In a buyer’s market, many would-be homeowners think that the best strategy is to make a lowball offer on a home. The perception is that the seller will be desperate and jump at any offer opening up the field for negotiation. This strategy is not always effective. Many times a low offer that is not submitted properly will just yield a quick and insulted rejection from the seller. However, if you approach the low offer in just the right way, you have a much better chance of acceptance.
The simplest mistake that is made is not contacting the listing agent before the offer is submitted. The listing agent can provide valuable information. With that simple phone call, you can often determine how many other offers have been received, how long it has been listed, and a wealth of other details that can make the difference between acceptance and rejection if considered when writing your offer.
Buyers should also gather information on the local market: how comparable homes are selling in the school district, neighborhood, etc., and how these factors interact with the home’s list price and sales prospects. By carefully calculating the market value of the home, the area’s sales activity, and other key factors, you can craft a low offer that is just high enough to avoid instant dismissal.
A lowball offer can sometimes be seen as one that in not serious. Sellers may receive numerous lowball offers from people just “testing the waters” or other reasons not directly interested in actually buying the home. Including a sizable earnest money deposit with your offer can often show the seller that you are a serious buyer. Providing a prequalification letter with the deposit and offer is also a good idea to show the buyer that not only is this a serious offer, but you are also prepared to buy right away.
Requesting seller concessions with a lowball offer is another good way to ensure rejection of your offer. Sellers frequently feel bullied or degraded by low offers. If you are already asking them to accept a price well below their asking price, asking for closing costs and major home repairs or upgrades can be adding insult to injury. If you want to have a lowball offer accepted, it is best to make the offer without additional concessions from the seller.
Lowball offers are not always a good strategy for a homebuyer. Sellers are not interested in entertaining a buyer who is admittedly out of their price range, and they don’t want to sell their home at a significant decrease. One purpose of realtors is to provide a buffer between buyers and sellers and to advise their clients on the best course of action. An experienced realtor can help you develop a low offer that can be accepted. Taking the time to gather all available information about the home and the market, and crafting your offer with care can significantly increase your chances of getting the best deal on your dream home.
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