A common fallout of a real estate buyers market is the tendency for drawing the lowballers out of the woodwork. More and more buyers who may never have considered this type of negotiation, now feel they have the upper hand and are more likely to submit a lower than normal offer.
What is a lowball offer? Although not written in stone, generally an offer lower than 90 percent of the asking price is considered a lowball offer. The biggest risk of this type of proposal is that the seller will be completely insulted and may reject any further attempts at negotiation. If it’s done correctly, however, the seller will make a counter offer and the games are afoot, often leading to a sale where both parties are happy with the results.
Here are some tips to help you find some middle ground between seller and buyer when submitting a lowball offer:
Shop when the market is slow: The best time to buy a house is between Christmas and New Year’s Day. You’re less likely to run up against other competitive bids and the seller will be happy to get some action during this slow time. Keeping this train of thought in mind, one of the worst times to make a low offer is during the spring when everyone is out shopping for a house.
Don’t be insulting: There are shameless buyers out there who will submit a ridiculously low offer just to test the waters. This generally upsets the seller and sets the stage for some tense and unpleasant dealings. You’re offer should not be so low as to be insulting.
Justify your offer: Support your low bid with facts. If the home is priced higher than market value, explain why and provide comparable sales in the area that support your argument. If there are deficiencies in the house, list them along with the estimated cost of repairs.
Know your seller: Try to discover the homeowner’s reason for selling as well as their level of desperation. Perhaps their moving date is quickly approaching, or maybe the home has been lingering on the market for months and the owner is fed up with open houses and maintaining their home as a showplace.
Understanding your seller’s motivation can definitely add leverage to your negotiation power. On the other hand, if a seller is happy to remain where they are until they get their asking price, you could be closing the door on any future counter offers. Some buyers focus only on dealing with sellers who are motivated for a quick sale.
Keep your offer simple: Keep your offer as straight forward and simple as possible. Don’t ask for anything unreasonable or out of the ordinary, shorten the inspection periods, and if possible waive some of the contingencies. You’re getting a good deal, you may have to settle for a few imperfections. Show that you are serious and ready to buy.
Don’t stop at the counter offer: In negotiating a home sale, it’s almost an unwritten rule that you will make an offer and the seller will counter. Don’t pass up your chance to offer a second counter offer; keep the deal alive as long as you can.
It’s not over, until it’s over: If your offer is rejected and you aren’t prepared to go any lower, track the listing for awhile. If it sits on the market for another 2 or 3 weeks, resubmit your offer; who knows, that original deal may start to look pretty good.