How to Make a Lowball Offer On a House and Get it Accepted?
For sellers who have been forced to sit by while their homes languished
on the market there is often no other choice but to negotiate for a
lower price. This is particularly common for homeowners who have waited
out the summer, typically the peak buying season and are now anxious
about going into the holidays with still no sell in sight. The closer
the holidays loom, the more anxious many sellers become. This can
certainly be good news for buyers who are on the lookout for a good
deal. If you're interested in getting a good deal by making a lowball
offer there are a few tips that should be kept in mind. The most
important step is to locate properties that have been on the market for
awhile. The longer a homeowner has had their home on the market, the
more receptive they will likely be to a lower price.
Understand your Market - Make a Comparative Analysis
One of the most common mistakes many buyers make when attempting to make
a lowball offer is neglecting to have a comparative analysis performed
on the property. Before you even consider making an offer on any
property, it is imperative to understand the fair market value for that
property. While making an aggressive offer on a property in some
neighborhoods might prove to be an effective strategy; that will not
always work in every market. Always understand your market before making
an offer.
Working with a Right Realtor
Working with the right real estate agent is also an important element. Despite the
current market, some real estate agents remain reluctant regarding
aggressive offers. Buyers should understand that real estate agents work
on a commission basis. When the price on a home goes down, so does their
commission. Other real estate agents may be reluctant because they lack
effective negotiation skills. If you notice that your real estate agent
appears to be averse to the idea of making an aggressive offer, it may
be time to find a new agent (Read
What to look for in a real estate agent?). There is certainly no harm in making a low
offer, especially on a property that has been on the market for months
with few or no offers.
Back Up your Lowball Offer
With that said, if you are going to make a low offer you must be aware
of the fact that coming in low can get negotiations off to the wrong
start. This is why it is important to always back up a low offer with a
reasonable explanation. The homeowner is always going to want to know
why you're offering them such a low price on their home. This is where a
comparable sales analysis can come in handy to assist you in validating
an aggressively low price. Avoid being harsh when criticizing a
property. Keep in mind this is still the seller's home and they likely
have an emotional attachment. Instead, stick with the facts and
statistics about the current market.
Decide your Walk Away Price
While it is quite likely that you will be able to negotiate a lower
price on a home given the current market conditions, it is also
important to recognize that most sellers do have their limits. Those
limits are typically based on the amount of equity the owner has in the
home. Before making an offer on a property, always know your own limits.
The fact of the matter is that you and the seller may not be able to
reach a common ground in terms of what you can pay and what they can
accept. Research your financials and know precisely how high you are
willing to pay for a property.
Make an Easy Offer
It is also important to recognize that sometimes price is not the most
important factor that will compel a seller to accept an offer. In some
cases, a seller will be more willing to accept even a lower offer if it
is a deal that will close quickly. Toward that end, strive to ensure
there are as few contingencies as possible when you make an offer. Begin
by making sure you have all of your financial information in order. With
increased loan restrictions,
pre-qualifying for a mortgage loan is more
difficult today and also takes longer. Take the time to obtain a
pre-qualification letter before you even begin shopping around.
When it comes to paying cash for a home, realize that circumstances may
dictate the willingness of a seller to accept a lower offer. Sellers
usually want to get the most money possible for their home and may be
willing to hold out longer if it means they can bring in a few thousand
more. If the property is a bank owned property; however, you may have
more luck in getting a lower price accepted. Buyers who need to obtain a
mortgage often result in delays banks do not wish to deal with.
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