Top ways to respond to lowball home offers

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Top ways to respond to lowball home offers

Getting lowballed on your home stinks. No doubt about it, but the story can have a happy ending. If you know how to effectively handle a low-ball offer on your house, it oftentimes can turn into selling your house at a price you didn’t even think possible. By the time you’re done reading, you will see that it’s not where a buyer starts their home offer, but where they finish.

What’s in it for you

  1. What is considered a lowball offer on a house
  2. Reasons people get offers under asking price
  3. Effective responses to low ball home offers

What could be thought of as a lowball home offer

In a normal market, the most common definition of a lowball house offer is 10% below a home’s current market value. In a buyer’s market, where there are more houses for sale than there are buyers, that definition changes to 20% below a home’s existing market value. In a seller’s market, where bidding wars are the norm with homes selling for thousands over their market value, a lowball offer might be considered anything less than full asking price.

In all practical purposes, a low-ball offer is anything you, the seller, think is significantly too low. This means that what you consider a lowball home offer is a matter of personal perception which is commonly influenced by 3 things: (1) your knowledge of the current state of the real estate market, (2) your access, or lack thereof, to legitimate comparable sales data, and (3) using online home valuations like Zillow or Opendoor and pegging them as correct (which the chances of these online tools accurately valuing real estate are about as good as seeing Bigfoot in your backyard!).

 

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(In August 2022, Zillow partnered with Opendoor to feed its users to Opendoor’s iBuying platform to request offers from Opendoor)

If you’ve received an offer, and the purchase amount offends you, keep reading before emotions take over and you slam the door shut on a buyer who’s probably ready to up their offer!

Why you get offers that are lower than you will accept

There are many reasons homebuyers might make you offers that are much lower than you’re willing to accept. Buyers know that sellers often put a cushion between their asking price and what they’re willing to sell for. For the same reason, house buyers often open with lower home offers as they’re hoping to meet you somewhere in the middle. Other reasons people receive lowball offers on their property include:

Lowballed because you value home improvements differently

You installed a beautiful pool for $30,000 and it’s so beautiful that it must be worth $50,000. Yet, home buyers think your pool will cost $10,000 to fill-in, and if they don’t, its maintenance will cost $4,000/year. What one homeowner values can be the opposite to another owner (note: according to Investopedia and many other credible sources, pools do not add value to a home).

The buyer isn’t serious about your home

Receiving a ridiculously low offer on your house could mean that the buyer has very little experience or that they’re just flinging out numbers hoping that a home owner will bite.

They’re lowballing to test how low sellers will go

If a buyer’s first offer gets accepted, most feel like they lost and offered the seller too much. People and most companies who buy houses don’t want there to be any chance of this, so they offer low to test your motivation for selling. Don’t be alarmed, just read on, and follow the advice below.

Some lowball home purchase offers are legitimate

Investor math can be rough on sellers. To make a profit, most sellers don’t realize (or believe) the costs an investor takes on and therefore home purchase offers from investors are often seen as lowball. Unlike the industry standard 15% profit, at GVH we target a 10% profit margin meaning that we can pay 5% more for your house. We even offer selling solutions that pay homeowners more than market value!

Lowball offers because your home is over priced

Is the offer you received really a low ball? Perhaps it’s not. Maybe instead you’re asking way too much, and the buyer is offering you a fair price. Review your comparable sales report or have a new one prepared and make sure your expectations are rooted in reality.

 

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Best ways to handle Lowball Offers on Your House

When thinking about selling a home, 1 factor to success always holds true: homeowners must treat the sale of their house as a business transaction and nothing more. At the same time, it can be hard to not take getting lowballed personally. After all, you’ve proudly maintained and have called this house your home for years.

Although it might make you feel good in the short term, you should never throw away or reply harshly to lowball offers. Doing so does nothing to accomplish your goal of selling your home. The fact that someone wants to buy it is a great thing, and you should respond to every offer because, as you’ll read, lowball home situations can turn into exactly what you’re looking for. Here are the most effective comebacks to lowball house offers:

Control your emotions when getting lowballed

Think about the last time you bought a home, was your first purchase offer at or above the asking price? We didn’t think so (unless you bought during the 2021-22 real estate bubble). Remember that, in fact, expect low ball house offers because, like you, buyers want to get the best deal possible. Be glad you have an offer and remain calm so that you can effectively respond (more on this below) to the home selling opportunity. If you react combatively or negatively, you might be building a wall where there could have been a bridge.

Snapping back also drags the buyer into a like mindset, making it harder for you to get what you want from them.