What Is a Lowball Offer on a House?

When buying or selling a home, an offer is a formal proposal from a prospective buyer to a seller. It outlines the price the buyer is willing to pay, along with various terms and conditions that govern the potential transaction. This legally binding document, once accepted, forms the basis of a sales contract. These terms can include financing details, desired closing dates, and any contingencies that must be met for the sale to proceed.

Understanding a Lowball Offer

A lowball offer in real estate refers to a bid significantly below the seller’s asking price or the property’s estimated market value. This type of offer often includes terms highly favorable to the buyer, making it less attractive to the seller. While no universal percentage defines a lowball offer, it generally implies a substantial deviation, perhaps 10% to 20% or more, from the listing price or comparable sales data.

Beyond the reduced price, a lowball offer often includes extensive contingencies. These are conditions that must be satisfied for the contract to be binding. Common contingencies include a home inspection, an appraisal contingency, a financing contingency, or a home sale contingency. An appraisal contingency allows the buyer to withdraw if the home’s appraised value is less than the offer price, and a financing contingency protects the buyer if they cannot secure a mortgage. While these contingencies are standard, an offer with numerous or unusually strict conditions can be less appealing to a seller.

Overall terms, such as a prolonged closing period or requests for the seller to cover an unusually high percentage of closing costs, can further categorize an offer as lowball. Closing costs typically range from 2% to 5% of the loan amount, covering items like loan origination fees, title insurance, and appraisal fees. Substantial seller concessions on these costs, in addition to a low price, can make an offer particularly unattractive. The determination of a “lowball” offer is subjective, depending on current market dynamics and the specific property’s characteristics.

Situations Leading to Lowball Offers

Several objective factors can create an environment where a lowball offer is more likely to be made or considered by a seller. In a buyer’s market, where the supply of homes for sale exceeds the demand, purchasers have more negotiating leverage. This imbalance can lead to properties staying on the market longer, increasing a seller’s motivation to accept a lower bid. As of June 2025, the median days on the market in the U.S. was 40 days, indicating a potentially slower market in some areas.

The condition of the property is another significant factor. If a home requires substantial repairs, renovations, or deferred maintenance, a buyer might submit a lower offer to account for these anticipated expenses. A professional home inspection, often a standard contingency, reveals such issues, providing a factual basis for a reduced price. Issues with major systems like HVAC, plumbing, or roofing can necessitate tens of thousands of dollars in repairs, directly impacting a buyer’s perceived value.

A property listed for an extended duration without acceptable offers can become a target for lowball bids. Sellers might be more open to a lower price, as prolonged market time can signal overpricing or lack of buyer interest. While the average time to sell a house in the U.S. ranges from 47 to 62 days from listing to closing, a property significantly exceeding this timeframe might be ripe for a lower offer.

Seller motivation plays a role. Situations like job relocation, financial urgency, or an inherited property can compel a seller to prioritize a quick sale over achieving the highest price. Unique property challenges, such as an unusual layout or difficult access, can reduce the pool of potential buyers, making a seller more receptive to a low offer.

Typical Seller Responses

Upon receiving an offer significantly below their expectations, sellers have several typical responses. One common reaction is an outright rejection. This occurs when the seller views the price or terms as completely unacceptable and sees no basis for further discussion. The seller’s agent will formally communicate the rejection to the buyer’s agent.

Alternatively, a seller might ignore the offer entirely. This informal rejection signals to the buyer that the offer is not worth a direct response or negotiation. While less formal than an outright rejection, it serves the same purpose of ending the negotiation.

A more common response to a low offer is a counter-offer. The seller proposes new terms, which might include a higher price than the lowball offer or a modification of contingencies. This indicates a willingness to negotiate, inviting the buyer to revise their proposal. The counter-offer process can involve multiple rounds of negotiation until an agreement is reached or negotiations cease.

Although rare, a lowball offer can be accepted under specific circumstances. This typically occurs when the seller is highly motivated to sell quickly, perhaps due to financial pressures, a strict relocation timeline, or significant undisclosed property issues. In these instances, the benefit of a swift transaction outweighs the desire for a higher sale price.