How Much Should I Offer Below Asking Price?

Thinking about making a lowball offer? Before you do, make sure it’s the right move and read our tips for how to make one.

By Emily Southey | 12 minute read

If you’re making an offer on a home, you might be wondering how much you should offer to pay for the property and if it should be below or above the asking price. In a buyer’s market, it’s not uncommon for prospective homebuyers to submit lowball offers in an effort to buy a home for less than the asking price. But how low is too low? This is the question we seek to answer today. While submitting a lowball offer can be an effective homebuying strategy, it can backfire on you if it’s so low that it insults the seller.

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What Is Considered a Lowball Offer?

A lowball offer is a negotiation technique employed by homebuyers with the goal of purchasing a home for less than the asking price. Therefore, a lowball offer is one where the buyer submits an offer on a home for a price significantly less than the asking price. 

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In a buyer’s market, the odds of a homebuyer finding a seller who will accept a lowball offer goes up. But in a seller’s market, a buyer is less likely to have success with this strategy. 

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The values of lowball offers vary as they are unique to the purchase price of a particular home. However, generally speaking, offers below 10% of the listing price are considered lowball offers (for example, a lowball offer on a $500,000 property would be roughly $450,000 or below). 

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When and How to Make a Lowball Offer

Submitting a lowball offer isn’t for everyone. Rather, there are specific circumstances in which they make sense and others in which they don’t. Continue reading to learn more about how and when to make a lowball real estate offer. 

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Determine if it’s a buyer’s market or a seller’s market

Before making a lowball offer, the first thing you should do is research the market. It is crucial to understand if it’s a buyer’s or seller’s market. After all, the success of your lowball offer directly hinges on current market conditions. Wahi’s 

Market Pulse tool can help you see which Greater Toronto Area neighbourhoods are selling for over and under asking. 

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Typically, buyer’s markets offer greater flexibility when it comes to price because inventory is high and demand is low. Therefore, sellers may be more willing to negotiate and accept an offer below asking. In contrast, if it’s a seller’s market, buyers will likely have a harder time purchasing a home below asking, especially if bidding wars are involved. Since inventory is low and demand is high, sellers are likely to get multiple offers and therefore may see no need to counter or accept a lowball offer. Ultimately, unless you have ascertained the seller’s motivations and have reason to believe they favour other factors, such as speed over price, it’s best not to submit a lowball offer in a seller’s market. If you need help determining the current market conditions, consider working with a REALTOR® who has extensive knowledge of the local market and can help you devise a strategy for making an offer. 

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If it’s a buyer’s market

One instance when a homebuyer can get away with making a lowball offer is in a buyer’s market. As mentioned, a buyer’s market typically translates to high inventory and low demand, giving homebuyers the upper hand. In such a market, homebuyers should feel comfortable submitting a lowball offer of roughly 10% below the asking price (anything less, and you risk insulting the seller). Even if the seller doesn’t accept your offer outright, they are likely to submit a counteroffer. 

If it’s fall or winter

The time of year is one factor that can impact your offer strategy. In most places, housing markets tend to cool off in the fall and winter. Therefore, if you hope to purchase a home with a lowball offer, waiting until these off-peak months might increase your chances. Typically, the housing market experiences a surge in spring and summer, with families looking to relocate between the end of one school year and the start of the next. From late August through to March, when school is in session, the holiday season is in full swing, and the weather has taken a turn, the market cools off. While there might be less inventory during these months, you might be able to purchase a home for less.  

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If the asking price is too high

Another scenario when making a lowball offer might be worthwhile is if the asking price of the home is too high. Sometimes sellers will list their homes for more than they are worth. Understandably, sellers want to earn as much as they can for their homes, but sometimes these asking prices are unrealistically high. In such a scenario, the buyer shouldn’t hesitate to submit a lowball offer. Work with a REALTOR® to determine the market value of the home, comparing it to similar, recently sold homes in the neighbourhood. Of course, always be respectful when submitting a lowball offer, especially on a home that’s priced too high. Although you might have the evidence to back up the fact that the home is overpriced, you don’t want to risk alienating the seller by coming off as rude or condescending. Instead, let the evidence speak for itself. For example, ask the seller’s agent for the comps they used to price the home. If the property in question differs from the comps (for example, the comps have updated kitchens and appliances or swimming pools in the backyard but the listed home does not), note this when you submit your lowball offer.  

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If the home needs to be updated

Lowball offers may also be suited to homes in need of extensive repairs, otherwise known as fixer-uppers. Therefore, when deciding whether to make a lowball offer, it’s important to consider the repairs or upgrades that the home needs. Stepping foot in the home might make clear that the necessary repairs are extensive, but for most properties, a home inspection is what will reveal the extent of the repairs. If the home inspection report lists a wide range of repairs, many of which are significant and will be costly to repair, homebuyers can use this as leverage to lower the asking price. Another option instead of reducing the purchase price is to request that the seller handle the repairs prior to the date of possession or that they provide the buyer with “credit in lieu of repairs.” No matter how you choose to go about it, a home in need of serious repair is one scenario in which a lowball offer might be acceptable. 

If the home has been on the market for a while

One final instance in which submitting a lowball offer could be an effective strategy is if the home has been lingering on the market. Specifically, if a property has been on the market for over three months, the seller may be more willing to negotiate, in which case, submitting a lowball offer could be a great place to start. 

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Tips for Making Lowball Offers in Real Estate

Increase the odds of your lowball offer being accepted by following the tips and tricks below.

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1. Research the market value of the home

Our first tip for making lowball offers in real estate is to research the market value of the home. When trying to determine whether to make a lowball offer, you should rely on the market conditions over the home’s listing price. If you’re buying a home without a REALTOR®, you’ll have to research market conditions on your own. But if you’re working with a REALTOR®, they have likely already conducted a comparative market analysis and can advise you on what comparable homes in the area recently sold for. If the comps don’t align with the listing price, submitting a lowball offer might be worthwhile.

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2. Never offer more than 25% below the asking price

Offending the seller is the worst thing you can do as a homebuyer. One of the quickest ways of offending a seller is with an offer that is too low. Although there are circumstances in which lowball offers are acceptable, there is still a limit as to how low these offers should be. On average, lowball offers fall between 10% and 15% below asking, and they should never exceed 25% below asking. Even 25% below asking can be insulting depending on the home. While it may be appropriate for a fixer-upper or a home that’s been on the market for several months, an asking price this low might insult the seller in a typical buyer’s market. To decide how much below asking to offer, carefully study the listing price and compare it to other homes in the area using the comps research from tip #1. If the home is already priced low, then you should approach a lowball offer with caution. But if it’s priced far too high, you might have more leeway when it comes to submitting a low offer.

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3. Find out the number of days the home has been on the market

Any time you’re considering making a lowball offer, find out how many days the property has been on the market. The longer it’s been sitting on the market, the more likely it is that the seller will accept a lowball offer or at least be willing to counter it. If the home has been on the market for three months or more, chances are the seller is getting desperate. This type of situation is one in which submitting a lowball offer might be effective.