Seth Godin had a post about the damage that can be done by asking. Real estate is a slightly different situation where people don’t get a chance to connect usually and it is a “cold” request. Seller’s can take low offers personally which I have seen many times. Low ball offers in this case are unreasonably low offers just to get the seller to come down.
Sometimes they reject the offer, other times they accept begrudgingly, not giving up anything on the inspection. What low-ball offers often do is adjust the thinking of the seller. They still won’t go to the low ball price but you have dislodge them enough that they might accept someone else’s offer and ignoring yours without a counter offer.
In one case the Seller reluctantly sent a counter offer to a buyer who gave plenty of signs that they would be difficult through the process. While the counter offer was waiting to be accepted we had another offer come in that was essentially the same. We quickly revoked the offer on the first and accepted the second. There was no reason to do that but the first had proven to be a nuisance. They would have accepted the offer but were too busy trying to beat the seller down.
I have consistently found, when people offer and counter offer from a position of fairness and not “getting-the-best-possible-offer-I-can” attitude, neither party regrets if their proposal is rejected and it runs smoother if accepted.
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This assumes that the seller's asking price is even remotely based on a current number. In the current market, a comp that is 3 or more months old can be quite far from the current price. I have been looking for the last year, and it has been my experience that many sellers will base their price not on the most current neighborhood average, but on the highest number in recent sales sometimes going back 6+ months it seems. Many of these homes have not sold and have been put on, pulled off, and put back on over the course of a year still trying for that number. Often by the time they lower it, the market has depreciated even farther ~ thay are still too high for the current reality. As a cash buyer I am thankful to these sellers in that this has caused a couple of my offers (5 – 10% under list) to fall through. Had I purchased at their price or even my number i would now be holding 10+% less in cash value. Overall I am more likely to purchase a home at or close to asking if its number is reflective of very recent comps. I have recently stopped looking at those that are not, as I feel an unrealistic price is reflective of an unrealistic seller.