Low Balling Offers on Houses

You Better Be Able To Justify Low Balling Offers on Houses Before Making One

Where to even start with a topic like lowball offers?

Last night (a Sunday), around 10:30, I received an unexpected offer on one of my listings.

The house is a 3 bedroom, 3 washroom backsplit. It has a wide 110 by 86 foot lot. It’s not a corner lot but sits on a gradual bend in the road.

It has a pool, separate side entrance with an inlaw suite in the basement. The kitchen is updated with granite countertops, stainless steel appliances and a kitchen island with a breakfast bar.

It’s a nicely kept house in perfectly good condition. You could just move in without having to do anything, really.

The backyard is privately fenced with horizontal fence boards giving it a modern landscaped feel. There is a nice big tree adding to the privacy and it faces west so it is nice and sunny almost the entire day.

The roof had new shingles put on in 2022, so no need to worry about a roof for a long time.

When I meet with owners to discuss the price range of their home, I always look at the following:

• What have similar homes sold for over the past year
• How many days, on average, similar homes took to sell
• What the average property taxes were
• What the condition of the house is compared to the sold properties

Property taxes usually translate well in telling me I’m using good comparable homes, and the average days to sell is a good gauge once the property is on the market as to whether or not we have the right price.

The most important part is what the price range is of similar homes in similar condition. Comparing apples to oranges is no bueno, but so is comparing crab apples to honey crisps

My analysis, which consists of taking all of the data into consideration along with my experience and intuition, I came to the conclusion the market value of the house was $1,185,000 to a maximum of $1,250,000.

The owners did ask about setting a low listing price of $1,099,000 to attract more buyers. I told them that I don’t believe this was the market for that tactic.

We decided that a fair market listing price would be $1,198,000.

Now, back to the lowball offer. The offer came in at $1,050,000.

Yes, $148,000 less than the asking price.

I didn’t know the offer came in. It was 10:30 on a Sunday. I was watching Parasite.

There was no phone call to discuss an offer. Not even a text to say “Hey, I’m submitting an offer.”

I always call an agent Before I submit an offer on a home. I ask about what closing date the sellers are looking for, whether or not they’ve had any other offers previously, and if so, why it didn’t go together, and price expectations even if there is no hold back on offers (an offer date).

The reason I ask about price expectation is to find out what the sellers want to be sure it’s even worthwhile to put the offer together. Sometimes, even if the house has been on the market for a couple of weeks.

Plus, if through my research I find that the house is overpriced, I want to know if the agent feels the same and would be open to looking at an offer that is significantly lower than the asking price.

It has happened before.

Anyway, this agent, who is actually the broker of record, which is scary to think she’s teaching this sort of practice to her agents, simply sent the offer unannounced.

Legally, I have to present all offers to the sellers even though I know they’ll say no.

I called the sellers and in an uplifting tone of voice told them they got an offer. Then in a monotone voice, told them it was crap.

As expected, when I told them the price, they were pissed. I told them I wouldn’t have bothered you with this crap if I didn’t have to. The sellers have to decide to reject, I can’t do that for them.

I gave the sellers their options which were to simply let it expire at noon without a response, or to send them a counter offer with their price expectations, which would be an effort in futility being this far apart in price, or to send the buyers Form 109.

Form 109 is an offer acknowledgement form. It proves the offer was presented and optionally allows the seller to say “bite me, asshole. You’ve insulted me with your price.” I always tone it down and just say the terms were unacceptable.

In this case, the sellers are experienced and instructed me to just let the offer expire without telling the buyer and agent anything.

Fast forward to 2:30 Monday afternoon, 2 and a half hours after her buyer’s offer expired, the agent called me to ask about the offer.

“It’s dead” was my reply.

That seemed to spark a fireworks display and she decided to go up one side of me and down the other. She was arguing how it’s a buyers market, and the sellers would be smart to take this offer because all other offers will be lower.

“A buyer’s market?” I questioned her. “So there are more houses on the market than there are buyers?”

I also asked her for the contact info of her fortune teller who could predict what the future offers would be like.

She didn’t like those questions and switched tactics telling me that in her 9 years in the business, this is the most favourable market she’s seen for buyers.

“Too bad you weren’t around in 2008, like I was. Then you would have seen a better market for buyers” I told her.

That put her in her place. She knew she wasn’t dealing with an agent that didn’t know what they were talking about.

She came up with another story about her client not even wanting a pool to justify the price. I simply asked why she would be showing a house with a pool to a buyer that wasn’t interested in pools.

“Because there isn’t much on the market to show her.” She told me.

“But you said it’s a buyer’s market.” I reminded her.

She was done and she knew it. 

She tried a couple of other bullshit lines like winter will slow the market and we don’t know where interest rates will go in October.

Now I went the offensive and pointed out a comparable house that had single pane windows, no pool or landscaping, a lot that was riddled with easements and boundary restrictions that sold the day before for $1,100,000, another that was bigger than my listing, but dated listed for $1,230,000, then rattled off 3 inferior homes that she could buy for the insulting price she offered for my clients home.

West Rouge, where I live, and Centennial are the two areas I concentrate on and know best and there’s no way this broker of record from Thornhill could even try to argue with me.

In the end, she tucked her tail between her legs and gave me the defeated line of “well, if the sellers change their mind, let me know and I’ll bring the offer back.”

There’s a better chance of me reading War and Peace in a day than that happening.