How often do lowball offers actually work?

I have roughly 100k in savings that I’d like to purchase a house with. It’s hard to find anything decent sub 100k in my area but i have seen a few interesting properties for ~150k.

I know ppl on this board will always tell you that these properties are worth substantially less than their asking price, but in reality how often will people actually sell for substatially less than the advertised price? Am I wasting my time putting offers in on there properties if I’m offering 33% under asking price? Would the fact that I’m offering cash hold any sway?

We went to see a house guiding at €675k yesterday. We were told by the EA that the offer of €470k is under serious consideration and likely to be accepted.

it only takes one to work to make it worthwhile.
I have put in a few offers in the 25-40% under asking region and none have been entertained…yet…

I don’t understand the estate agent / vendor thinking in these situations. If they are considering an offer of €470k why have the asking at €675k? Surely the sensible thing to do is to drop the asking to €490k and generate a more interest?

The thinking is if you drop the asking to 470 people will only start offering you 350…

Ok but at least drop it to somewhere in between, say 550.
Regarding the original question, surely its all about price discovery. You’ve got to start off 20-30% below and guage the reaction. If its somebody waiting on their inheritance it could yield a much different response from somebody in a chain. A cottage by the sea that the owner isnt going to use themselves

Low ball offers don’t often work in the strict sense of being accepted straight-up, but their power is greatly underestimated. They are in important tool in your negotiation kit. Even when not accepted, the lowball can have a profound psychological impact on the vendor (remember that the EA is duty-bound to communicate all offers to the vendor) and may influence the pace an magnitude of reductions in the asking price. However, the lowball always needs to be balanced against considerations such as your reputation with a particular EA if it is likely you will be dealing with them many times.

The lowball is powerful because of a well-observed decision-biasing phenomenon known as the anchoring effect, sometimes also called anchoring and adjustment. ANYBODY who is considering buying a house or who made a mistake during the property madness of recent years - or even any pundit on the Pin who enjoys guesstimating values in today’s market - would do well to inform themselves about anchoring; Google or Wiki the term and enjoy the ride.

This.

There’s also a lot of academic discussion on whether it’s better to make the first offer - obviously in a property sale it’s different as the value is advertised but it may often be worth getting the vendor to make a more realistic asking price and then take it from there.

“Getting to Yes” is a classic book on this

amazon.co.uk/Getting-Yes-Neg … 1844131467
en.wikipedia.org/wiki/Getting_to_YES

this is also worth a look

en.wikipedia.org/wiki/Best_alter … _agreement

If i see a property that takes my fancy, but i consider the asking price fairytale stuff, i simply email the auctioneer and ask them if they have any current offers on the property, you usually get a much different price to what they are asking on myhome/daft. It gives you a good insight into if a property is worth bothering with.

Its worth a go, but at the bottom there may be less room for cuts. However, all it takes is a motivated seller who needs to sell and is willing to sell for whatever they can get. The problem is with the moratorium on repossession, those sellers (which should make up a large part of the market) are in delay-and-pray mode and are not actively on the market. So who knows… you may be waiting a while, but keep at it, you are in an envious position.

No, we’ve had this one out several times on the Pin already. If the vendor tells the agent in advance that they won’t entertain offers below X, the agent does not have to bring them offers below X. An agent can also help to manufacture this sort of agreement – “Ah sure I presume you don’t want me wasting your time with silly offers below X, do you?”

And that’s only the agents who believe in their duty :smiley:

If the lowball offers work too often, they they are not lowball enough !

+1

I have a 0% success rate. Offered 30% of ask (fully costed and EA given a detailed breakdown of how I reached my figures).

Price keeps dropping so my offer is now 60% of current ask…we may meet in the middle around 2013!

They may be duty bound to but they enough of them still seem to be making the vendor’s mind up for them with out bothering to consult.

boards.ie/vbulletin/showthre … 2056352731

Very interesting story there from boards.ie. Thanks iguana.

One of the tasks of a potential housebuyer is to **PUT A VALUE on a property. I know this has come up many times before, but how do we as ordinary Joe/Josephine Soaps try to value **a property? Personally I consider the following:

  1. The asking price of similiar houses in the estate
  2. Similiar type houses in the area
  3. Similiar type houses in similiar type areas.
  4. Costs involved in decorating/upgrading the house. Things cost money!!
  5. I note the downward trend in prices and commentators views! :smiley:
  6. I have a think about how much of my hard earned money I would feel comfortable parting with in exchange for a house!
  7. Bearing all of the above in mind I adjust the asking price downwards (at least 10%++++)

Am I on the right track here? What am I not doing but could be doing? (I do realise the cheapest house prices come to those who wait. However life intervenes and life is short so perhaps there are other costs involved).

went to see 2 gaffs. One the EA said 20% below the asking would do it. The other 15% below the asking. Gaffs were 450/550 asking. They also kept using the strange phrase “we are encouraging offers”. Yes that is your job no?

…and here are your first 3 mistakes:

  1. The asking price of similiar houses in the estate
  2. Similiar type houses in the area
  3. Similiar type houses in similiar type areas.

Relative priving of other properties may help re-inforce a purchase decision but that is were usefulness fallls away.

These 3 can be use at any point in the property cycle but are not use when determin value - which should be a cost of money, rent v. buy type debate.