The anatomy of a low-ball offer

Yesterday I was hot, and it had nothing to do with the weather. My broker called to say that another REALTOR® had called her and raised the concern that I was not presenting her buyer’s offer to my clients. That was two insults in one: First, the accusation that I was not presenting an offer, and second, complaining to my broker and not talking to me directly about it.

Not presenting an offer? I would never – absolutely never – fail to present an offer to my client, no matter what that offer was. But what made this worse, and what got me really hot under the collar, was that the agent who was complaining had submitted three offers on one of my listing, and not one of them was complete.

First was an offer in writing, way below asking price, and without an accompanying Loan Status Report. For all of you who are not familiar with the standard purchase contract of the Arizona Association of REALTORS®, the contract specifically states that the Loan Status Report is part of the offer to purchase, regardless of what the status of the financing is, and must be provided with the contract.

The AAR Loan Status Report (“LSR”) with, at a minimum, the Buyer’s Loan Information section completed, describing the current status of the Buyer’s proposed Loan, is attached hereto and is incorporated herein by reference.

I presented the first offer to my sellers and advised them about the missing LSR, however the offer was so low that my clients did not want to counter. As a professional courtesy, I called the buyer’s agent and told her that the offer was rejected and that my clients did not want to counter. And by the way, the seller has no obligation to decline an offer in writing. (Buyer’s agents can request the seller to be present when presenting the offer, and if the seller does not want to do that, that is the seller’s right and must be evidenced in writing.)

Then a couple of days later I got a phone calls from the buyer’s agent proposing new offers verbally, and I told her that I would relay that information to my client, however it would be best to put it in writing.

Then there was silence for a couple of weeks. A few days ago, I got another phone call from the same agent giving me heads up that another offer would be coming shortly.

Lo and behold, the offer showed up in my email fax, and I forwarded it directly to my sellers via email. But again, the purchase offer was missing the LSR as well as the ninth page (ironically the last page of the contract with the buyer’s signature).

Not even 24 hours after receiving this incomplete offer, which, by the way was lower than the earlier verbal proposal, I got the call from my broker telling me that the buyer’s agent was raising the concern that I was not presenting offers.

For a second I felt like unleashing the wrath of a mad Austrian on this REALTOR®, but I decided to let some time pass before giving her a bit of education from a relative “newbie.” In my somewhat short career I have made several low-ball offers for my clients as well, and I’ve learned there are several things to consider.

In order to have a shot at getting an offer accepted at way below asking price, the offer has to be at least complete. Certainly price is a big factor in acceptance of an offer, however there are other important pieces to the equation. The amount and terms of the earnest money, the time-line of closing of escrow, financing and inspection contingencies, all can have a big influence on the decision making process for the seller.

My advice when low-balling is to at least submit a complete offer and to avoid shortcuts. Complete offers will have a better chance to be considered by the sellers.

The rest is negotiation, and that is where you have the opportunity to be creative in finding the combination of price and terms that works for both buyer and seller.

Low-balls are hardly ever fun – at least they could be made professionally….and now I am going to cool off.