What Is a Low Offer on a Property & How to Deal With It?
Looking at what to do if a buyer makes an offer on a house that is lower than expected, what a low offer on a property means, and how we can help you sell your home fast.
Alexandra Ventress ★ Digital Content Writer
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Receiving a low ball offer on house is never a pleasant feeling, especially when you know your property is worth more. It can take what is supposed to be an exciting time and turn it stressful. Whilst it may not happen to you, knowing how to respond to a low offer on a property is a skill worth learning.
In this blog post, we are going to be looking at what a low offer on a property is, how to deal with them, and when to reject an offer.
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What Is a Low Offer on a Property
A low offer on a property, also referred to as a cheeky offer, is an offer that is anywhere between 10-25% below the asking price of a property. As a rule of thumb, sellers will usually put their property on the market for slightly more than it is worth in order to get a head start on these offers.
A low ball offer on a house is anything 25% or less than asking price. More often than not, a seller will feel insulted by a low ball offer on their home, which can make negotiation difficult.
How to deal with low offers on a house?
When it comes to receiving any offer on a property, you will typically have three options, you can either:
Depending on how far below your asking price the offer you receive is, you may accept a low house offer. A common tactic used by buyers is to make an offer that is below the asking price in order to make room for negotiations. However, some sellers will accept this initial offer because they are looking for a quick move or have already purchased their next property.
Some sellers can decide to negotiate if they get a lower offer. As a rule of thumb, it is usually a good idea to provide a counteroffer that is higher than the buyer’s offer, but is slightly below the full asking price in order to find common ground. If you are unsure what could be classed as a realistic offer, it is always best to discuss it with your estate agent.
If you feel as though the offer that you have received is too low, then you are within your rights to reject it. You may wish to follow the rejection with a counteroffer rather than a flat-out rejection, however, the choice is yours. In some cases, the buyer may come back with a counteroffer instead.
Is a low offer on my house bad?
No its not. A low offer on home is not necessarily a bad thing, as it opens the line of communication for you to negotiate for a better deal. At the end of the day, a low offer is better than no offers.
If you have received a low offer, then you can either decide to cut your losses and accept, reject it if you feel as though it is too low, or you can negotiate for a better deal. As we have already mentioned, buyers will often put in an offer that is lower than asking price on purpose, as it leaves wiggle room for negotiation.
Should i negotiate a low ball offer made on my house
If you have received a low ball offer on a house, then by all means you should negotiate. If you believe that your property is worth a higher offer, then you are under no obligation to accept a lower offer, but it may be within your best interests to negotiate on price. The majority of estate agents will also encourage sellers to at least talk to the prospective buyers about price negotiations, and offer a counteroffer that is closer to their asking price.
You are able to reject the offer if you feel as though the offer on a property is too low, however, it is always worth at least entering negotiations, as they are not legally binding and you are under no legal obligation to accept.
If a seller makes an offer, do I have to accept it?
Any offer that is made is not legally binding until the exchange of contracts. You are under no legal obligation to accept an offer unless you have exchanged contracts.
You do not need to accept or reject any offers that you receive straightaway. You should take a day or two to consider an offer, weighing up the pros and cons. You may wish to check the local sold prices in the area online in order to get an idea of what similar properties are selling for.
Before you settle on a decision regarding accepting or rejecting an offer, you should consider the buyer’s position, their timescale for moving, as well as your own position.
Why is my house undervalued?
If you have an undervalued house, there could be a number of reasons for this occurring. It may have been a case that the asking price was much higher than equivalent properties in the area, or the condition of the property may not have been up to the correct standards. There may have even been maintenance issues that were not picked up until the mortgage valuation survey.
Some of the most common reasons why a property may be devalued include:
- The seller has set a price that is far too ambitious
- The lender is acting cautiously over fear of overinflated prices
- Surveyor has uncovered issues with the property
- The property was outside of the surveyor’s usual area of expertise
As the seller, you may never find out the full reason why your property has been undervalued. A mortgage valuation is not for the benefit of the seller, it is to ensure that the property will be suitable security for the mortgage lender.
What can I do?
Thankfully, if you have an undervalued house, there are steps you can take to rectify this. If you still wish to sell, below are some avenues you may wish to explore:
- Consider lowering the asking price.
- Spend money to correct any issues that may have led to devaluing.
- Wait for property trends to change. You may risk losing an interested buyer, but if you wait for prices to rise you may be able to recoup some losses.
- Find a different buyer with a new lender
When should I reject an offer on a property?
There are many reasons why you may choose to reject a low offer on house, such as it is a conditional offer or simply an unsatisfactory price. Below we take a look at some of the reasons you may have for deciding to reject an offer on your home:
- Little flexibility: One such reason you may have for rejecting an offer is that the buyer has shown little to no flexibility in negotiations and is unable to address reasonable conditions from the seller.
- Unsatisfactory terms: Should the proposed date for exchange and completion, repairs necessary for the property, or contingencies not align with your buying and selling plan, then you may wish to reject the offer.
- Untrustworthy buyer: If the buyer has failed to provide the correct documents when asked to prove their financial capability or credibility, then you may wish to reject their offer.
- Lowball price: Should the buyer have lowballed you with their offer and it is too low for the property’s value or your expectations, then you may reject it.
- Financial instability: If there are any concerns raised about the buyer’s creditworthiness or their mortgage preapproval status, then you may wish to reject to save yourself hassle and disappointment further down the line.
- Conditional: If a buyer submits an offer that is dependent on the sale of the buyer’s current property, this has the potential to cause delays and uncertainty further along in the sales process.
When to reject an offer on a home
Knowing when to reject an offer on your home is an important part of the house selling process. However, it is not as easy of a decision as it may originally seem. Below we take a look at some of the factors that you should consider when it comes to rejecting an offer on your property;
One of the first things you will need to consider before rejecting an offer on a property is whether it reflects a fair price on your property. It is always wise to refer back to your house valuation to determine whether or not this is the case.
You should talk to your estate agent about any offers you receive, about whether they think they are a fair offer, or whether there is room to get a higher price.
You should also consider the buyer’s situation before accepting or rejecting an offer. Be sure to find out if their timeline matches up with yours. Are they are part of a chain? Have they arranged their mortgage agreement in principle?
Carefully consider all of these factors before rushing to make a decision.
You should also consider not only your buyer’s circumstances but your own. Are you looking for a quick sale or can you afford to wait a while on the market? Are you looking for a buyer who will look after your home the way you have?
You will need to understand exactly what you are looking for and how the offer you have received lines up with this.
Carefully consider all of these factors before rushing to make a decision.
Another aspect you should look into considering is the amount of time you have spent on the market. If you have only just put your property onto the open market, then you may want to think about waiting for a better offer.
The offer you receive for your house price will undoubtedly take a lot of consideration, however, you should also think about the terms and conditions that come with it.
You should also look into the market trends currently occurring in the open market. If it is currently a buyer’s market, then you may want to consider any offers you get carefully. However, if it is a seller’s market, then you will have a little more leeway and can afford to wait around.
Sell to us
Whether you are looking to buy or sell a property, we are here to help! Here at The Property Sourcing Company, we firmly believe that selling a house should be three things; fast, effortless, and free. We keep this at the heart of what we do, by providing you with a tailored service to suit your needs, at no extra cost to you.
We will work alongside you every step of the house-selling process, covering everything, so you won’t have to. The days of expensive solicitor fees and legal work are over, and our team of property experts will continue to be there even after the process is complete.
We will market your property on popular property portals such as Rightmove and Zoopla, organise viewings, cover legal fees, and negotiate better deals, all for free!
So if you are looking to buy or sell a property, get in touch today and fill in one of our free, no-obligation forms!