How low to go

In today's overstocked housing market, buyers often feel emboldened to make rock-bottom offers that can sometimes lead to ping-pong-like negotiations.

"I see more lowball offers today because buyers are savvy and know they're in the driver's seat," said Sheri Fine, an agent at the Edina Realty in Minneapolis.

Travis Killoren, for example, offered about $20,000 less than the $299,900 list price on a "good condition" 1974 two-story duplex. He based his offer on comparable sales in the area.

"They had priced it unrealistically," he said. "It was a reasonable offer for the square footage and I would have to replace the siding and windows down the road."

Still "the seller interpreted it as a lowball offer," said Fine, his agent. "But it opened the door to negotiations."

Finally, the two parties agreed on a price -- $287,000. Plus, the seller agreed to replace two furnaces after an independent home inspection.

Killoren knows that his offer was somewhat risky. The seller could have rejected it and not come back with a counter offer, but he wouldn't have been shattered. "There were plenty of other houses to look at," he said.

When there are 10 homes on the market for every active buyer and median home prices are falling, sometimes any offer is a good offer. How do you avoid insulting the seller?

"The offer has to be palatable and show you've done your homework," said Deb Greene, president of the Minneapolis Area Association of Realtors and an agent with Coldwell Banker Burnet in Plymouth. "We make a list of the reasons why we are offering less than the list price."

Fine agrees. "Sometimes an unreasonably lowball offer can make a seller so angry they won't make a counter offer or deal with a buyer."

Most buyers make offers that are less than list price because "everyone is shopping for a bargain and are wary of paying too much," said Mark Bartikoski, an agent with Re/Max in Wayzata.

How low can you go?

"There is no magic number," said Greene. "You have to rely on your Realtor and gather all the facts to help you construct the best offer."

When coming up with that "palatable" number, consider that many sellers are pricing their homes lower from the start to draw people in for showings, Greene said.

"Homes are not just competitively priced, but compellingly priced," she said. "So a buyer recognizes it as a great house at a great price and they need to take action."

If a home has been on the market less than two weeks, you'll pay closer to list price. Longer market times are more likely to bring a lower offer.

In October, sellers in the Twin Cities metro area got 93.1 percent of their original asking price, according to the Minneapolis Area Association of Realtors. Typically, Bartikoski and Fine said, buyers are nabbing homes for 5 to 10 percent less than the list price.

"Today it's more about strategy and creative negotiations," Fine said. And more than ever sellers are willing to negotiate other tangibles such as repairs, closing dates and even closing costs.

"But if you truly want the home," said Greene. "A smart buyer will be reasonable and respectful to the seller."

Lynn Underwood • 612-673-7619

Lynn Underwood • lunderwood@startribune.com