Should Home Sellers Ignore Lowball Offers?

When a seller receives an offer on their home, they’re usually filled with joy and excitement. However, that excitement can quickly fade when the offer comes in thousands of dollars below asking price, especially after years of investing in the home. Some sellers get frustrated enough that they refuse to respond at all, no counteroffer, not even a formal rejection.

The short answer is no, sellers should not ignore a lowball offer. Even an offer that feels insulting is worth a response, since it keeps negotiations open and the buyer engaged.

Sellers need to realize that when a buyer takes the time to submit an offer on their home, it could turn into a viable offer. So unless a buyer states it’s their highest and best offer, there is hope they may be willing to come up in price, a price the seller will agree to.

What Is Considered a Lowball Offer?

There’s no single number that defines a lowball offer, it depends on the home, the market, and the terms attached to the offer. A $900,000 home receiving an $850,000 offer likely isn’t a lowball offer, that’s within normal negotiating range. A $500,000 home receiving a $350,000 offer, on the other hand, almost certainly is.

Generally, an offer that comes in 10% to 20% or more below asking price, with no compelling reason behind it, is considered a lowball offer. But price isn’t the only factor. A cash offer at a lower price may actually be stronger than a financed offer closer to asking, since it removes appraisal and lending risk. Terms like closing timeline, contingencies, and deposit amount all factor into how “low” an offer really is.

In today’s market, buyers are often more comfortable negotiating than they were in previous years. Higher interest rates, insurance costs, and affordability concerns have caused many buyers to submit offers below asking price. A lower offer doesn’t always mean the buyer isn’t serious, it may simply reflect what they can responsibly afford right now.

3 Things to Consider When Dealing with Lowball Offers

So if you’re wondering whether or not you should ignore a lowball offer, the answer is no, but before responding you need to evaluate the situation. Let’s take a closer look at why you should never ignore a lowball offer and how to properly respond.

Pricing

First and foremost, is your home overpriced? If the list price of your home is more than recent comparable sales, the buyer’s offer may not be a lowball offer at all. Odds are your listing agent reviewed the most recent neighborhood sales prior to listing your home and recommended an asking price. Did their asking price match your current asking price?

If your home has been on the market for several weeks with little activity, a low offer may be valuable feedback rather than an insult. It doesn’t necessarily mean the buyer is wrong, it may indicate that buyers don’t believe the home is worth the current asking price. Consider your days on market, any previous price reductions, showing feedback, and how many other homes you’re competing against in the same price range.

In Wellington and the surrounding Palm Beach County market, pricing correctly is especially important because buyers have access to detailed information about recent sales. Homes priced accurately for their condition and location tend to receive stronger offers, while overpriced homes often see fewer showings and lower offers.

There are many factors that determine what a home is really worth, but when it comes down to it, a home is only worth what a buyer is willing to pay and what it will appraise for if the buyer is obtaining financing. To understand how professionals approach this, see how real estate agents evaluate comparable sales. So if your home isn’t selling and you’re only receiving lowball offers or no offers at all, it could be overpriced.

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Losing Time

Countering a lowball offer only takes a few minutes, so what do you have to lose? While agents may discuss potential terms verbally, any accepted changes should ultimately be put in writing and signed by all parties. Oftentimes, the listing agent and buyer’s agent will discuss terms first, and once both sides come to an understanding, the written offer is revised and formally signed.

You need to keep in mind some buyers just want to try submitting a low offer with the hopes of getting a great deal. However, if you counter back, even at full price, the counter may show them there is no chance you’re going to give your home away. It’s also not uncommon for buyers who submit lowball offers to increase their offer to a realistic price. So before you decide to ignore a lowball offer, reconsider taking a few minutes to counter.

Emotions

Are you being irrational? What you consider a lowball offer might not be a lowball offer at all. So it’s best to set your emotions aside and look at the facts before you ignore a lowball offer.

Sure, you may have done costly home improvements to your home over the years that you see value in. However, it doesn’t necessarily mean a buyer will see the same value and is going to pay more because of them.

In fact, some home buyers may deduct money from their offer for the home improvements you made, since they may need to spend money to update or redo them.

While it’s certainly easier said than done, you need to remove emotion when responding to an offer. A top Realtor will be able to help keep everyone calm and see if there is a chance this lowball offer will turn into a strong, realistic offer.

How Should Sellers Respond to a Lowball Offer?

• Don’t take it personally. A low offer is often a negotiating tactic, not a judgment of your home. The buyer may simply be testing the waters to see how firm you are on price.
• Review the entire offer, not just the price. The number on the page is only part of the picture. Look closely at whether the buyer is paying cash or financing, the proposed closing date, the length of the inspection period, any contingencies attached, whether there’s an escalation clause, and the size of the deposit. A slightly lower offer with strong terms can be worth more than a higher offer with weak ones.
• Counter strategically. You don’t have to automatically counter at full price if that doesn’t make sense given the offer and the market. A counter that meets somewhere in the middle, or that trades price for stronger terms, often moves negotiations forward faster than an all or nothing response.
• Know when to walk away. Not every buyer is negotiating in good faith. If a buyer refuses to move at all after multiple rounds, it may be time to move on to the next showing.

For example, imagine a seller listed their Wellington home for $750,000 and received an offer for $680,000. Their first instinct was to reject it outright. After reviewing the buyer’s financing and negotiating through a couple of rounds, they ultimately agreed at $725,000, much closer to their goal than the initial offer suggested.

When Should You Reject a Lowball Offer?

Most lowball offers deserve a response rather than a rejection, but there are situations where declining outright makes sense.

• The buyer is rude or unreasonable during negotiations
• The offer includes impossible or unworkable terms
• The buyer refuses to provide proof of funds or a preapproval letter
• You have multiple offers and stronger options on the table
• The offer is clearly not serious or made in bad faith

Popular Questions About Lowball Offers

Should home sellers ignore lowball offers? No, sellers generally should not ignore lowball offers. Even an offer that seems unreasonable can create an opportunity to negotiate and determine whether the buyer is willing to move closer to an acceptable price.

How to politely decline a lowball offer? If a seller is dead set against countering a lowball offer, they can simply thank the buyer for submitting an offer on their home. However, due to the terms, they are not interested in the offer as written. If the buyer would like to improve their terms and resubmit their offer, the seller will be more than happy to consider it.

What percentage is a lowball offer? What percentage is considered a lowball offer ultimately depends on the market conditions and whether or not the property itself is priced correctly. There is no set percentage that universally defines a lowball offer, but it’s generally considered to be significantly below the asking price or the market value of the property. This percentage usually falls around the 10% to 20% mark.

Can a seller counter a lowball offer? Yes, and in most cases they should. Countering keeps the negotiation alive and gives the seller a chance to test whether the buyer is willing to move closer to an acceptable price.

Should you accept a lowball cash offer? It depends on the terms attached to it. A cash offer removes financing and appraisal risk and often closes faster, so a lower cash offer can sometimes be worth more to a seller than a higher financed offer, especially if speed or certainty matters.

Do lowball offers mean my home is overpriced? Not always, but it’s worth checking. If a home is receiving multiple low offers, especially alongside low showing activity, it may be a sign the list price doesn’t match what buyers believe the home is worth.

Final Thoughts

If you receive what you consider to be a lowball offer on your home, don’t let your first reaction determine your response. Discuss it with your agent and come up with a game plan. Oftentimes sellers discount and ignore lowball offers thinking they’re a complete waste of time. However, that offer you thought was going nowhere may turn into the best offer you’re going to receive.

So before deciding to ignore a lowball offer, come up with a counteroffer. Even a full price counteroffer keeps the buyer engaged, and if they’re serious, they’ll play ball and accept your terms or counter back. The buyer took the time to submit an offer, so they clearly have an interest in your home, don’t discount them. If you’d like a broader look at what causes deals to collapse altogether, see why home sales fall through and how to prevent it.

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About the Author

Top Wellington Realtor, Michelle Gibson, wrote: “Should Home Sellers Ignore Lowball Offers?”

Michelle has been specializing in residential real estate since 2001 throughout Wellington Florida and the surrounding area. Whether you’re looking to buy, sell or rent she will guide you through the entire real estate transaction. If you’re ready to put Michelle’s knowledge and expertise to work for you call or e-mail her today.

Areas of service include Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm Beach, Loxahatchee, Greenacres, and more.