Hot Areas to Invest in Vancouver September 10, 2020 Christian Dy, Latitude West Financial…
Lowballing Vancouver Real Estate
Updated May 7, 2019
Prices are falling and it’s a buyer’s market for Vancouver real estate these days.
What is a Lowball?
A Low Ball offer is one that is significantly less than the asking price (but maybe not the market value) of a property.
Why are Canadians afraid to submit Low Ball offers?
Negotiating the price for everyday items is not something is commonly done in Canada.
In this country, the only things that people haggle or negotiate on are cars (most people only own 10-12 cars in their lifetime and not all are new) and homes (Canadians buy 4-5.5 properties in their lives)
In Canada, aggressive negotiating tactics outside of the business world are often seen by those who do not negotiate professionally as rude, disrespectful, and unpleasant. Those on the receiving end of aggressive offers and negotiating tactics often have negative a emotional response.
In a soft market, a negative emotional response may stand in between a seller and getting a property sold.
For the reasons above, many buyers in Canada are afraid to submit low ball offers for fear of insulting the sellers. But low ball offers serve a purpose.
Why are Low Ball offers good?
- All offers in real estate are an opportunity. Lowball offers are an opportunity for sellers to get an accepted offer in a market where these are scarce.
- Can result in the seller getting top dollar? Yes. A low ball offer received could create the opportunity for a multiple offer situation for a seller. As soon as more than one buyer is competing for a property, the negotiating power of a seller increases exponentially. The sellers agent cannot disclose to the buyers agent how much the offers are for, they can only disclose there is another offer. A good Sellers agent will encourage low ball offers to use as leverage on other more motivated buyers to get the seller top dollar.
- Allows a seller important market feedback about the price they have listed their property at. Often a seller may not have received good pricing advice or the market analysis was not done correctly on the property and the seller may be unaware that they are dramatically overpriced. If a seller receives no offers and then a few weeks or months after listing the property, receives a low ball offer, this is a very clear signal to the seller their property is over priced or has some other major issue the seller was not aware of or did not take seriously.
- Allows the buyer to be 100% certain they have gotten the best deal possible. This reduces buyers remorse as well as the chance that a buyer walks away from the deal if the market falls between the time there is an accepted offer and the completion date.
What to Avoid when Low balling.
- Offering what you will pay. Your Low Ball offer should initially be below the amount you actually want to pay. The Low balling Buyer wants to create the impression in the Sellers mind that the Seller has a good deal because they have got the Buyer to raise their offer price.
- Walking away from a sellers counter offer. A Low ball offer allows a Buyer to assess the Sellers motivation. Some Sellers may be desperate, but try to create the impression they are not by responding to a Low ball with a high counter offer. If the Buyer doesn’t respond to the Sellers counter that’s the end of it. You can’t get anywhere in a negotiation if you’re not negotiating. Persistence pays when Lowballing.
- Time is your friend. In my experience, time is the best solvent for stubbornness. A seller may reject a low ball offer out of hand and then think twice about it after only to become far more flexible the next time the buyer submits another low offer.
How to make a Low ball Offer work in Vancouver.
Give the Seller something. If you are going to come in low on price, make sure to add a sweetener like a quick completion date or a short subject removal date. The seller may look more seriously at your offer if you add these sweeteners.
Make a good case for the low price. If you’ve done your homework and you have some documentation to support your offer you may find the seller comes around. A seller may not have known about a recent transaction that has impacted the market, if you let them know, they may go for your offer.
With a Lowball offer it’s like anything else in life, if you don’t try, you’ll never know!
How to deal with a Low ball Offer if you are a Seller.
Looking for advice on buying a property in Vancouver? Check out my First Time Home Buyer Videos!
If you have any questions feel free to drop me a line!