask is a solid offer and likely to get a response/counter offer
- 80-90% is a low offer that may or may not get a counter offer.
- Less than 80% of ask is a low ball offer that is likely to offend an owner-occupant who is emotionally attached to their home.
Obviously, if there are distressed conditions going on that rule of thumb would not apply but in that case the distressed situation is part of the negotiating strategy not just the price. For example offering to take the existing bad/nonpaying tenants rather than requiring the seller evict them before closing can be a negotiation point justifying a low offer.