Just about every home buyer wants to find the perfect place at a discount. While this might happen on occasion, it’s definitely more realistic for buyers to have to have wheel and deal in order to get the price point as low as possible.
Putting in a lowball offer – one that is considered a lot lower than the asking price – can be risky, since the majority of sellers may be insulted by such a low number. But by doing your homework first, and keeping the offer somewhere in the vicinity of the listing price, you can effectively boost your chances of scoring the home at a selling price that you’ll be happy with.
Before you put in a lowball offer, consider these 5 factors first.
What Have Other Comparable Properties in the Area Recently Sold For?
One of the first things that you should do is analyze other recent sold properties in the neighborhood that are comparable to the home you’re looking at. These other properties should ideally be similar in size, location, features, age, and so forth.
This is where a real estate agent can come in really handy – while the average home buyer might be able to find out the asking price of current listings, finding out what previous listings sold for is a lot tougher without the right resources. Your local real estate agent will have access to this information.
Once armed with these numbers, you can identify if the seller of the property you’re looking at is asking for too much. If this is the case, you have good reason to go much lower than the listing price, as long as it’s somewhat in line with what other similar properties sold for in the recent past.
How Eager Are the Sellers to Get Rid of the Property?
Are the sellers desperate to get the home off the market? Are they in the middle of a divorce? Are they being relocated to a different city for work? Are there two homes being supported at the same time? How willing the sellers are to accept your lowball offer will typically come down to how motivated they are. Try to poke around for information, or get your realtor to do the scoping around for you.
Is the Listing Getting Stale?
The longer a listing sits on the market, the more stale it gets. Properties that linger on the market for a long time start to get a bad reputation from buyers, who will typically wonder if there is something wrong with the home if it still hasn’t had any bites.
If its been weeks or months that the property has been sitting on the market, the sellers may become increasingly anxious to sell. Under these circumstances, they might be willing to entertain just about any offer, including a lowballer. At some point they have to sell, and if all they can get is what you’re offering, they just might take it.
Give the Sellers a Clean Offer
If you’re not going to offer the sellers the price they want, then make the rest of your offer as clean and attractive as possible. One way to do this is to limit the number of clauses and contingencies in the offer, or eliminate them altogether. While you might still want to keep a home inspection clause, don’t start nitpicking with minor clauses, like leaving the window treatments, or fixing the railing on the staircase, or making sure the floors are cleaned before they vacate.
In addition, make sure you’ve got your finances in order beforehand, which includes getting a pre-approval for a mortgage. Any lowball offers should always be accompanied by a pre-approval letter and a sizable deposit check. In fact, the more money you put up front in cash, the more likely the sellers will be to accept your lowball offer.
Don’t Insult the Seller
Offering a price that’s much lower than what the seller is asking for can be a sticky situation. Many sellers will be downright insulted by a lowball offer. After all, it’s still their home, and possibly a place where they raised their kids.
Even if you think the listing price is way more than it should be, or the property needs some work, it’s still important to be respectful of the seller while following the rules of conduct of the current housing market. Lowballing the sellers could end the deal, but if you work closely with an experienced realtor who will present the offer expressing your genuine interest and appreciation in the property, your offer might be more likely to get accepted.
Putting in a lowball offer on a property isn’t always the right move. You’ll have to prepare yourself to lose the house in this case. However, if you follow the skilled advice of a good local real estate agent and be respectful towards the seller, you can bump up your chances of the landing the place.