Why a “Low Ball” does not mean a “Low Blow”

We have all heard the stories about how a fabulous purchase was made --- How certain buyers become the owners of a great house for an unbelievable price…  The sellers “had to take it” or the bank needed to “get out from under it” or the “negotiation was the only important part of the buying process”…  Everyone knows of these stories, but why is it that no one actually “is” that buyer --- when more details come out about the purchase?  It’s always a story about “someone else”, or another time in the market.

The reason involves how to prevent a “low ball” offer from becoming a “low blow” offer.  Way back even when Friday Night Fights were the rage on small black and white TV’s, the term “low blow” came into the English or American language.  It signified a punch gone astray, landing in a particularly painful and vulnerable area of the male body, and called a halt to any match until the “injured party” could recover enough to continue.  As kids we knew it too, and worked to avoid this in sports contests, games of skill and ability, and in a general overall sense of fair play in contests of any kind.

When a purchaser is looking to make an offer on an attractive and acceptable house, the price to offer is naturally a major consideration.  So too are the qualifications for a loan, amount of cash needed for work and to make the down payment, income to make the payments going forward, and many, many factors.  Sellers (and their realtor, who is expected to know the market pricing) set a price expectation for their house, and hope that the marketplace will think it is realistic.  Buyers see this price as the first sorting tool for making choices of what to see, investigate, and then move on to an actual offer.  One is related to the other, as is the overall condition of the sales market and whether there are more sellers than buyers, or more buyers than sellers.  These markets are named for opposites.  More sellers than buyers is a “buyers’ market, and more buyers than sellers is a “sellers’ market”.  Today, the market favors the buyer. 

More houses are on the market than many months of need.  Sellers compete for real buyers greatly.  Few people are actually looking to buy today for a complicated litany of reasons involving lost jobs, income dropping, poor business conditions, cutbacks, foreclosures, bad loans, adjusting loans with onerous “set points”, and other numerous reasons more than can be listed here.

When making an offer that is considered a “low ball” offer, most buyers are looking to “win” an attractive price.  Most sellers are looking to “get out” or sell the house with a price that will work for them.  Buyers and Sellers are not necessarily going to meet each other’s expectations.  Some buyers reach too far, and offer much lower than listing prices.  Some sellers refuse to answer to market conditions, and hold to price levels best for them, but not likely to be attained.  In the middle is a point to a meeting of the minds.  Communication is the tool of the professional in making that point work for both parties.  Any offer that is very low related to the listed price must be sold to the sellers as “reasonable and fair”.  The buyer’s conditions of income, status, money down, and other factors must be included in the communication, whether verbal or written.  The seller must “know the buyer” to help in the transaction.  A low offer must not be insulting, the days of “take it or leave it” should be gone.  No one likes to be insulted or hit with the “low blow”.  Everyone has a point of acceptance, the professionals involved must keep emotions out of the transaction, or there is no starting point.  Likewise the sellers will not take offense at a very low offer is presented correctly, with backup information on the buyers, and knowledge of the seller’s position.  A few more zeros in a sellers’ bank account are completely different than a fixed payoff amount needed to get out of a loan.  These are different things, and must be communicated properly for any offer to work, or for any sale escrow to be begun, much less completed.

When the buyer is armed with information, and communicates properly to the seller, a “low ball” offer might be accepted.  That way it won’t be a “low blow”!