REAL ESTATE- GIMME SHELTER- Art of the deal:Why lowball offers aren't insulting

Jim Duncan
Century 21 Manley,


Q: We've heard alot lately about home buyers making "lowball" offers, and buyers being offended. But what exactly determines if an offer is lowball? Isn't fair market value determined by what buyers are willing to pay? What's going on here?

A: Lowball offers are indicative of several things: 1) Buyers' lack of confidence in the market; 2) Buyers' attempts to price in anticipated or predicted declines in the market; 3) A possible indication that sellers have unrealistic price expectations; 4) Fear– on the part of buyers (buying something that will be worth less tomorrow) and on the part of the sellers (fear that they won't be able to pay off the mortgage with the proceeds from the sale); 5) Peer pressure– some buyers feel that if they do not get a "great deal" they've done something wrong.

My advice? Focus on your own goals and desires and on purchasing a home, and don't let fear drive your decision-making process. 

Yes, fair market value is determined by what a ready, willing and able buyer will pay. There are a lot of buyers in the market right now; fewer than in the past several years, but they are more qualified than in recent years.

What determines a "low-ball" offer?

The short answer is "it depends"– and that number is set by the market, what the buyer is willing and able to pay, what the sellers' expectations are... some would consider 10 percent to 20 percent under asking price as a lowball offer, and some would consider 25 percent to 30 percent a lowball offer (and some even more).

Basically, my advice to buyers is to not be as concerned about offending the seller– focus on a reasonable offer, based on the market and the buyers' intent.

My advice to sellers is to reasonably consider any and all offers. Look at that offer as the start of a conversation or negotiation, rather than a poke in the eye. It's not emotional, it's business. 

For both buyers and sellers, understand that it is your Realtors' role to help guide you through the process and remove emotions from the equation. Having that guidance and buffer can be enormously valuable (said with the experience of having represented myself in the past).

The first offer usually ends up being the best offer.