Anyone purchasing a property would like to get the best price, and smart offers often result in a happy new home owner. So go ahead and forget about the low-ball offer.
Low-ball offers won’t get it in today’s real estate market
Suggestions to put home-buyers in a better negotiating position
1. Understand how to read the market
2017 is likely to remain a seller’s market in the majority of areas, but experts predict that buyers may have more choices in 2018 or 2019. You should understand why to assist set expectations, says Brad L’Engle, a real estate attorney and loan originator with the L’Engle team at Guild Mortgage in Folsom, California. If demand is hot and properties are scarce, he says, urge buyers who wish to play hardball to think twice, or they will often find their potential seller looking elsewhere.
2. Be realistic about price
In a seller’s market, one of the toughest dilemmas we face is looking for a way to tell buyers that a home is beyond their means, especially when the buyer already has fallen in love with it.
“I had one buyer who wanted to see a house that had come on the market at $385,000, even though the highest price she had been planning to bid was $375,000,” says Becky Lund, a real estate pro leading Team Lund at Lyon Real Estate in Fair Oaks, California. “The house was completely updated with great views, just amazing, and I could see right away that it was going to get multiple offers.”
However, against Lund’s advice, the buyer was so excited that she made a decision to pull money out of her 401(k) to bump her bid up to $394,000. Ultimately, the property wound up selling for $415,000.
“What I tell buyers is that if there’s an incredible house and you’re already at the top price you can handle, you’ll almost certainly be outbid,” says Lund. “And you can save a lot of time and emotion and frustration if you just move on.”
3. Don’t submit an unworkable “lowball” offer
The real estate market has heated up in most parts of the country, so we gently discourage our clients who want to get tough with the sellers.
“We’re not in a market anymore where you can lowball somebody $20,000 below the list price,” L’Engle says. “I tell clients to look at the listing and selling prices in a given area to help determine what’s reasonable. If you’re a buyer, don’t lose your bid on a house to save $5,000.”
Lund agrees: “If you’ve found your dream house, do you really want to let it go for a $5,000 difference? Help your buyers think through doing something they’ll regret.”
4. Do your homework
L’Engle advises buyers to check the MLS to determine how long the home has been listed. If it’s been on the market longer than the typical period of time for your area, the owner may be prepared to bargain. Any issues with the house? Disclosing this information is required by law.
5. Get pre-approved for a mortgage
Getting pre-approval on a mortgage means buyers are fully aware of your price range and have a better chance at a smooth closing.