Wednesday, April 10, 2024 / by Amy Brown
The "lowball": A horrible strategy for both buyers and sellers
I wanted to address this topic because I have actually seen two "lowball" offers come across my desk this week. So let's discuss why this isn't a good strategy.
Selling real estate is emotional
Why we all might want to think that we are savvy when it comes to business, even the most experienced businessperson can mix emotion with finance when it comes to selling their home. Selling a house is a very personal experience. There are memories there and a bit of nostalgia for any homeowner, regardless of their motivation to move on.
When a "lowball" offer comes across the table, instead of an unattached response, the buyer is creating an emotional volcano, most often, insulting the seller and putting up a wall to negotiation. This only bars the gate to a counteroffer and instead of the response that the buyer is seeking (usually to start a conversation) the seller in most cases refuses to continue the deal at all.
Why is this occurring?
This has been a new phenomena to the market lately and I can only attribute it to what is being perceived as a "high" interest rate market. Many buyers have forgotten the interest rates over the past decades where 11-16% was considered "normal". The rates of 2021-2022 at 3-4% were very much an anomaly and we shouldn't expect rates to be that low again for decades, if at all in our lifetime. Mortgage rates are a result of the current state of the economy and as long as inflation is running high, we should expect interest rates to remain where they are and be happy that they aren't higher. Embrace today's stability.
Another reason why this may be occurring is because buyers have lost a bit of their buying power from a few years ago. That home that they could afford reasonably in 2021 is not the same home today in 2024. It can be a hard pill to swallow. When shopping for a home, we all have certain "must haves" in mind and for some in their current price point, those must haves are not obtainable so they tend to shop according to feature and not affordability creating unnecessary disappointment and frustration.
A seller could still consider my low offer, right?
In general, no. Buyers and sellers are more educated than ever right now to current home values, mortgage rates, and the trends currently happening in their local market. The majority of homes are priced competitively already at market value. And you must remember, that every seller is also a buyer. They depend upon the equity that they have worked so hard to gain to get them into their next home. And they are also fighting the same obstacles that you are in their next location. Sellers are much more willing today to wait for the right offer than they are to accept a low one. We just haven't reached that point yet, if at all.
So what do I do to prevent frustration and disappointment?
Make sure that you are talking honestly with your agent about your expectations and financial abilities BEFORE you ever set foot inside of a home that is for sale. The reason that I say this is that nothing is more heartbreaking than finding the "perfect" home only to realize that you can't afford it. It is also unfair to the seller who is getting their hopes up on a potential offer, taking time out of their day to make sure that the home is just right for your showing, only to find that you aren't an "able" buyer.
Only look at homes that you know for a fact that you can comfortably afford and that has at least some of the features that you are looking for. Remember that compromise is always going to be a necessary factor. Don't shop before you have your preapproval letter or proof of funds statement in hand so that you know exactly what you can afford to purchase. And definitely do not even look at something "just to look". You are only pulling on your own heartstrings and believe me, if you see the perfect one, nothing else will ever compare and no matter what you see, it won't be good enough.
I hope that you see this advice as a way to lessen the anxiety of home buying. Relocating is hard enough as it is. It is my goal to make the process more enjoyable and as stress-free as possible but I need your help.
Talk to me! I have been in your shoes! Let me help you educate yourself on what you should expect to see in your price bracket and provide suggestions on homes that will not only meet your needs but could possibly exceed your expectations!
We have a lot of beautiful homes out there and prices are stabilizing so take advantage of a calmer real estate climate to find the right home at the right price!
Selling real estate is emotional
Why we all might want to think that we are savvy when it comes to business, even the most experienced businessperson can mix emotion with finance when it comes to selling their home. Selling a house is a very personal experience. There are memories there and a bit of nostalgia for any homeowner, regardless of their motivation to move on.
When a "lowball" offer comes across the table, instead of an unattached response, the buyer is creating an emotional volcano, most often, insulting the seller and putting up a wall to negotiation. This only bars the gate to a counteroffer and instead of the response that the buyer is seeking (usually to start a conversation) the seller in most cases refuses to continue the deal at all.
Why is this occurring?
This has been a new phenomena to the market lately and I can only attribute it to what is being perceived as a "high" interest rate market. Many buyers have forgotten the interest rates over the past decades where 11-16% was considered "normal". The rates of 2021-2022 at 3-4% were very much an anomaly and we shouldn't expect rates to be that low again for decades, if at all in our lifetime. Mortgage rates are a result of the current state of the economy and as long as inflation is running high, we should expect interest rates to remain where they are and be happy that they aren't higher. Embrace today's stability.
Another reason why this may be occurring is because buyers have lost a bit of their buying power from a few years ago. That home that they could afford reasonably in 2021 is not the same home today in 2024. It can be a hard pill to swallow. When shopping for a home, we all have certain "must haves" in mind and for some in their current price point, those must haves are not obtainable so they tend to shop according to feature and not affordability creating unnecessary disappointment and frustration.
A seller could still consider my low offer, right?
In general, no. Buyers and sellers are more educated than ever right now to current home values, mortgage rates, and the trends currently happening in their local market. The majority of homes are priced competitively already at market value. And you must remember, that every seller is also a buyer. They depend upon the equity that they have worked so hard to gain to get them into their next home. And they are also fighting the same obstacles that you are in their next location. Sellers are much more willing today to wait for the right offer than they are to accept a low one. We just haven't reached that point yet, if at all.
So what do I do to prevent frustration and disappointment?
Make sure that you are talking honestly with your agent about your expectations and financial abilities BEFORE you ever set foot inside of a home that is for sale. The reason that I say this is that nothing is more heartbreaking than finding the "perfect" home only to realize that you can't afford it. It is also unfair to the seller who is getting their hopes up on a potential offer, taking time out of their day to make sure that the home is just right for your showing, only to find that you aren't an "able" buyer.
Only look at homes that you know for a fact that you can comfortably afford and that has at least some of the features that you are looking for. Remember that compromise is always going to be a necessary factor. Don't shop before you have your preapproval letter or proof of funds statement in hand so that you know exactly what you can afford to purchase. And definitely do not even look at something "just to look". You are only pulling on your own heartstrings and believe me, if you see the perfect one, nothing else will ever compare and no matter what you see, it won't be good enough.
I hope that you see this advice as a way to lessen the anxiety of home buying. Relocating is hard enough as it is. It is my goal to make the process more enjoyable and as stress-free as possible but I need your help.
Talk to me! I have been in your shoes! Let me help you educate yourself on what you should expect to see in your price bracket and provide suggestions on homes that will not only meet your needs but could possibly exceed your expectations!
We have a lot of beautiful homes out there and prices are stabilizing so take advantage of a calmer real estate climate to find the right home at the right price!
