How To Lowball

We all love getting a good deal, particularly in this economic climate. Whether you're saving 75 cents on a bag of frozen french fries or $5,000 on a new home, frugality is in.

The art of the lowball offer
To kick it off, let's talk about that all-important step after you've found your dream home: submitting the offer.
If you're following the numbers, you're probably aware that most U.S. markets still favor homebuyers but that trend is quickly changing. That may lead you to believe that sellers are desperate and will take any offer you throw at them. You'd be wrong. While sellers may be more willing to negotiate now than they were in 2006, for instance, you still must perfect the art of the lowball offer. The key is research. Your agent  must know everything about the market, the property, the seller and yourself.

The market: There is no such thing as a national real-estate market, which means all this talk of a buyers market may not even apply where you live. Your real-estate agent can find out whether comparable homes are selling quickly or slowly and at, above or below asking price.

The property: How does the price of the property compare with those of comparable homes? How long has the home been on the market? The longer it has been listed, the more likely the seller may be to entertain lower offers. If it has been on the market for months or even years and there have been no offers, at some point the seller is going to give up and either accept a much lower price or just resolve not to sell it.
Another factor is whether the home will require a lot of work, if you're willing to do the work, you can generally find good deals on fixer-uppers.

The seller: If sellers already have purchased another home or are starting a job in a new city and must sell quickly, that will affect their willingness to settle for less. Being flexible on the terms of a contract also can translate into a lower price. For example, if the seller plans to move to a new home still under construction, he might accept a lower price in return for a rent-back agreement allowing him to stay in the home for some period after closing.

Yourself: Are you in love with the house or with getting a good deal?
If the buyer is in love with the property they might want to offer something closer to market value in order to lock it up, particularly if it's in a market with intense buyer competition. If the buyer is just looking to get a great deal they might take a shot at whatever they think is in the lower hemisphere of fair and see how things develop. In my opinion, a buyer's best bet for finding a great deal is to buy a short-sale property, but you must be sure you're cut out for what is usually a long, difficult process. You can also get a bargain when buying a foreclosure, but  those homes are priced based on what is owed to the bank, not on their actual value.
If you're looking at a distressed property, be realistic about whether you can handle buying a property "as is." If you've never picked up a hammer, the money you save on the purchase may not be worth the hassle and expense of hiring contractors to make updates — or even to make the home livable.

First-time homebuyers use internet but still depend on agents!

Homebuyers, including first-time buyers, usually use the Internet for the preliminary work of finding homes for sale and collecting information on neighborhoods and recent sales. But those buyers, particularly if they are first-timers, often use real-estate agents to identify long-term value in properties, negotiate prices and ensure that deals go through.

Functions of real-estate agents
Many first-time homebuyers will not be purchasing their dream home as their first place, and often have difficulty seeing the true value in homes.  Many of these same buyers will be moving in the future so it is a good idea to think about resale when the buyer is purchasing. Buyers may not be aware of things like the problem of living on a busy street, or know to check on issues with homeowner-association covenants.


A real-estate agent can point out potential issues that could affect the resale price of a home and suggest small changes to increase the home's value.  When I'm showing a house that absolutely does not work, I dig into why it doesn't work. When we see other houses that may be a better fit, we discuss what does work for them and why.  First-time buyers should rely on their Realtor to provide them with data about comparable homes that have sold, how long a home has been on the market, what homes haven't sold and all the activity that has been happening in the local real-estate market. Ultimately, it is the buyer's decision what price and terms they wish to offer. However, buyers should be able to rely on their Realtors to guide them toward an educated offer on the home.  Negotiation occurs not only at the beginning of a transaction over price and terms, but also possibly after a home inspection, an appraisal and at other times between contract and closing.