Lowball
What Is Lowballing?
A lowball offer is a shoptalk term for an offer that is essentially below the seller's asking price, or a quote that is purposely lower than the price the seller plans to charge. To lowball likewise means to give a false estimate for something intentionally. Normally, the potential buyer making the lowball offer isn't really anticipating that the seller should acknowledge; all things considered, it tends to be utilized as a method for starting or push forward negotiations.
Understanding Lowball Offers
Lowball offers are most regularly utilized as a strategy to put pressure on a seller who could have to quickly liquidate assets. On the other hand, while arranging a price, prospective buyers could start talks with a lowball offer to measure the seller's expectations of the resource's fair value. This can give the buyer an advantage as the talks proceed.
Lowball offers are likewise utilized as an intentionally misleading sales strategy that includes initially providing a low cost estimate and afterward claiming the quote was a slip-up and that the real price is higher. A few customers might be put off by this strategy, viewing it as something of a sleight of hand, yet others might acknowledge the higher price since they have previously chosen to make the purchase.
For instance, lowballing can be an effective strategy while attempting to buy a home, especially in the event that it's in a buyer's market when there are a ton of properties around. For instance, a potential buyer could deliberately make an offer 15% below the asking price as a method for starting dealings and end up with a price that is eventually 5% below the asking price.
Lowballing an offer works best when the buyer has an upper hand, giving them room to arrange. On the off chance that the seller as of now enjoys the benefit, for example, a tight housing market with not many homes accessible, then, at that point, a buyer attempting to lowball the price is probably not going to obtain great outcomes.
Instance of Lowballing
In the LIBOR scandal during the financial crisis in 2008, banks in the U.K., including Barclays, Lloyds Banking Group, and Royal Bank of Scotland, kept LIBOR rates misleadingly low, by "lowballing" their LIBOR entries.
This false estimate not just assisted them with creating a gain on their trading books yet caused them to appear to be more trustworthy than they really were. This lowballing purportedly contributed to the disappointment of a number of American banks.
Features
- To lowball likewise means to toss out a deliberately lower than reasonable number to perceive how the seller will respond.
- A lowball offer alludes to an offer that is undeniably not exactly the seller's asking price or is intentionally too low, for the purpose of starting talks.
- Lowball offers are commonly utilized as an incentive to get a seller to lower the price on something, especially in the event that the seller is needing quick funding.
