A Low ball offer. What is a low ball offer and how should buyers and their agents decide how much to offer? Imagine that you are a buyer, and before you make an offer or discuss price with your buyer’s agent, the listing agent warns your agent not to make a low ball offer. What? Where did that come from? As a buyer, you might be thinking what makes the listing agent (who represents the seller) think he can tell my agent how much I will offer? The reason I want to write about this is because listing agents are regularly warning buyer’s agents that their clients will not entertain low ball offers. Let’s dig into this a little and find out what is going on.
Why The Warning About a Low Ball Offer
If a listing agent has a valid reason to expect that a buyer’s agent may submit a “low ball” offer, it would not be unreasonable to drop a subtle hint to that effect, but the warning is annoying when it comes out of the blue and is communicated to an experienced professional. Why? There are several reasons.
- A buyer is the master of the offer, and that means the buyer and the buyer’s agent decide how much to offer. The seller has no contractual or ethical right to tell the buyer how to draft the offer. Indirectly telling the buyer’s agent is the same thing.
- The buyer’s agent represents the buyer, and the listing agent represents the seller. Each has legal and fiduciary duties to their clients. One should not try to infringe on the other agent’s relationship.
- A buyer has the right to make any offer they want, no matter how much it is, even if the seller thinks it is a “low ball” offer.
- The seller has the right to accept, reject, or counter. This is America, and that’s how it works. Buyers and sellers are free to negotiate the best price and terms.
- Many listing agents do not actually know what a “low ball” offer would be. That makes warning against making a low ball offer especially unreasonable.
What is a Low Ball Offer
I know there are Realtors who will write any offer without regard to fair market value, market conditions, and professional appraisal considerations. I’ve turned a couple of buyers away because they literally wanted me to draft low ball offers on houses until they got one accepted. Their concept of a low ball offer was to find a reasonably priced home and offer 30% below that. I won’t do that. But I also wrote an offer on a house two years ago that was a reasonable offer, but the seller rejected the offer and her agent called it a “low ball” offer. It was not, but the seller and the listing agent had an unreasonable definition of what “low ball” was. That house never sold, and has been on the market for two years now. They have dropped the price several times by huge amounts. I doubt the seller and listing agent would admit that the offer my client made was not a “low ball” offer at the time. I remember that Realtor actually laughing on the phone and calling the offer a “low ball” offer. I had solid proof at the time that the offering price was reasonable with other comparables and appraised values. After two years, the proof has clearly demonstrated that the offer was definitely not a low ball offer.
This is a Low Ball Offer
My point is that what is often called a low ball offer is not a low ball offer at all. On the other hand, there is such as thing as a low ball offer. If the true FMV of a home in this market is $325,000, and a buyer makes an unreasonably low offer of $245,000, that is a low ball offer. But as I’ve written above, the buyer has the right to make any offer he wants. The seller can accept, reject, or counter. What you don’t need is a seller’s agent telling a buyer’s agent what to offer, directly or indirectly. That is inappropriate.
Last Updated on November 30, 2011 by Chuck Marunde