A lowball offer, or an offer price that’s significantly lower than the listing price, is often rejected by sellers who feel insulted by the buyers’ disregard for their property. Most listing agents try to get their sellers to at least enter negotiations with buyers, to counteroffer with a number a little closer to the list price. However, if a seller is offended by a buyer or isn’t taking the buyer seriously, there’s not much you, or the real estate agent, can do.
First, can you offer less on a house?
However, as a buyer, you can take steps to increase the likelihood that your low offer will be accepted, or at least increase the chances that negotiations can take place.Before you make an offer at all, you should be thoughtful about your goals. If you love the house and truly want to buy it, don’t submit an offer that’s too low.
However, if you’re interested in grabbing a bargain and becoming a homeowner for financial reasons (and are less invested in which house you own), a low offer could be the right option for you. Consider making an offer that hovers 25% below the asking price—and see what happens.
1. Stay updated on current market conditions
You and your real estate agent should be discussing the local real estate market throughout your house search so that you can recognize the value of individual homes. If your local market is a seller’s market with competition for homes, you are much less likely to have a lowball offer accepted than if buyers have the upper hand. However, in any kind of real estate market, a house that has been listed for sale for several months is more likely to have owners willing to negotiate a lower price.
2. Be respectful of sellers
Even if you think the sellers have overpriced their property or have let it fall into disrepair, it is important to treat them with respect and follow the protocol of your local real estate market. After all, this is the sellers’ home, perhaps the place where they have raised their family. They may be selling because circumstances are forcing them to sell, rather than by choice. A low offer may be upsetting to the sellers, but if you and your real estate agent present the offer along with an expression of your appreciation for the property, it’s more likely to be accepted than a low offer accompanied by a half-complete contract or an insult about the property’s condition.
3. Have your agent contact the listing agent
To depersonalize the negotiations, it is best to have your real estate agent and the listing agent discuss your offer, but your agent can do more by talking to the listing agent even before you make an offer. Your agent should also find out as much as possible about the sellers: why they are selling and whether they have turned down other offers. This can be helpful regardless of whether you intend to make a lowball offer or contemplate a higher offer.
4. Have your financing in order
Sellers are rightfully concerned about getting to settlement any offer they accept, so your offer should be accompanied by a pre-approval letter from a lender along with an earnest money deposit. The higher your deposit and your promised down payment, the more likely the sellers are to take your offer seriously. In fact, if you can make an all-cash offer, you are even more likely to succeed.
That is, make sure you can afford the mortgage for the house you like. If you think you could end up in trouble with your lender a few months or years down the road, take a step back.If you offered to waive the home inspection but are praying there are no issues with the house (because you know you can’t afford major repairs), maybe rethink this sale before going into escrow.
5. Eliminate as many contingencies as possible
If you are making a lowball offer price for the home, you might consider keeping the contingencies to a minimum. With a steal of a price, you probably shouldn’t expect to have the sellers make repairs or to convey additional items to you, such as their window treatments. You should still have a home inspection, but you may want an information-only inspection if you anticipate making any repairs yourself.
Keep in mind that a low offer is not always the right offer to make. In fact, you need to be prepared to lose the house if your offer is too low. Sometimes the market isn’t in your favor and the sellers will stand firm on the list price.
However, if you can make a low offer respectfully, in the context of your local market, you could end up with the bargain home of your dreams.
See full article: Realtor.com