The lowest offer can cost you the property

• Low-ball offers on new listings often strengthen the seller's negotiating position rather than secure a bargain.
• Buyer psychology and timing are just as important as the price you offer.
• A credible, well-structured offer frequently beats the lowest offer in a competitive market.

A recent sale reveals why chasing the biggest discount can backfire and how smart buyers negotiate to win.

Sometimes paying less costs you more‍

‍

One of the oldest sayings in property investment is, "You make your money when you buy." While that remains true, many buyers mistakenly believe the best way to achieve it is by submitting the lowest possible offer.

‍

In reality, that strategy can often produce the exact opposite result. According to Simon Clark of wesellhouses.co.za, a recent property transaction provided an interesting insight into buyer psychology, negotiation strategy and how sellers think when evaluating offers.

The property had been priced deliberately to sell. Rather than inflating the asking price and waiting months for activity, the seller adopted a strategy increasingly favoured by experienced estate agents, price realistically, generate immediate interest, schedule multiple viewings and allow buyer competition to determine the final selling price.

Even before the first scheduled viewing, two written offers had already been received. On the surface, that sounds like an excellent outcome.

The reality was very different. Both offers came in well below the asking price, with one also being subject to a property inspection. Instead of persuading the seller to accept an early deal, the offers simply confirmed that genuine buyer demand already existed. Rather than removing competition, they created it.

Why the strategy was doomed‍

Submitting a significantly discounted offer on a newly listed property rarely eliminates competition, it usually increases it. The moment a seller receives an offer, something important changes psychologically. The uncertainty disappears.

The seller no longer wonders whether buyers exist. They now know there is genuine market interest. At the same time, other prospective buyers who hear that offers have already been received often experience the fear of missing out (FOMO). Buyers who may have delayed making a decision suddenly act faster and frequently submit stronger offers.

Ironically, the buyer attempting to secure the biggest bargain often becomes the catalyst for a competitive bidding environment. Market data supports this.

Lightstone statistics show that in many regions, including the Eastern Cape, properties typically sell for only around 6% below the asking price. Against that backdrop, expecting a seller to accept an offer 15% or 20% below asking on a freshly listed, correctly priced property is unlikely to succeed.

Sellers don't compare offers against their asking price. They compare them against what they believe the market is prepared to pay.

Three reasons buyers make low offers‍

Not every low offer comes from the same motivation. Understanding why buyers do it helps explain why some strategies work while others fail.

1. They're hunting for a bargain
 Many buyers believe there is always someone willing to sell at a dramatic discount. Occasionally that happens.

However, it usually occurs when a property has been sitting on the market for months, is overpriced, or the seller is under financial pressure. On a new listing attracting immediate attention, it is generally wishful thinking.

2. The property has been on the market too long
 A completely different dynamic exists when a property has remained unsold for an extended period. Buyers often conclude that the asking price is unrealistic or that the seller has become frustrated.

In those circumstances, submitting a discounted offer may be a sensible negotiating strategy. Whether it succeeds depends almost entirely on the seller's motivation and urgency to conclude a sale.

3. It's all the buyer can afford
 Sometimes a low offer is not tactical at all. The buyer genuinely loves the property but simply cannot stretch their finances any further.

In these situations, the objective should not be making the lowest offer possible. Instead, buyers should focus on presenting the strongest overall package, supported by secure finance, fewer conditions and a clear explanation of their position. A well-presented offer often carries far more weight than price alone.

The danger of insulting the seller‍

Many buyers assume there is no downside to submitting an unrealistically low offer. "If they don't like it," the thinking goes, "they'll simply counter."

Unfortunately, negotiations don't always work that way. Property transactions involve people, and people make emotional decisions. When an offer is perceived as unrealistic or disrespectful, some sellers don't negotiate at all. They simply reject it.

That is exactly what happened in this recent transaction. Rather than making a counter-offer, the seller dismissed the offer outright. The buyer removed themselves from the negotiation before the first proper viewing had even taken place.

Had they submitted a more credible offer, they may well have remained in contention.

Understanding the psychology‍

Perhaps the most interesting lesson from this transaction is that the buyer's own emotions created the problem. The buyer feared losing the property to someone else.

To avoid competition, they rushed to submit an early offer.

But because the offer was significantly below market expectations, it actually strengthened the seller's confidence and encouraged other buyers to act.

The very outcome they hoped to avoid became more likely. Successful property negotiations are rarely won through emotion. They are won through understanding how the other party thinks.

A better approach‍

If you're serious about securing a newly listed property, avoid treating the negotiation like a game of who can make the lowest opening offer. Instead: 

• View the property thoroughly before making an offer.
• Research comparable sales to understand true market value.
• Assess whether the asking price is already realistic.
• Submit an offer the seller is likely to view as credible.
• Strengthen your position with pre-approved finance, fewer suspensive conditions and flexibility where possible.

Remember, sellers don't always accept the highest offer. Very often, they accept the offer that provides the greatest certainty of concluding the transaction.

Winning the property is the real objective‍

The purpose of negotiation isn't simply to pay the lowest possible price. It's to secure the property at fair market value while giving yourself the greatest chance of success.

Sometimes paying an extra few percentage points is considerably cheaper than losing the property altogether and spending months searching for another suitable home or investment.

As Simon Clark's recent experience demonstrates, buyers who focus solely on price often overlook the most important aspect of any negotiation, the psychology of the seller. In today's market, the strongest offer isn't always the lowest one. It's the offer the seller is most confident accepting.

‍