Could the Canadian housing market be in store for the return of the low-ball offer? While this buying strategy became all but extinct, given the heated housing market in the last couple of years, rising interest rates have caused many markets to cool and shift from strong seller’s markets to more balanced or even tilted in favour of buyers.
What is a Low-Ball Offer?
A low-ball offer is when a prospective homebuyer makes an offer to purchase a home below the asking price. While the term usually carries a negative connotation, as it can be viewed as undervaluing the worth of an asset or even disrespectful to the seller, it’s often part of negotiation strategies in the real estate market.
The motivations behind making a low-ball offer can vary. Some buyers may genuinely believe the asking price is inflated and are attempting to correct it. Others may be testing the waters to gauge the seller’s flexibility or desperation to sell. Low-ball offers may be more common and even expected in specific scenarios, such as an economic downturn or a buyer’s market.
How to Strengthen Your Negotiation Position When Making a Lowball Offer
Making lowball offers is all about strategy. The stronger your position, the better your chances of getting a seller to take your offer seriously. That means knowing the market and the home’s history and crafting an offer that’s smart, not just cheap. If you’re wondering, “Can you lowball a house offer?” the answer depends on your approach. Here are seven ways to strengthen your negotiation position before making a low ball offer.
Check Recent Comparable Sales (Comps)
Before making a lowball offer, you need proof that it’s reasonable. What is the best way to do that? Look at comparable sales or homes in the same neighbourhood with similar features that have sold recently. Pay attention to things like size, layout, condition, and location. If comparable homes have sold for much less than the asking price, you have a solid case for offering lower. Recent sales (ideally within the last 30 to 90 days) give the best picture of the market. If prices have been dipping and other homes aren’t selling at full price, you have even more leverage when negotiating a lowball offer.
Understand Market Trends
Market trends play a huge role in whether a lowball offer will be entertained. If it’s a buyer’s market, where there are more listings than buyers, sellers are more likely to negotiate. On the other hand, in a seller’s market, where homes are selling fast with multiple offers, lowball offers probably won’t get much attention. A balanced market sits somewhere in between, where buyers and sellers have equal footing. Look at local trends. Are homes sitting on the market longer? Are sellers dropping prices? If so, your chances of negotiating a lower price with a lowball offer are much better.
Look Into the Home’s Listing History
To get the best response to a lowball offer, you must understand the home’s listing history. It can tell you a lot about the seller’s mindset. Is the property overvalued, and the price reduced multiple times? Has it been sitting on the market for months? These are signs that the seller might be getting anxious to sell, which gives you an edge in negotiations. You should also check if the home was previously under contract but fell through. This could mean the seller is eager to close quickly. If you see any of these red flags, you have a stronger argument for making a lowball offer.
Get Pre-Approved for Financing
Sellers want to know a deal won’t fall through at the last minute. Getting pre-approved for a mortgage before making an offer shows you’re a serious buyer who can actually afford the home. This gives you an advantage, especially if the seller has other offers that are less certain. It also makes the negotiation process smoother since they don’t have to worry about financing delays on your end. If a seller is debating multiple offers, a pre-approved buyer with a low ball offer may still have an edge over a higher bid with financing uncertainties.
Offer More Than Just a Lower Price
Price isn’t the only thing that matters in a deal. If you’re making a low ball offer, try sweetening the deal in other ways. Offering a quick closing date could be appealing to a seller who wants to move fast. Being flexible with move-out dates might make your offer stand out if they need extra time to relocate. Reducing contingencies, like waiving minor repairs, can also help. The less hassle for the seller, the more likely they are to consider your lowball offer, even if it’s lower than they originally wanted.
Work With an Experienced Real Estate Agent
A good real estate agent can be the difference between getting a deal and getting ignored. They know how to navigate negotiations, find the right comps, and craft an offer that won’t immediately turn off the seller. An experienced agent also knows how to communicate with the listing agent, which can be a huge advantage when figuring out what the seller really wants. If things get stuck, they can help tweak your low ball offer or find creative ways to make it more appealing without raising the price too much. Having someone in your corner who understands the market and negotiation tactics gives you a stronger chance of success.
Be Prepared to Walk Away
One of the strongest negotiation tools you have is the ability to walk away. If a seller refuses to budge and their price doesn’t align with the market or your budget, it’s okay to move on. Desperation can weaken your position, while patience can lead to better opportunities. Sometimes, when a seller realizes you’re willing to walk away, they’ll reconsider and come back with a counteroffer. If not, there are always other homes on the market. If you’re unable to get the best response to a low ball offer, remember that sometimes the smartest move is to keep looking for a better deal. The key is knowing when to push for a better deal and when to step back and explore other options.
A low ball offer isn’t just about paying less. It’s about making a strategic move based on research and seller psychology. If you’ve ever wondered, “Can you lowball a house offer?” the answer is yes—but only if you do it right. Go in prepared, negotiate wisely, and you might just walk away with a home at a price that works for you.
Pros and Cons of Making a Low-Ball Offer
Here are the benefits of making a low-ball offer on a house:
Potential for Savings
The most obvious advantage of making a lowball offer is the possibility of securing a property for well below its market value. A lowball offer can result in significant financial gains in some cases.
Negotiation Leverage
A lowball offer can be a starting point for negotiations. Even if the seller doesn’t accept the initial bid, they might come back with a counteroffer that is still lower than the asking price, providing a better deal for the buyer.
Testing Seller Flexibility
Making a lowball offer can give you insight into how motivated the seller is. If they’re eager to sell, they may be more willing to negotiate, providing you with advantageous terms.
Here Are the Drawbacks of Making a Low-ball Offer on a House:
Risk of Rejection
A lowball offer may insult the seller to the point where they refuse to entertain any future offers from you, effectively closing the door on a property you’re interested in.
Lost Opportunities
Particularly in a seller’s market, making a lowball offer can result in losing the property to another buyer willing to pay closer to the asking price.
Questionable Appraisal
If your lowball offer is accepted, it might create problems with financing. Lenders typically won’t finance more than what the property appraises for. They might also be suspicious if the selling price seems too low. An appraisal might be required to get the financing you need.
When Should You Make a Low-Ball Offer?
Low-ball offers are more common in a buyer’s market when there are more listings than buyers, and competition is not a factor. Another common scenario for low-ball offers is when looking to purchase a fixer-upper. Another common scenario for low-ball offers is when the buyers know they are dealing with a very motivated seller whose objective is less time on the market versus holding out for a price.
While there’s no hard and fast rule when it comes to making a low-ball offer, there are some things you can do to improve your chances of success. First and foremost, trust your real estate agent’s professional opinion on whether to come in at a low price and exactly how low you can go.
5 Things to Consider When Making a Low-Ball Offer
1. Understand the market when determining how much to low-ball an offer.
If it’s a buyer’s market, you have less competition and more negotiating power. In a seller’s market, homes are in greater demand (often thanks to an influx of buyers, a shortage of listings or a combination of both scenarios), and the chances of a successful low bid are less likely. Trust the market conditions more than the home’s listing price when deciding whether to go in with a low-ball offer. Your real estate agent will likely already have done a comparative market analysis, offering valuable insight into what comparable homes in the area have sold for recently.
2. Consider days on the market.
How long has the home been listed for sale? If you’ve been shopping the housing market, you’ll notice it when a home keeps surfacing in your listings feed. Depending on the homeowner’s urgency to sell, they could be more likely to accept a low-ball offer as days turn into weeks and months. It could be market conditions that have the home sitting on the market without any nibbles, or it could be the home’s condition. As part of your offer, a home inspection is a good idea to determine if any problem areas can be fixed and at what price.
3. To sweeten a low-ball offer, make it a clean one.
When a quick sale is the seller’s objective, a great way to sweeten the taste of a lowball offer is to remove the conditions. The seller likely already feels like they are making concessions on price, so removing conditional clauses could help. To help you stay limber at the offer table, ensure you get pre-approved for a mortgage before you start shopping. You’ll already have been approved for financing and know precisely how much you can spend. Removing this condition could tip the scales in favour of a quicker sale. But buyer beware! It is generally recommended to have a home inspection before agreeing to buy any home.
4. Understand the seller.
Knowing the seller’s reasons for listing their home could help inform your buying strategy. Maybe the homeowner has already purchased another home and needs to unload this one to avoid paying double mortgages, double property taxes, and double utilities. You get the idea. Perhaps the owners have inherited the property and have no interest in keeping it. A new baby, a new job, or a slew of other factors could also prompt the need for a quick sale.
5. How low is a low-ball offer?
Don’t risk offending the seller or the listing agent by coming in with an unreasonable offer. Ultimately, every seller wants a fair price, just as every buyer wants a bargain. Don’t waste the seller’s time, or yours, with an offer you know won’t be accepted. Be fair and come prepared with a rationale behind your lowball offer. It could be the market, the home’s condition, the property’s location, the time the house has been on the market, or something else entirely.
The success of your low bid will depend on several factors, including your strategy, market demand and the seller’s sense of urgency to sell. Work with your real estate agent to ensure your strategy is considered from every angle.
