Is It Time To Lowball?

Everyone has been uncertain about the market and whether they should buy or not mostly because of the combination of interest rates, inflation and general affordability.

But here’s a strategy buyers should be taking advantage of right now if you’re serious about buying.

1. Get approved for your maximum loan amount and payment you are comfortable with.
2. Get our list of properties that have been sitting on the market 90 days or more and start shopping.
   As of this posting, there are currently 1754 active listings in The OC that have been sitting on the market for 90 days or more. Why 90 days? I’ll address that below.
3. Make low ball offers on properties you like. But there’s a strategy to this. I’ll share in a moment.
4. Be aggressive and don’t get discouraged. Keep making offers. Eventually a buyer will accept your offer.
5. DO NOT get emotionally invested in any particular house until it’s actually yours.

Why 90 days?

Home sellers have become so accustomed to putting their house on the market and getting an offer even before the sign has been planted in the front yard.

Every 30 days is kind of a psychological marker for the seller. Each time 30 days pass, they lose more and more confidence that their home will ever sell. They see the market shifting and become more fearful than the previous month. 90 days is that breaking point where sellers try to find any reason they can as to why their house didn’t sell. After all for years, in Orange County, if you couldn’t get your house sold in a month, there must be something terribly wrong with it.

Usually they blame the agent first but if the pictures and description in the MLS are well done, it’s usually not the agents fault but they’re the easy target.

They almost never want to accept that their price is just too high. After all back in May a neighbor sold their house for a bazillion dollars and it was no where as nice as theirs. They may not want to accept that things can change so much in just 5 months.

But after 90 days realization starts to set in. They become more willing to hear what people have to say. At that point they either have to decide to take the hit or just not sell.

What’s Considered Low Ball?

There is a difference between what I call a reasonable lowball and an outright offensive low ball.

Let’s look at what’s considered an offensive low ball offer. Basically it’s similar to what most investors do.

It’s not uncommon for investors to put offers out there for 30-50% below comparable value. So for example, let’s say the comparable value (not always the price) is $1,000,000. Their offer would be somewhere between $500,000 to $700,000.

This can be a significant shock to a seller and a super high majority of offers are shot down and met with a lot of inappropriate language.

But investors are completely OK with this because it’s just a numbers game and they know they have to do two things, 1. Potentially make a hundred offers before they get a potential seller. 2. Not get emotionally involved in the transaction. It’s all about business.

And once in a while they get that one seller who agrees for their own reasons and the investor is rewarded well for their efforts. I love writing offers for investors.

For most buyers though this is a difficult process emotionally and is a significant time commitment.

It doesn’t mean you can’t make a reasonable low ball offer and have much better odds of a seller accepting that offer. So what does that look like?

In my opinion I think that’s somewhere around 5-10% below the current asking price, again if they’ve been on the market for 90+ days.

And it kind of depends on the price range. Home seller’s don’t equate a lower offer in the terms of percentages. They look at it from the perspective of dollar amounts. They’ll say, “OH My Gosh that’s $70,000” lower than what we’re asking as opposed to, “That’s only 7% lower than our asking price”. 70,000 is a much bigger number and more difficult to swallow than a little ol’ 7.

So the lower the price range the more you can probably decrease the percentage of the list price to meet your goals.

You might have to make offers on a few different homes before you get a seller to accept, but that’s ok.

Most agents are not willing to work with buyers who use this strategy because it’s a lot of hard work submitting offer after offer, getting yelled at by the listing agents and waiting and hoping for a sale.

But my philosophy has always been, “If you don’t ask, you don’t get!” So I absolutely don’t mind asking for my buyers and making sure they’re protected in the process.

What if I’m a seller?

Do I have to accept lowball offers?

Did you think I didn’t have a strategy for you too? Call me!